Horizon’s ETF’s this morning announced significant temporary changes to its BetaPro Crude Oil 2x Daily Bull ETF (TSX: HOU) and BetaPro Crude Oil -2x Daily Bear ETF (TSX: HOD) exchange traded funds, most significant of which is the temporary reduction to a 1x leverage on the products.
The temporary changes have been put in place largely as a result of the current volatility being experienced in the oil markets. Given that the funds are meant to represent a 2x leverage of whatever move oil makes in the day, if the price of oil were to move more than 50% in a single day, one of the two ETF’s should in theory see its net asset value drop to $0.00 as a result of the nature of the investment strategy.
In addition to dropping to 1x leverage, the fund is also changing its investing methodology. While normally it would invest in the front month oil contract until the 6th of the month, both ETF’s will now see their assets roll to the July contract effective at 2:30 today with 100% exposure. This is being done as a result of the current volatility in the June contract.
Lastly, as of April 21 the ETF’s will no longer be taking additional subscriptions until further notice. What this means in effect is that the ETF’s will trade more like a closed-end mutual fund rather than that of an ETF, as the equity may no longer trade in line with its net asset value.
The manager of the fund is expected to announce future roll dates as they happen, until such time that the ETF’s return to their intended normal operation.
A full explanation of how the fund is intended to work can be found here.
The author has no securities or affiliations related to any organization mentioned. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
38 Responses
Anyone have any developments regarding small investors who lost in Horizons BetaPro Crude Oil HOU
ETFs in 2020 ?
I also want to be informed I also lost a lot in 2015-2016 because they were suddenly not following the oil barrel price.
I lost around 50K in my TFSA…
I see there is a class action now, but I really want to see the updates because I think this company is a scam since a long time now.
There is a group for HOU/HOD lawsuit please contact lbrahim
iboduroglu@gmail.com
(514) 750-3030
https://sotosclassactions.com/cases/current-cases/horizons-hou-etf/
Hi Angela! Things are moving along. I would suggest you get in contact with David Rosenfeld directly: drosenfeld@kmlaw.ca
Hi Ben, I would like to know is there any updates regarding potential lawsuit HOU/HOD? Thanks
A possible class action lawsuit is being researched at the moment. If you are or were a unitholder when the changes were made, you can reach out to David Rosenfeld at Koskie Minksy to evaluate your options. Telephone: 416-595-2700; email: drosenfeld@kmlaw.ca.
I think its an absolute scam that they just pulled off. We buy the stock because it is volatile and are prepared to take that risk. No one told us they were going to cancel 99.5% of our shares through a redemption at a next to nothing price. We have zero chance of recovering any of our money when they consolidated (Cancelled) the shares. They did not adhere to the indexing of 2X oil futures that we bought the stock based on. Had they done so, I would have recovered almost 60% of my investment to date. A class action suit against the Company and the Directors for there mismanagement and negligence of this fund is certainly warranted to protect the public from this happening.The Ontario Securities Commission should be contacted by each and every shareholder and file a complaint.
Totally agree!!
also to make matters worse. They take away the leverage, In doing this they make it impossible for Investors to recoup their loss as the oil price moves up!! WTF!!!!!!! Its not what I paid for when I bought their ETF product!
Horizons f-d up big time they need to be accountable!
Same for me. I think we’d need a large investor to get the ball rolling… Or at least the right lawyer.
We need to keep looking into this Its Not right they had no backstop or plan in place for their product, when the one time in history, oil goes negative, they where aware this could happen yet they did nothing right before it happen! they design the product.. its there responsibility! no alert announcement just before this happen. nothing!!! just let everyone lose their asses.
Keep pushing this people….
You can call the OSC to file a complaint (1-877-785-1555). Looks like there was a class action lawsuit filed against Horizons for one of its inverse ETFs last year and it was ultimately dismissed (https://www.advisor.ca/news/industry-news/ontario-court-dismisses-proposed-class-action-against-horizons/). However, it may be possible to argue that the change in leverage for HOU constitutes secondary market misrepresentation,which could open the door to a class action lawsuit.
If you find lawsuit info I would like to join. HOU cost me thousands and if was correct would actually be up right now.
I saw an article this case is getting revived. A CAL needs to be filed for HOU. How can these managers issue 2 reverse splits within 4 weeks. Now look where crude is trading at.
what would be the best move right now? buying more of the stock, keeping it or selling? I think selling it will not make much sense because even with the consolidation of the stock we will have the same price value just a lesser amount of stock.
No offence Dave, but you would be a fool to throw good money after bad. This company is corrupt and can not be trusted. Find a trustworthy company…
Stay away from all the Horison ETFs, such as HOU, HQU, HOD, … this is the most corrupted company I know. They are not vivid and hiding the most important facts of their ETFs from the investors. They should be sewed and their company (what a joke, company) should be blocked.
This is ridiculous, and the last time I will trade Horion ETFs. How can you trust a company that changes the rules at the most important moment. I gonna to see what kind of legal action is possible.
In the meantime, I will do my part to make this action well reported and advise anyone I know to stay away for Horizons.
The bull ETF is supposed to go up with oil right!! Total corruption! No decay… down 22% with oil prices going up. What a joke this company is!
Hi Nathan, I feel the exact same as you. How can they to that at the worst time and we can do nothing about it ? I’ll will look my side to see if we can have a legal action or start a class action. We are supposed to be up + 90% in the last 2 days and now we are down by 50% this is totally ridiculous. Please let me know if you find something and I will do same.
Will do Mark-Antoine! It might be good to start with a complaint to the IIROC. https://www.iiroc.ca/investors/makingacomplaint/Pages/default.aspx
I’m gong to keep looking into it and ask some friends in the investment community.
Is there a lawsuit we all can join or start in lost $150 k practically overnight at 2x and now they expect to recover at 1x
This is immoral or illegal. Let me know mvickers@rogers.com
Send an email to David. I sent him the details of my position, he is looking to prepare a class action suit.
David Rosenfeld
David Rosenfeld drosenfeld@kmlaw.ca
There is a group for HOU/HOD lawsuit please contact lbrahim
Iboduroglu@gmail.com
(514) 750-3030
Hi Nathan, I would like to know is there any updates with potential lawsuit HOU/HOD? Thanks
I am curious if anyone heard class action against HOU and HOD. Many legal cases filed in the States against USO now.
A class action is needed
It’s still going awry today. A class action is warranted. I’m done too with these shysters.
Sorry guys. I went the other way HOD and instead of losing everything which I should have….I only lost about 30% beacuse of there changes. I do plan on holding on as I see oil prices coming down this coming week and getting my money back and then getting the hell out. Good luck trying to get any of your money back…..which would have been mine.
Agree with Gord. And since HOU is temporarily 1x leverage. We should be able to keep HOU for a bit with no decay
screwed big time anna
so what happens to people who are holding hou and are unable to sell at the current price?
Losing bad, lose all money because of the rich coronapumping and coronadumping. Sorry anna.
Not necessarily bro. Hou has a lot of potential. You guys watch tomorrow it will go up again to at least 2$/ share
It looks like HOU is trading like a stock right now. Hardly any upside even though oil price has appreciated a lot today
What is happening to HOU ? The oil is up but HOU is down over 30%.
Should i hold on this or sell ?
Lost all my investment in retirement, Tfsa and margin total worth half a million. Hopefully these guys will be held accountable.