Bitcoin Forum

September 21st, 2013: DISCUSSION: Motion to list BMF.B1 (https://bitcointalk.org/index.php?topic=229036.msg3202628#msg3202628)
September 17th, 2013: News Flash: LTC-ATF buys controlling state in BMF (link to full story) (https://bitcointalk.org/index.php?topic=229036.msg3174029#msg3174029)
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http://tsukino.ca/bmf/

In it's time, BMF was the largest and most successful investment fund in this community. I have relaunched it on BTC-TC, and I plan to do an even better job than before.

NEWS: June 25th, 2013
The contract has been approved by shareholder vote and we have 5 YES votes and are now trading.

Contract as approved by Shareholder Vote
(Note: If there is a discrepancy it is unintentional and the contract as voted on BTC-TC takes precedence)

Purpose:
BMF allows investors to safely diversify among a wide-range of mining companies in the bitcoin community.

Contract:
1. BMF will pay as distribution or reinvest 100% of the net income generated by trading and investment activity of the fund.
1b. (the 'BTCINVEST' clause, suggested by TaxReturn (https://bitcointalk.org/index.php?topic=229036.msg2412269#msg2412269)) The fund will place timely bids at 95% of the NAV. Holding bitcoins does not earn bitcoins, and the spread will go towards the fund. New shares of the fund will be priced at or slightly above NAV.
2. Payments are due on or before the 7th of every month for the previous month’s trading and investment activity.
3. The issuer reserves the right purchase back the security at 1.1 times the highest price the asset was traded over the previous month.
4. The fund is mandated to only invest in bitcoin mining companies and to perform due diligence when investing.

Transparency:
Transparency: The fund seeks maximum transparency by fully disclosing all assets held in the fund at any time:
5. We publish our spreadsheets. You must request access, and you may not publish or distribute the information to any other party.
6. An independent financial advisor will be hired to provide oversight and ensure that things are running smoothly.
7. A support e-mail address will be operated by the manager, to provide disclosure and give investors the tools they need to make their own decisions should anything be required.
8. Monthly reports will be published to the forums (and/or reddit or any other widely read news source).

Distribution:
The fund will pass through dividends received by the fund using a combined growth and income policy:
9. The fund will use approximately half it's income to buy more assets (growth via capital gains) and the rest to make payments (income via distributions).
10. Distributions must be paid within a reasonable time frame after receipt; within 7 days of the end of the month for that month's activity.

Net Asset Value:
11. The Net Asset Value (NAV) is the value of all assets in the fund plus the cash on hand.
12. The Net Asset Value per unit is the value divided by number of units outstanding. This is also known as NAV/U.
13. The Net Asset Value will be calculated based on our internal fundamental analysis process and due diligence and verified by the financial oversight advisor and/or Certified Accountant(s) hired to oversee the financial operation of the fund.

Governance:
Given that underlying assets held by the fund may periodically raise motions to vote,
14. This fund will vote on motions on underlying assets favoring the best interest of the fund.
15. Any shareholder of 5% or greater may request a motion for proxy voting the fund's shares of an underlying asset.
16. Any shareholder of 5% or greater may request a motion to be run at any time (limit: 3 per month, one re-run within 100 days).
17. Shareholders wield supreme executive power (i.e. shareholders may vote to replace management).
18. Motions require quorum of 60% or greater and majority vote of 60% or greater to pass.

Risk:
Although research has been put into each underlying asset, Mining assets in the past have been unpredictable. The fund's value relies on the the value of the underlying assets. If the underlying asset value decreases, the entire fund's value will also decrease. Additional risks to Mining assets include the price of Bitcoin, the price of mining equipment, the difficulty mining Bitcoins the Bitcoin reward per block, mining equipment upgrades, as well as many other risks. This fund does not hedge against any of these risks. Each shareholder must understand these risks before investing. Additionally, there may be undisclosed risks which the operator is or is not aware of. The operator will not be liable for any damages to the investor beyond the the value of the investor's position in the fund at the time of the complaint, as determined by market price discovery.

Fund Closure:
I. Closure clause. Management reserves the right to close this fund for any reason giving 30 days notice. All assets in the fund including unpaid dividends will be liquidated at fair value and paid to shareholders.
II. Buyback clause. Management reserves the right to force-buyback all units of the fund at 110% of the highest traded price over the last 100 days.
III. Exchange limited liability (the "GLBSE clause"). Management will not be responsible for damage caused to shareholders outside of management's control, i.e. by actions of the exchange.


=====
Management Ownership:
1. June 29th, 2013 -- purchase of 50 shares at an average price of 0.038 (total: 50 shares).
2. July 3rd, 2013 -- purchase of 200 shares on the open market at 0.0357 (total: 250 shares).
3. July 3rd, 2013 -- purchase of 200 shares on the open market at 0.0356 (total: 450 shares).
4. July 3rd, 2013 -- private placement of 400 shares at above market price (400 @ 0.036; see #3; total: 850 shares).

FAQ (Frequently Asked Questions):

1. (from Deprived, paraphrase) "This thread is self-moderated. What does that mean?"
A: It means I can delete your posts but I cannot edit them. For clarification here's the entire moderation policy:

• No swearing.
• No excessively off-topic comments (no rambling).
• No scam accusations.

If you break these rules is I'll send you a PM requesting you make an edit. If you break them repeatedly I will simply delete your post. Regarding swearing, blotting out words is not an acceptable compromise. Just don't swear. Regarding scam accusations, if you have solid information that I or anyone is scamming, go post it on the scam accusations forum where it belongs. If you do not have solid information but are merely suspicious, please feel free to post a logical, well-thought out question. I'll be pleased to answer it and credit you in the FAQ. Note I am not a moderator or anything -- If you can't abide my local policies you're free to post whatever you want -- in your own threads.


2. (from Factory, paraphrase) "You said 'In it's time, BMF was the largest and most successful investment fund in this community.' That's correct if you consider 'successful' as losing a large portion of it's value. This is provable with basic math."
A: Simple. Now that BMF has listed again, I have donated more than 100 BTC worth of assets and bitcoins to the fund. By making investors whole in USD terms, with a USD gain of more than 20% over the past nine months since GLBSE shut down. No mining bond can compete with that offer. For example, during the rise of BTC from $5 to $10 and during the mining crash (around August 2012, IIRC) BMF fell 50% in value to 0.49 BTC, while issues like GIGAMINING fell 67% from 1.50 to 0.50. Ex. 2, YABMC, went from 0.35/share @ $10 ($3.50/share) to just 0.015/share @ $130. This is a loss in USD terms of around 44%. In roughly the same time frame BMF will have gone from 0.49/share @ $12.4 to 0.06/share @ $120. This is a gain in real terms of more than 20%. Yes, everyone lost money in terms of BTC because the price rose. But BMF took steps to protect the value of your investment, even if only in real terms.
You can see these figures for yourself on our Holdings & NAV page (http://tsukino.ca/bmf/holdings-nav/).
Update: It turns out there was one issue that did outperform BMF on GLBSE (but it wasn't a fund). It was MOORE. Friedcat ran it. Hindsight is 20/20, I guess!


3. How can I get access to financial information about BMF?
The fund seeks maximum transparency by fully disclosing all assets held in the fund at any time. Please read the "Transparency" section of our contract on BTC-TC. In short, any shareholder may request access to our spreadsheets at any time. Investors are also encouraged to send us an e-mail with their questions and concerns about the company. Talk to us -- we are the best source of information regarding BMF, and the only authoritative one.
Note: A spreadsheet is currently publicly available at: http://tsukino.ca/bmf/holdings-nav



Letters and Comments from our Shareholders (since relaunch):

The Truth Thread

In a way I am sorry I have to do this. I really would prefer to ignore trolls. But look what happened when I ignored Deprived and friends in 2012 -- he and trolls just like him -- Ian Bakewell, BitcoinOZ and EskimoBob, among others -- caused enough damage that mods started harassing me and I could not get listed in BTC-TC for the first six months of 2013. Now the truth is out, Ian Bakewell is tagged a scammer, BitcoinOZ is known to have stolen NYAN's shares and abandoned his asset on BTC-TC, and EskimoBob's security immediately crashed 99.5% of it's value, these people still continue to bother me. Deprived in particular does not know when to stop.

After reading this you may wonder whether or not Deprived is mentally insane. Why does he bother me so much? It could be because I have discovered many discrepancies in the books for LTC-ATF (for example, see see here (https://bitcointalk.org/index.php?topic=129985.msg1739721#msg1739721)). Perhaps it is because I market make his security LTC-ATF.B1 and prevent him from selling shares at far above their book value as I have shown he has done in the past. But whatever the reason, I have had to suffer his malicious criminal libel for about an entire year now.

There's really not much I can do except expose him as a liar. Hence this one, simple post.

To keep it simple this post will contain accusations issued by Deprived since June of this year when I relaunched BMF, and will mainly contain accusations regarding BMF.

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1. Deprived claims that a list of assets stated to belong to BMF actually belongs to TU.SILVER
"Are you saying that those assets belong to BMF?  Or are those assets that belong to various of your assets (including TU.SILVER)?"
https://bitcointalk.org/index.php?topic=226650.msg2385638#msg2385638

Response: There is no logical reason for him to come to the conclusion, or even have the idea that the assets belong to TU.SILVER. Despite a rebuke in a following post, he goes on to harp on this several times as if I hadn't said anything.


2. Deprived claims I am refusing to provide information necessary to calculate any value for BMF.
"So you're asking for approval for an asset that has SOME assets but which refuses to provide information necessary to calculate any value for it." (ibid)

Response: Given that I had posted a list of assets, it is illogical for him to assume I am refusing to provide information necessary to calculate value for BMF.


3. He claims I am mixing personal funds with those of my companies.
"Usagi doesn't properly segregate assets belonging to different companies."
https://bitcointalk.org/index.php?topic=226650.msg2386676#msg2386676

Response: DeaDTerra and cusdog (and notably, pigeons, and notably twice, deprived(!!!)) have seen the TU.SILVER spreadsheets and it is exceedingly obvious that I keep meticulous records for TU.SILVER. Second, now that BMF is trading again it has been moved to a separate BTC-TC account.


4. He berates me because NYAN owns shares of BMF:
"It's doubly stupid when you consider that some of the other assets actually own shares in BMF" (ibid)

Response: I don't see a problem with this. In fact, DMS (Deprived's new issue) owns shares of LTC-ATF.B1. Looks fine to me.


5. Deprived claims I previously manipulated investors of my companies (and therefore I will do it again).
"...he did it before - manipulating share price up so as to justify (off-market) sales of his own shares by his own companies (in the process reducing the real value for all other investors AND destroying a contractual obligation..."
https://bitcointalk.org/index.php?topic=226650.msg2405911#msg2405911
"BMF had already been screwed to try to help CPA" (etc.)
https://bitcointalk.org/index.php?topic=226650.msg2407113#msg2407113

Response: The claims that I was manipulating share prices have been conclusively proven false by an investigation performed by BCB. (http://kongzi.ca/BCB/misrepresent1/index.php) Deprived agreed to give ALL evidence he had to BCB. After an extensive review which included me giving Theymos permission for BCB to undelete as many of my posts as he wanted, BCB and I had a chat on IRC where BCB stated in so many words that I am not a scammer, and that Deprived was likely part of an organized campaign to defame me. He then dropped the case after withdrawing that charge. In short anything Deprived says about how I misled, misrepresented, scammed, etc. anyone from when I was on GLBSE is a blatant lie. (That is also why I am mainly sticking to things he has said just this June, but he did say the above on June 7th. So be it.)


6. Deprived claims I am avoiding paying out on NYAN.A with the assets I have on hand.
"The BitVPS belong to Nyan not BMF.  If he's saying all BMF has left is cash then there's absolutely no reason why he couldn't liquidate - or at least buy back the shares held by Nyan/CPA with their portion of that cash.  To NOT do so is unnecessarily adding delay to paying Nyan off.  He's just stated BMF has no assets of significance left - so the only thing stopping him paying out Nyan is his own attempt to use the threat of delayed/non-payment as a crude tool to try to bludgeon moderators into voting yes."
https://bitcointalk.org/index.php?topic=226650.msg2406732#msg2406732

Response: The problem is I only have $10,000 but I have promised to bail out the investors for $100,000. Now, besides the fact that I am a really nice guy for saying I was going to do that, and Deprived is being a jerk for chastising me over not paying it immediately, the simple fact is that running my companies again and making money with them (which is why people run companies) is the cornerstone of the plan I have to pay back investors in NYAN and CPA. I am NOT "un-neccessarily adding delay to paying NYAN off". I am being extremely careful and wise with the resources I have left. If you notice, I have successfully gone after Brendio and gotten our BIB.BVPS shares back (Brendio was cordial). Next we went after Ian Bakewell and I can't talk about the proceedings but I am in fact involved. I started the thread for it too, go check. I obviously can't discuss who we are going after next or what information I have. But to state that I am avoiding paying people back is ludicrous. CPA just settled a 1100+ pirate contract and I am in active negotiations with several shareholders of NYAN and other companies. It is what it is, but it is not me avoiding paying any debts. I already sold $3,000 of my own personal gold and silver, my gibson guitar, etc. to help pay people off. To state I am avoiding paying people is really dumb. Sorry for saying that but Deprived really makes me mad with his lies.


7. He claims I abandoned NYAN/NYAN didn't do it's job/I essentially stole from Nyan/etc.
"Nyan sold its holdings of Nyan.A/B/C in off the market transactions then gave the cash back to CPA in return for cancellation of the shares in it.  In one fell swoop usagi totally removed a protection that Nyan.A and Nyan.B were contractually entitled to - to try to bail out CPA."
"Removing those assets - that were contractually supposed to protect Nyan.A/B - is little short of outright theft."
https://bitcointalk.org/index.php?topic=226650.0

Response: Wat? NYAN still owns about 160 shares of BMF and 80 shares of NYAN.A (and NYAN.A is basically made up of 2000+ BMF shares and 30,000 BITVPS shares plus associated debts). So NYAN is another great example of why BMF needs to be unwound first.
NYAN didn't sell anything, I don't know why Deprived is saying that. I didn't steal anything, don't know why he is lying about that either. Deprived is also clueless as to the relationship of NYAN and CPA. Contractually CPA insured NYAN, not the other way around. NYAN has gone nowhere since the crash. It's still there. It will be unwound along with NYAN.A and everything else once I get BMF back on it's feet. I have no clue why Deprived is babbling about NYAN.


8. He claims I am attempting to facilitate insider trading by charging people for access to BMF's books.
"Quote from: usagi on June 08, 2013, 01:18:10 PM
5. We publish our spreadsheets. You must request access, and you may not publish or distribute the information to any other party.
This has two problems:
1.  It directly faciliates insider-trading.  There will be a privileged (to the extent anyone sending BTC to usagi can be considered privileged) class of investors able to see accurate information on the state of the fund - and use it to trade with an advantage on the market.
2,  It creates an asymmetry of information.  If someone selling shares has access to the financical information then anyone without such information who wants to buy is forced into acting based on a much lower level of information/knowledge.  That means that they are forced to compete on the market and enter into trades at an unfair disadvantage."

Response: Deprived misread point 5, as I am not charging anyone. He then attempted to state what he "really meant"  ::)
"he believes I'm accusing him of charging people to see his books.  I'm not."
https://bitcointalk.org/index.php?topic=226650.msg2416619#msg2416619
I had to point to him several times that point 5 is not limited to shareholders.
But beyond this, no, it does not create two classes of investors, facilitate insider trading, or any else of his ridiculous claims.
In fact, Deprived is on record stating that significant shareholders of LTC-ATF can ask to see it's books (although this may have been a lie; as a 12% shareholder he refused to show me his books).

And what's even more unbelievable is that he states in this message:
"The contract listed in BMF is not the one currently active - NOR is it the one he intends to have.  He has posted asking for advice on what should be in the contract - i.e. he wants approval before he's even ready to determine what the contract is.  So you're being asked to approve something that isn't even defined."
Yet in the post above this one (https://bitcointalk.org/index.php?topic=226650.msg2414642#msg2414642) he quotes the new contract for BMF which is listed on BTC-TC (html and all!) Is that nuts or wat?


9. Deprived claims I lied about providing liquidity to TU.SILVER/My advice to Tu.SILVER investors is to guess what the price is
"His advice to investors, BTW, is just to guess what the price is - put up an order and if he likes it he'll fill it. ... he long since gave up the pretence that he was going to provide visible liquidity..."
https://bitcointalk.org/index.php?topic=226650.msg2563958#msg2563958

Response: This is extremely disingenuous given my advice to investors in the TU.SILVER reports, archived here. (http://kongzi.ca/silver/) It is clear that Deprived cannot read, because according to these reports not only do we publish (mostly) IFSA-compliant financial reports and give management guidance, we also advise investors to do due dilligence when investing in TU.SILVER and explain several possible scenarios. Just for example? Page 4 here. (http://kongzi.ca/silver/TSR/20130224TSR.pdf) Just for example. That's from February, too. Is Deprived insane, or just trolling? I do not know. I know this. He states this about his own security DMS:
"1.  Work out a range within which they believe the correct valuation for each lies.  That means taking best and worse-scenarios... 2.  You then need to consider what alternative investments exist that offer returns you can rely on... 3.  You can then work out the zones above and below which investment makes sense. ..."
https://bitcointalk.org/index.php?topic=228327.msg2547675#msg2547675

This does not sound different at all from why I have said. I do not like hypocrites like Deprived.

Regarding liquidity, this (https://bitcointalk.org/index.php?topic=177747.msg2406351#msg2406351) and this (a quote from deprived!!!") (http://The reason for ANY change in the price of MINING/SELLING (other than a reduction because of a dividend being paid) is that the market (i.e. everyone investing collectively) has decided that the previous price was wrong.

In this particular case the change is almost certainly caused by one particular group - those who held SELLING.  SELLING got a big dividend today.  Pretty much by definition those holding SELLING are the people who believe it's better value than MINING - i.e. they believe (or believed) MINING was over-priced.  It's fairly safe to assume some of those used their dividends to buy more PURCHASE, split it then sold the MINING.  Once their MNING have gone we'll find out whether the rest of the market agrees with their new valuation.) "The reason for ANY change in the price of MINING/SELLING (other than a reduction because of a dividend being paid) is that the market (i.e. everyone investing collectively) has decided that the previous price was wrong." And this:
So we see Deprived understands market forces and liquidity very well, why is he attacking me over the same issues LTC-ATF, his own fund, is experiencing? There is no difference between TU.SILVER, DMS, BMF and LTC-ATF here. No asset issuer can control what people set their bids and asks for. All we can do as issuers is our best. TU.SILVER is a great example. We have over 20 people holding over 1100 outstanding shares and none of them wants to place an ask less than 2x NAV. That is not my fault. That is a sign that I am doing an exceedingly good job. Why is Deprived attacking me over that point when he has the same problem himself with LTC-ATF? Is he stupid?

Nevermind the repeated number of times I have published in the TU.SILVER reports that people with large sale orders should contact me so I can fortify the bid. Mind that Deprived understands that you can't force people to pay a low or high price, and spouts this fact to anyone who will listen (such as this poor sap (https://bitcointalk.org/index.php?topic=228327.msg2543075#msg2543075)) when it suits him, yet, he will turn around and use the anti-logic to condemn me for manipulating the price of my securities. I will say it again: I do not like hypocrites.


10. He claims I'm stealing from my companies
"Buy-backs (likely undisclosed) to drain cash (if you ever get any) to your other companies/yourself." (etc.)
https://bitcointalk.org/index.php?topic=226650.msg2574325#msg2574325

It's a little ridiculous for Deprived to misread "..personal account..me..I.." as myself using company funds to buy back units at an inflated price, but what's really unbelievable is that doing so will somehow transfer(drain) money to myself. So let me get this straight. Using my personal funds to buy shares in TU.SILVER from people at above market prices, is somehow transferring company funds to myself. This guy is a lunatic.


11. He claims I attempt to mislead investors by stating BMF is the top performing mining stock.
"Historically he's always claimed that BMF outperformed ALL mining stocks."
"He still continues to compare BMF to just about anyhting other than other funds.  At present he's trying to compare it to PMBs, bonds etc - but not a single fund.  Where are the meaningful comparisons - to things like BTCInvest or LTC-ATF?"
https://bitcointalk.org/index.php?topic=226650.msg2583755#msg2583755

The problem is, I didn't say stock, I said fund. See the FAQ. No, BMF was not the best share issue of all time, that is ridiculous and it is not what I said. Deprived knows this and is misquoting me to make me look bad. Read the FAQ (and the original quote in the OP) for yourself. Furthermore, regarding mining bonds, which is the historical comparison I make, it is very clear that BMF performed better than the PMBs from GLBSE and that it has performed better than them both recently and on a long term basis. GIGAMINING and YABMC being the classic examples. When Deprived posted this, he was fully aware of this chart (https://bitcointalk.org/index.php?topic=229036.msg2580539#msg2580539), which he had deleted it from his moderated thread. He then made the above post. Unbelievable.

12. He claims it is difficult or impossible to determine how many outstanding shares exist for BMF.

The issue of how many shares are outstanding is an exceedingly simple one. The total number of shares is listed on our public disclosure page (http://tsukino.ca/bmf/holdings-nav). This information is contained in our FAQ, so it is inexcusable for Deprived to pretend there is any issue whatsoever regarding the number of outstanding shares.

He makes a number of other claims in this post, such as "the issuing account holds assets of Nyan/CPA as well as those of BMF". This is a favorite tactic of Deprived, yet we know he is lying because he is aware the final claims thread (https://bitcointalk.org/index.php?topic=133168.msg1418441#msg1418441) (and similar threads). For example, he is aware of the disclosure of assets via his participation in the NYAN liquidation auction. He has also been made fully aware that the assets of BMF have been moved to the usagiBMF account while the assets of NYAN/etc. are in a different account. So this is not merely a mistake -- he is deliberately lying in order to defame me.

He's right on one thing though -- I placed shares up for sale, and sold some, and that it is impossible to tell whether they were new shares or sold ones that previously pelonged to Nyan/CPA. Let us all take a moment to thank Deprived, aka Dr. Obvious. Of course you don't know who is putting shares up for sale or who they belong to. Only I know that information because only I have access to the list of investors (and burnside I suppose). You can probably glean from the total number of outstanding shares listed whether or not the company has sold any (and it has, maybe 860 shares, not sure) -- but beyond that this information is confidential or I suppose BTC-TC would e-mail a list of shareholders to every investor. Unfortunately for Deprived this simply isn't an issue. Don't you wish he would just go away and stop making a fool of himself? Request to halt trading on BMF? Don't make me laugh, after the last 12 lies he told about me and BMF, he has less than zero credibility, it's actually gone negative.

BTCINVEST has a line in the contract to the effect that bids will be placed at 95% NAV and the spread going back into the fund. I think that's a sensible move to facilitate exits and increase dividend for shareholders.

This is implicit (see clause #1). But I think I'll take your suggestion and add this wording to the contract. I believe it's a good idea to have it stated out in the open. This is how I manage TU.SILVER as well. (https://bitcointalk.org/index.php?topic=177747.msg2409594#msg2409594) I do think it's a good idea to allow investors to exit the fund if they need to sell in a hurry, without having to take a heavy loss.

Of course I can't always have a big bid up for the fund, so if anyone wants to sell once we re-list, send me a PM and I will work something out with you.

I'll have a look at #11 and #12 (edit: fixed). The issue with #5 is simple; it's not sketchy, it's how things are done. I guess I spoiled people by offering full, 24-hour updated disclosure of how BMF operated the last time around. The problem with offering that kind of disclosure is that trolls will use it to lie about what I am doing. That's just a fact. At the least I can justify the position by pointing out we will still be offering the most disclosure of any fund -- including LTC-ATF, Deprived's fund.


 :) Dollars are relevant because mining hardware is always priced in dollars, and the core asset of BMF is mining hardware. This is a fact I learned when I ran BMF last year. You simply cannot deal with things entirely in BTC terms when the price swings from $5 to $250, which is what BMF saw over it's history. And I think we did a very good job compared to other funds and other issues. I think I have a duty to represent that. It's a great advertisement. I haven't been dishonest, I have stated by how much we fell in BTC terms. What I am trying to do is show in what ways BMF can add value to the community and to BTC-TC. BMF (as with any well-run fund) adds value by tilting the odds in the investor's favor. But no one can turn a lemon into a lambroghini. If mining crashes, everyone is going down.

But what is really interesting to me is that long term, BMF didn't actually lose money in terms of real value (currency) but that it was able to use BTC as a payment system to get investor's money in and out of BMF. And that it was able to give them a positive return. So I will have to disagree. If you can't peg BTC to a (relatively) stable price, you have no right to complain that mining funds lost money in terms of BTC. It's like that guy that keeps demanding Butterfly Labs refund him in BTC from last year's orders. Yeah that would be nice, wouldn't it! Never going to happen.

Thanks for your comments odolvlobo. Your questions make me think and it's refreshing to see an LTC-GLOBAL moderator get involved.

You made a mistake; we don't calculate ROI in USD. Please see the FAQ, question #2, which states "...during the mining crash (around August 2012, IIRC) BMF fell 50% in value to 0.49 BTC". Now, I've created a FAQ topic which answers your concern; this side of the discussion is pretty much done.


Done (see FAQ Question #3).


Great idea. I will post this in "Business Description" on BTC-TC.


Interesting idea. Of course we don't bother to handle currency risks in the mining sector because a) no one does, and b) it's probably impossible. The only way to handle currency risk is to hold a significant portion as currency, and that is not the stated goal of BMF. But, I will think about this for a while, and, if you have any ideas I am all ears.


Capital management is covered in our contract (see #9 in the contract above). I've already requested burnside to change the contract on BTC-TC yesterday.

Quick update:

3. How can I get access to the Holdings & NAV page?
To make things simple and transparent we've opened our portfolios on BTC-TC and LTC-TC to the public. You can view them at:
BTC-TC: https://btct.co/portfolio/gbo5Dg==
LTC-TC: https://www.litecoinglobal.com/portfolio/fsA1Dg==

I've taken the liberty of moving over the re-list securities so you can see what we will be starting with.
As soon as the security is approved for trading, the shown assets will instantly become property of BMF.

My estimates indicate a 2.54% ROI and the ability to sustain a daily distribution payment of 0.00001 per share while investing 0.00001 as well. As a result I have gone ahead and scheduled payments for the rest of June. If you're a BMF shareholder, you will now start receiving daily payments.

Check it out, the schedule is for the next 15 days: https://btct.co/security/BMF (click on 'history' to see scheduled payments).

Thanks and have a nice day! :)

Quick update.

I've done some calculations and determined that the remaining value of BMF shares is going to wind up at approximately (edit: 0.0361) per unit. This doesn't include the 0.0873 already paid out and more to be paid in June. (Note: There are about 40 un-invested BTC in the account right now, and we follow a 50%-50% program of reinvestment and dividends).

As a show of good faith, until the end of the month I am willing to manually buy back shares at this price on a first-come-first-served basis -- which is what the market would be like if we could trade. Hopefully by that time we will list and I can just place the orders on the exchange like a normal person  ;)

If you think BMF is worth more than this, just send me a PM with how much you think it's worth, and we can discuss that. I'm also more than willing to discuss it here in the thread. So if I missed something, let me know! Thanks and good luck.

All BMF shareholders please vote. Please visit https://btct.co/security/BMF and click on "Motions".
-----
Motion for New Contract
Begins: 2013-06-11 13:48:15 (JST)
Ends: 2013-06-30 00:00:00 (JST)

This vote will run for the month of June.

In order to do things right, we should vote on our new contract. Please be aware that a YES vote also implies you wish BMF to relist, and a NO vote implies you don't want it to relist. This vote may or may not affect LTC-GLOBAL moderator sentiment. Please carefully review our new contract on the DETAILS page. You may change your vote at any time prior to closing.

I've also decided to permanently donate the current holdings of the usagiBMF accounts to BMF regard. This means that the outcome of your vote will not affect how much money you will recieve. After the 100BTC in assets I've donated to relaunch the fund, the current NAV/U of BMF stands at approximatelty 0.05. There have been 0.0873 already paid to investors.

Of course I would love to relaunch the fund, and I hope you can see I am trying to do the right thing here.

Management suggests that you vote YES.

Now that I've stabilized the value of the fund, it's possible to start publishing results again to see how we're doing. These are from the internal calculation which we use to internally price the units, and you can always verify the holdings for yourself by checking our public portfolios (see FAQ). I'll be updating these figures each week as well as reporting the dividends paid.

June 13th, 2013: 0.03610483 NAV/U (3,822 outstanding shares).

As a reminder, we are currently buying back shares at and above this price -- PM for details!


----

Edit: June 25th udpate:



No, let's. It will be very educational. A date of June 13th was chosen since it marked the date I published a NAV for the reconstituted BMF.

ISSUE	JUNE 2013	TODAY	CHANGE	RANK	NOTES
ASICMINER (G-PT)	2.75	3.5	27.27%	#1.
BMF	0.0361	0.0376	4.03%	#2.
COGNITIVE	0.3000	0.3087	2.90%	#3.	COGNITIVE is non-deterministic, like BMF.
LTC-ATF.B1	0.48	0.46	-4.17%
DMS.MINING	0.0183	0.017488	-4.44%		Start date June 18th
S.DICE (G-PT)	0.0027	0.0025	-9.42%
PAJKA.BOND	0.0880	0.0500	-43.18%
TAT.VIRTUALMINE	0.0073	0.003403	-53.38%		Start date June 13th on BitFunder, 20th on BTC-TC
B.YABMC	0.0125	0.0040	-68.00%

Quick update;

Thanks to the turnout of shareholder support, it seems we've won over one of the ABSTAIN votes to our cause.

Now, we just need the moderator who promised to vote YES if we publish a list of holdings. Should he or she vote YES, we will have five votes.

With that in mind, here again are our list of holdings which are published in our FAQ and on our webpage:

BTC-TC: https://btct.co/portfolio/gbo5Dg==
LTC-TC: https://www.litecoinglobal.com/portfolio/fsA1Dg==

The above are the entirety of BMF assets.


Actually it looks like they want it in spreadsheet form so JUST in case they're hinging on that I will provide a link to that. It will be here in a few minutes:

http://tsukino.ca/bmf/holdings-nav
(edit: it's up! (https://docs.google.com/spreadsheet/ccc?key=0AqcbXlA0lxjSdFVJWXBJVFB4YmZTQVdlSFIwOFV3Zmc#gid=15))

Hello everyone.

Thank you to my shareholders for unanimous support with a 80% quorum (I did not vote with personal or company shares).

Thank you to the LTC-GLOBAL moderators for voting yes.

To kick things off I have placed bids for 10% of the fund at an average price close to book value. I will be reviewing these bids and updating them as time goes by. My plan is to make better and better bids (raise the average) and make the market until liquidity is established. BMF will not sell any shares until we've bought back a significant number of shares from the market. So for example, someone currently has a bid above my highest bid, and BMF will not be selling into that bid order.

Second point. As we have just relisted, there are several aspects of the contract which we are currently unable to follow. Here are three examples. I expect that all contractual obligations will be able to be fufilled by the end of July 2013. As always you are free to ask me for more information, that's why I am here. I just like to keep things short and sweet in official announcements.

Example 1:
4. The fund is mandated to perform due diligence when investing.
We will be reviewing the assets of the fund and interviewing fund managers as time goes by, but we will not be able to complete an initial review for at least two weeks.

Example 2:
5. We publish our spreadsheets. You must request access, and you may not publish or distribute the information to any other party.
We currently have the books open to everyone without restriction. At some future time, we may resume our contractual obligation. Until then we feel an open books policy is best. We will review this policy on a monthly basis.

Example 3:
6. An independent financial advisor will be hired to provide oversight and ensure that things are running smoothly.
Anybody want a job? :) We'll post an official announcement later.

There are other minor points (for example, the average price right now is zero, so can I buy the fund back for 1.1 times zero? No  :D don't worry) but that's the deal right now. Please leave your questions and concerns right here. Thanks and good luck.

=====

ISSUE	JUNE 2013	TODAY	CHANGE	RANK	NOTES
ASICMINER (G-PT)	2.75	3.5	27.27%	#1.
BMF	0.0361	0.0376	4.03%	#2.
COGNITIVE	0.3000	0.3087	2.90%	#3.	COGNITIVE is non-deterministic, like BMF.
LTC-ATF.B1	0.48	0.46	-4.17%
DMS.MINING	0.0183	0.017488	-4.44%		Start date June 18th
S.DICE (G-PT)	0.0027	0.0025	-9.42%
PAJKA.BOND	0.0880	0.0500	-43.18%
TAT.VIRTUALMINE	0.0073	0.003403	-53.38%		Start date June 13th on BitFunder, 20th on BTC-TC
B.YABMC	0.0125	0.0040	-68.00%

Hello;

There is a pressing issue that I face with BMF today which I have chosen to come to the community for advice about.

There is no market for BMF shares. I don't mean that no one wants to buy them. I mean no one wants to sell the shares they have. I know the shareholders are out there because of the massive turnout of votes we got on the last motion. I've tried to entice selling by placing bids at 10% and 20% above NAV but that doesn't seem to do the trick. What's worse, there is a single bid for 10 x 0.5 up. That's more than 10x what our NAV is right now. God forbid someone buys at 0.5, I would just feel bad. That isn't my ask.

So unless anyone has any comment why I shouldn't do it I think I will place a wall up at a bit over NAV and use the cash to buy back more shares. At least that will allow anyone who wants to get out to get out faster. I'm beginning to think it's the right thing to do, I'm just concerned it's a little too soon after re-listing. I had really wanted to buy back a significant number of shares first.

Comments welcome. Good luck!

You should not be doing this for the most fundamental reason:

You are offering to pay 110-120% for 100%. By doing this you are destroying the underlying value for shareholders.

Unless you are putting up the bids using your own money, instead of the funds money, and then it would be silly but not as bad as wasting the fund's money on buying back overpriced shares. Do you need to get shareholder approval before selling more shares?

Dear Investors;

I just got back from surgery. That was fun. they were supposed to knock me out for it, but they didn't. I was awake, but I didn't feel anything. They showed it to me after the surgery. It looked like Chinese food. I'm allowed to say that because I live in Asia :p The doctor gave me happy pills. So that should answer anyone's concerns as to my well being (or ill being); I have happy pills. I'm fine.

Regarding BMF; A few quick observations, and a few quick updates.

1. No one's selling.
--> No one seems to be selling into company bids so I have reduced company bid from approx. 600 units to 50. This will change in the future appropos to demand.

2. No one's buying.
--> Actually someone bought a few shares in the previous days. But overall I expected volume to be higher. *shrug* I'm willing to work with what I have.

3. BMF's assets: A real mix.
--> We have a large amount of fixed interest ("face value") bonds such as BTC-BOND, LTC-ATF.B1 and B2, etc. Some people have criticized me for investing in those. While it's true we hold a lot of fixed interest (and a noticeable investment in just-dice) the reason we hold them is because those are the assets I donated to restart the fund. This is the plan; start from a position of strength (fixed-face-value, fixed-interest) and move into the riskier mining as it is safe and prudent to do so. If you watch our portfolios (they are open to the public) you will notice we are slowly accumulating mining bonds and mining companies. This is a much safer plan than I employed during the GLBSE days. In particular, we will initially favor fixed-interest like FIMB or non-deterministic companies like BASIC-MINING or COGNITIVE.

4. Hedging policy: Second thoughts.
--> All this has the effect of allowing us a slight hedge against the BTC price. This worked for TU.SILVER and I aim to make it work for BMF. I am waiting to see which way the price will move. It's my hope that BTC will go up, and that the fixed value investments will pay off. Until that time we will accumulate mining companies and mining bonds. Such that if the price falls those assets will strongly increase in value. I believe this is a safe and prudent strategy, but of course I am open to other ideas. Any comments from shareholders are welcome.

--> Due to our current asset mix and the complete unreliability of VIRTUALMINE and MINING (losing 50%+ in just 2 weeks) we've considered investments in more reliable securities like RTM and PAMB. TradeFortress' excellent BTCINVEST fund is also on the list, pending review. Although assets like RTM and PAMB have also been adversely affected by the new "virtual" mining assets (assets without any actual hardware) it's my experience that assets like these, run by long-term and very trustworthy members of the community, tend to fare a lot better than these new startups. Also looking strongly at FIMB and COGNITIVE again, because Garr has shown himself to be humble and stalwart in the face of crisis -- which we like.

--> The long and short of this is i'm planning on keeping a decent chunk of the fund in fixed interest/face value simply to preserve capital and ease into mining over the medium term. I don't want to risk another mining crash. I'd also note that much of the fixed interest is already based on mining (LTC-ATF, FIMB, etc.) We will move into daily interest bonds like RTM and PAJKA.BOND first, to retain a strong income stream.

5. Increased daily distributions
Although the HWM is down from the last couple of weeks due to failed investments in MINING and VIRTUALMINE, they do still pay a very nice dividend. So I increased the daily distributions we pay for the next couple of weeks. This is a policy of allowing the shareholders to decide what to do with their money in uncertain times. If they feel BMF is the place to be, I'm sure they will buy more BMF. But I think it's better right now to give shareholders the option. Later on I might take a slightly larger percentage for reinvestment but not today.

I remain available to answer any shareholder's questions. Just send me a PM. I'm particularly interested in anyone who is interested in providing oversight for the fund. We still need to hire a financial oversight advisor.

 ;D Actually I would not mind at all if that's where the divs were coming from. But we only hold 130 BTC-BOND right now. At this stage I would prefer to hold about 1,500 (10%-15%) of the fund in BTC-BOND, but we will have to move there slowly.

Some facts; BMF pays 0.03567 total dividends per day over 2378 shares. This is just under 0.25 btc/week. Backing this are the following income streams:

1. DMS.MINING: 0.36184492
2. DMS.PURCHASE: 0.17039073
3. PAJKA.BOND: 0.08674834
4. ESECURITYSABC: 0.0716
5. YABMC: 0.06325615
6. BASIC MINING: 0.01128653
7. BTC-BOND: 0.000576
8. LTC-ATF.B2: 0.00035
9. TAT.ASICMINER: 0.00048198
(actual income received into the BMF account over the last 7 days except in the case of ESECURITYSABC which is an estimate).

Income: 0.76653465
Distributions: 0.24969
Reinvestments: 0.51684465 btc / week

This works out to around 0.5%/week, just with what we have invested on BTC-TC. I don't expect mining income to remain so high for very long which is why I am slow to pay out more; although I am a little torn over that. Looking at these figures afresh for the first time in weeks I think I might be able to pay out a little more than we are now.

BMF Share Buyback Program
July 27th, 2013

In addition to increasing value by investing in the mining sector and carefully trading our holdings when appropriate, I have decided to give our loyal shareholders a perk in the form of a buyback program. During the month of August:

1. The company will not sell new shares of BMF into the market.
2. Bids will be placed for a limited number of shares between 100% and 120% of the company's NAV.
(You can see all our assets on our holdings and NAV page. (http://tsukino.ca/bmf/holdings-nav))

I cannot give you advice on whether to buy or sell BMF but I can guarantee that this offer represents a significant premium to the value of our holdings.

A big thanks to everyone who helped us get this far!

How can you buy back at over NAV? Wouldn't that just mean that 80% of the shareholders get all the money, leaving 20% with worthless shares?!?

Not at all. In theory, yes, if we were to attempt to buy back every single share of the company right away, we would not be able to do it. But that's not what I am planning to do. I've calculated what I believe is a fair P/E ratio for my company and I am buying back shares at or below that ratio. As a simple example, let's say we plan to make 20% on our assets, and we buy company shares back out of free cash for 110% of NAV. It may look like we're giving money away but we're not. The assets will still make 20% of the old market cap of the company, but now that income will be spread across fewer shares.

Example; company A, worth 1 BTC per share. Market cap goes from 1000 to 1020 BTC (a 2% increase). Before this happens the company buys back 20 shares for 22 BTC (110% of NAV). While it looks like the company is overpaying for it's shares, the result at the end of the month is 980 shares outstanding and a 998 BTC market cap -- a per-share gain of 1.84%.

The following month, assuming the results are the same, the company would have 960 shares outstanding and have a market cap of 996. Let's fast forward one year and see how this ends up. After 12 months, the company would have bought back 240 shares and have a market cap of 976. At this time, one share would be worth 1.284 and one month's income (20 BTC) would represent a gain of 2.05%. Over time it is clear that this strategy will outperform simple reinvestment into the company.

So while for the average investor it seems like BMF is throwing money away, what we are really doing is implementing a long-term strategy to increase our value. The value of the shares will increase, and our distribution payments will increase as well. I believe that our investors can appreciate this strategy both in the short term and in the long term. The reality of the situation is, people have shown themselves more than willing to place bids above the company buyback bids. But what is even more interesting is that no one seems to be taking the bait -- no one is selling into the bid, even at +20% NAV.

You are missing something very important here. When company B earned the dividend their NAV rose to 1010/1000 = 1.01 BTC/share. So if they buy some shares back at 1.01 they are only paying 100% of NAV, not 101%. To buy back at 101% they would have to pay 1.0201 BTC/share.

No, there isn't, you misread what I wrote and are assuming that company B bought back shares before they received income (presumably by selling some BOND-X). Please see the highlighted sections in my response to Peter (above) (https://bitcointalk.org/index.php?topic=229036.msg2828765#msg2828765); your mistake is similar to his. The point of Company B was that they were buying shares back after they had received income from their investments. The point of company C was that they had bought back shares out of cash on hand expecting to receive those payments.

"After the interest payment, there are 990 B shares, and 999.799 BTC in assets (989.9 BOND-X assets plus 9.899 BTC in interest).  The remaining B shares are worth 1.0099 BTC when they could have been worth 1.01 BTC."

Company B was described as buying back shares "at their new nav" (1.01 BTC). So at the end of the month there would be 990 shares and 1010 - 10.1 (999.9 BTC) market cap. The remaining B shares would therefore be worth 1.01 BTC. That was the original math which should be clear. In short, if you buy back shares for NAV you do not change the NAV of the company. The point of the "psychological impact" comment was that investors may not realize the value of Company B (or C) was 1.01 BTC -- and may feel that by buying shares "above nav" was unsustainable. The point of comparing companies B and C was to show precisely where and when investors were most likely to make that mistake; to show that the NAV does not suddenly jump from 1 to 1.01 BTC; but that there is some intangible value which must be assigned to the expected income of an asset. And further, that if this income was not accounted for it would lead to an undervaluation of the company.

Anyways thanks for your comment, I think after reviewing what you and Peter have said the examples needed to be simplified to get the spirit of my point across. I've gone back and done that, please let me know if there are any further issues with the math :)

I don't see a problem with that though.

Continuing with the previous example, if the company never reinvests it's 20 BTC a month income, that income will start to become worth less and less on a percentage basis. The first month 2%, the next 1.96%. Then 1.92%. After just five months we're already down to 1.82% -- lower than the payment made in the first month of a repurchase program. So clearly it's bad management to simply hold the BTC. This thought experiment shows us we need to reinvest at least some of the money if we would like to maintain a stable NAV and dividend payment program. The question is, invest where? If we can't find anything that pays a stable 2% per month, there's no shame in repurchasing company shares. Doing the math again, after 5 months let's say the company has made 100 BTC and repurchased 100 shares at 1.1 BTC/share. They would have 990 BTC market cap and 900 shares. This would be a gain of 10% per share. The best part however is that the 20 BTC is no longer a 2% gain but something slightly more. In this case it's clear that reinvesting into the company is very much better than just sitting on the money.

Of course I'm not suggesting the best strategy is always to repurchase company shares. In BMF's case in particular, if I could find an investment that pays more than what we make it would be wise to invest in that instead of repurchasing shares. And I do in fact invest in a wide variety of assets -- most recently I picked up a few more shares of B.YABMC, and another few hundred shares of ACTIVEMINING. We've also bought some LTC in order to get more LTC.MINER and support our friends in the Litecoin community. So we invest in other assets all the time; I just happen to feel that the market has undervalued BMF and that buying a few "shares of opportunity" here and there will increase the long-term profitability of the fund. Again I will point out that there are plenty of market participants who are willing to place bids above what I have placed from the company. I'd actually prefer people sold into my bids but they're not doing that.

How are you purchasing 100 shares at 1.1 BTC/share with 100 BTC?

I'm not. In the example, the company had 1000 BTC, made 100, and spent 110. The market cap was then 990 BTC, as stated above (1000+100-110 = 990).

Then you have to think harder. If you want to do things fair, then it is fine that you are buying the shares so those people get the money now instead of later. But they should get LESS money now than they would get later, the shareholders who wait it out should have MORE because other people decided to cash out early. It is nice for those people who sell the shares, but it is at the expense of the other shareholders who get shafted because their money is used over a longer time and has a lower yield.

I am the fund manager, I am making the call, and I am willing to accept responsibility for my decisions. I'm willing to explain to you why I am doing what I am doing. I'm even willing to listen to a valid argument or a better solution if you have one.

But all I am getting from you here is that you are oblivious to what's going on. You said "If you want to do things fair... they should get LESS money now than they would get later..." but I've already said that's what we will do. I said, "I've calculated what I believe is a fair P/E ratio for my company and I am buying back shares at or below that ratio." (https://bitcointalk.org/index.php?topic=229036.msg2828221#msg2828221) This goes all the way back to the post where I gave the examples featuring Company A. When you keep raising issues like this it looks like you haven't even read what I wrote. It's actually a little disrespectful. You should put some effort into it before accusing me or assuming I haven't thought things through properly.

BMF Letter to Shareholders
August 1st, 2013


1. July Results and Guidance for August 2013
Our market cap as of today is 146.23 BTC. Our records indicate an expected monthly income of 7.62 BTC based on current holdings. This represents a return on investment of 5.2%.

As a result, we are increasing dividends by 6.7% this month, to 0.00048/share over 30 days. These payments have been scheduled in advance. The total is 1.15 BTC, which will leave us approximately 6.47 BTC to reinvest.

Our book value is currently 0.3107. We have experienced a decline recently due to negative performance in ActiveMining; over the course of a week it has gone from 0.0025 to 0.0095, to 0.0038 and back up. Our investment in ActiveMining is currently 9.16% of the fund, so it may continue to have a significant impact on our book value going forward.


2. Management Fees
The management fees of 5% (0.381 BTC) have been donated back to the company in order to strengthen the share price. Management doesn't feel that it is appropriate to take management fees until our book value is above our IPO price of 0.036.


3. Investment Targets
We believe that there are no legitimate investments with a predictable ROI greater than the 5.2% which we currently enjoy.

There is also the complication of our deprecating and wildly volatile mining assets. TAT.VIRTUALMINE and DMS.MINING have fallen by over 60% since our IPO on June 13th, and our recent investment into ACTIVEMINING has been shown to be a short-term mistake. This has had a significant negative impact on our share price (we have fallen from 0.036 on June 13th, 2013 to 0.031 today).

Due to these issues we will continue to reinvest in face-value assets (preferably mining-related, such as FIMB) during August. Most importantly, we will pursue a share repurchase program.


4. Share Repurchase Program
Today BMF faces several challenges on the road to success. Management speculates these challenges have led investors to undervalue BMF by a significant margin. In order to turn this situation to our advantage, Management has decided to repurchase a limited number of company shares in August. It goes without saying that as a result, no new shares will be sold into the market for the duration of August.

To implement this buyback program we have placed bids at (and slightly above) our NAV in order to defend the share price and show our committment to investors. I had originally intended to offer a repurchase at up to 20% of NAV, but after some investors showed concern on our discussion thread I will limit bids to 5% above NAV for now. Based on an expected income of 6.5 BTC per month, we will attempt to repurchase between 100 and 200 shares in this way. We feel this will have several positive effects:

o Shareholders will be protected from panic-selling;
   -- if someone panics and sells, they will get a fair price
   -- if someone needs to sell for other reasons, they will not be forced to sell at a loss
o LTC-GLOBAL moderators will have more evidence we are "trustworthy".
   -- We're not sure why so many of them voted "no" or are abstaining, but actions like this should help them realize they should have voted YES a lot sooner.
o Other investors will take this as a sign of strength.
   -- investors may be willing to pay more for BMF if they think it's a stronger company.
o We expect to gain value on a per-share basis by reducing the number of outstanding shares.
   -- we will attempt to maintain the market cap at or above 150 BTC.


5. Response to LTC-GLOBAL moderators' NO and ABSTAIN votes.
Two of the LTC-GLOBAL moderators who had voted YES to get us listed have changed their votes to ABSTAIN without any explanation. There are now five ABSTAIN votes for BMF, and three NO votes.

We remind the LTC-GLOBAL moderators that it is no longer their job to approve or disapprove of our listing on BTC-TC. It is their job to offer guidance on how well are keeping the Asset Issuer Terms of Service, in particular how well we live up to our a fiduciary responsibility to the shareholders. In that respect, negative votes which do not offer constructive criticism are not just useless, they're negligent. If you are a LTC-GLOBAL moderator, please recognize your responsibility and take the time to do your job properly. BMF places a huge value on comments from our shareholders and from LTC-GLOBAL moderators, and it's very frustrating to see the people who are our gatekeepers act this way. You've voted YES to this company and this contract -- now it's time to work together to make BTC-TC a better place. If there's some deficiency in how we are fulfilling our contract, it is your responsibility to point it out so that we may fix the problem.


6. Upcoming Interviews & Analysis
BadBitcoin (James Sutton) has not returned his interview yet. We have therefore scheduled interviews with three other companies which we hope to complete this month.
During the time where we are not preparing interviews, we will take the time to perform detailed analysis of various companies on BitFunder BTC-TC, and we will post these to our disclosure page (http://tsukino.ca/bmf).


7. Usagi's health problems
For those of you who did not know, I was admitted to the hospital for surgery on July 13th and was discharged on the 18th.

This is related to my prior hospitalization in October 2012 for several weeks after GLBSE closed -- it's my kidney stones. I feel weak and a bit loopy due to the medication. I will continue the medication until approximately August 6th. I apologize for not being my usual self and for taking a bit longer to get things done. I don't believe the fund has suffered as a result of this problem, but for the record I don't anticipate any further problems of this nature. To health and long life!


8. Request for Comments
Are you a shareholder? Do you like how we've been doing so far? Do you have a suggestion?

Tell us!

Our shareholders are very important to us. Please e-mail comments and questions to usagi at usagi@tsukino.ca. Yes, your voice counts. We respond to all shareholder inquiries and often take serious steps to change things based on shareholder requests. For example, just recently we completely re-did our Holdings & NAV spreadsheet to use a script that automatically pulls values and balances from BTC-TC. This was done because of a chat we had on IRC with one of our shareholders.

Good communication is important. One thing a BMF invetsor will never tell you is that it was difficult to contact management with an issue or to resolve a complaint. So if you have any problems with BMF please let us know so we can take steps to solve your problem, We are here to serve you!

Happy investing!

Interim Update:

The sale of hotwallet.ca, all code and intellectual property has been completed. I've also been hired on a short term basis to modify the site. The payment for this work will not be very much, probably about the same as was paid for the site.

I have donated the proceeds from this sale to BMF. The NAV has increased by approximately 1.1%.

When the modification work has been completed I will post another update here.

Happy investing!

Request for Discussion: Company Policy

BMF's share repurchase program is not going well, in the sense that very few investors want to sell shares back to the company. When we decided to offer a buyback program and repurchase a limited number of shares, we were attempting to give investors an incentive to sell their shares back to the company. Instead, it seems that the opposite has happened. Investors have taken the buyback offer as a sign of strength and have been placing bids above the company's repurchase bids. This was likely done in the hopes that the company would buy back the shares at a price higher than the already inflated price they bought their shares for.

While we can justify buying back a limited number of shares at a slightly higher price than our NAV as a promotional event, we cannot justify a price beyond that suggested by our cashflow. In fact, due to comments from investors last month, we have decided to limit the buyback program's bonus further, to just 5% over NAV.

I am looking for additional suggestions. We would like to encourage investors to sell their shares back to the company however there seems to be no way to encourage investors to do this. What ideas do you have for an incentive or bonus we can offer to investors choosing to sell shares back to the company? Do you feel a 5% bonus is justified? If not, what other deals or offers could we propose?

I'm unwilling to let the company languish, and growth is indeed a policy of the company. So on the surface an investor would want to hold BMF. The main issue is not to damage the company by placing too great a price on the repurchase of shares. All that is required is a fair deal, an exchange that wouldn't leave BMF worse for wear but would allow some investors to satisfy their goals with BMF in a fair and equitable manner. Please discuss. If your proposal is chosen, BMF will be pleased to offer you a consultancy fee of 10 shares for help discussing your plan and implementing it.

Thanks and good luck!

Ok, after discussions with a few other investors/asset issuers on IRC I think I have a solution which is fair to all. Proposal:

BMF offers investors a chance to participate in a purchase warrant program. For each share sold back to the company at fair market value, the investor will receive two purchase warrants with a strike price equal to the fair market value of the company at the time of sale. These warrants operate like calls. It would be done manually so investors would have to contact me manually, either in email or here (via PM).

What this does is allow investors a very special, unique opportunity which provides:

 i) a financial incentive to sell;
 ii) without damaging the financial position of BMF.

What's the incentive? Simple. Should the price of BMF fall, investors will have made the right decision to sell and can walk away with more money than they would have had if they held on. Yet should the price of BMF rise, investors will have the ability to leverage back into BMF using their purchase warrants. In short, the purchase warrants allow the investor the option to reverse their sale at any time, but, should it be to their advantage, buy more shares of the company at that price.

From the standpoint of BMF this is also a good thing. One, there's no harm in buying or selling shares at NAV. If we sell 100 shares at NAV, buy 100 shares at NAV, or whatever, it does not affect the NAV and won't affect existing investors. Secondly, because we issue two purchase warrants per share, we have the prospect of raising capital for the company. Since this is done at NAV, it won't affect the value of the shares, but it will intangibly increase the value of BMF as a whole because the total net cashflow will have been increased. This makes managing the fund easier because we will have more purchase options. A stronger cashflow makes repurchasing shares out of income even more attractive for the company as well.

In short this looks like a win-win proposition. And the best part is, investors can choose whether or not they want to participate. If someone feels it's not to their advantage, they can choose not to sell their shares back to the company and the value of their shares and the income they receive will not be affected.

If there are no objections I am considering posting an official announcement mid next-week. I will run a motion if anyone (shareholder or not) thinks this could be a bad idea for the company. This discussion time and question and answer period is the time to raise your voice if you feel this is a bad idea, it will be too late after I post the announcement.

Do the numbers sound right? I was also considering doing one and one-half purchase warrants per share, but 2 seems like a better number. I might go as high as three depending on any comments I receive.

@Usagi,

There is an inherent risk associated with allowing others to manage your BTC-denominated investments for you. Therefore, the reward of using a managed investment fund must far outperform what an average investor could achieve with 15-30 minutes a day. What I would like to see from your fund (as well as others) are performance metrics which compare the fund's performance to other investments:

• #1. ASICMINER: It's risky to place all your eggs in one basket, but how does your investment vehicle compare to simply holding ASICMINER-PT?
• #2. CoinLenders' CD: It is also inherently risky to place your coins with an individual (even if they are reputable; pirateat40 was, after all, reputable until he wasn't)
• #3. Market CAP adjusted holding of all mining stocks (excluding  PMBs): This is the true performance metric. Your fund must at least perform as well as a market-cap adjusted holding of all available mining securities (ASICMINER, BASIC, COGNITIVE, ActM, NastyFans, LABCOIN, BTCGARDEN, etc.)

 

#1 and #2 are incredibly risky sole investment strategies, but as an investor I would like to see funds that approach their returns while securing against that risk. I have excluded PMBs from the calculus of #3 this because they will decline in value over time, but perhaps with active management they are worthwhile, and this, at least, may be one way in which a fund might outperform #3 and keep pace with #1 & #2.

I know smidge has tried to create an index (DCX (http://dcx.smidge.com/)), but I would like to see other fund managers attempt to create objective performance metrics for their investments as well.

I look forward to your response.

I really like that idea, but it turns out to be a lot of work -- much more so than it seemed at first glance.

For example, ASICMINER exists in the form of at least five separate pass-through vehicles, with different weights (ex. AM1 vs AM100) and all pay a slightly different rate. Their market cap together is about 180,000 BTC. That underlines the first problem I encountered, a the wide disparity in market caps. For example, PAJKA.BOND, B.YAMBC, COGNITIVE and DMS.PURCHASE aren't even worth 1,000 BTC put together. So any meaningful index would have to be weighted subjectively, perhaps in the way someone might tend to invest in that company. Say, equal weighting. But already we have created what amounts to a meaningless statistic, because it is obvious by the market caps of the securities that people do not invest equally in these securities. In that sense, a fund like BMF which invests in many securities is already a kind of index, although probably not a very useful one, certainly not one which could fulfill our goal of rating our relative performance.

I think the most meaningful kind of comparison you can do is comparing one security to another, one by one or in groups, and sorting them based on one or more statistics that interest you. For example avg price or (recnt price) over the last 30 days. On July 3rd, BMF had 200 volume at 0.0356. On August 3rd and 4th I recorded a significant volume of trades between 0.04 and 0.043. This represents a gain of about 10%. On the other hand, DMS.MINING was trading at 0.02 in early July (1st to 3rd) and is now trading at about 0.0085 -- a loss of more than 50%. COGNITIVE on the other hand, was trading at around 0.35 on July 1st, and has now reached 0.045 today -- a gain of about 30%. Then again, they had been trading in the high 0.90's just two weeks ago. So how much did COGNITIVE gain? How much did DMS lose? It's not always so easy to tell from just one number.

I've gathered that that the situation we find ourselves in as investors is nothing if not chaotic. It's difficult to find a stable place to invest, and I have a feeling that an index would not be very useful in and of itself. Lending is also exceedingly risky, I won't invest with CoinLenders because I just don't have the stomach for that level of default risk. For all these reasons I created BMF. I wanted a stable place to invest where the average investor could put their bitcoins and at least not have to worry about losing everything in a flash crash. A really great example is the recent ASICMINER crash from about 4.8 to 4.1. BMF didn't lose any value when ASICMINER dropped all those points, we were able to stand our ground.

Anyways I did have a go at creating an index, and although I don't think it works as we well as it could, it seems to say that buying one form of ASICMINER is better than any other:

issue            : relative value
TAT.ASICMINER      : 4.2347
AM1            : 4.190
AM100         : 4.1684
ASICMINER-PT      : 4.1317
G-ASICMINER-PT      : 4.0740
Weighted Average   : 4.1056

I'll look into some indexing strategies and will try to come up with something better later on.

Thanks again for the suggestion,

Further to the index idea, I've created a list of every single mining issue on BitFunder, BTC-TC, and Havelock.

I've calculated market cap for each company, which amounts to the total amount of money the community has invested into mining at any given time.

I will work on calculating BTC/mHash for each company and creating a weighted index for that as well.

For now, here is the MINING MARKET CAP INDEX, courtesy of BMF:

August 5th, 2013
AllCaps   BMF.MMI   4,407.16
LargeCap   BMF.MML   3,619.45
MidCap   BMF.MMM   667.89 (Note; MidCap is approx. 2,000 to 20,000 BTC market cap)
SmallCap   BMF.MMS   119.81

I'm particularly open to changing the delineation of what a mid cap miner is. Do you think it would be more appropriate to separate issues which are deterministic vs. non-determistic, vs. those who are startups?

Sorry to clarify. Can you explain the dividend history being queud and cancelled and only a few being payed out and small ammounts on the same day. I am an investor and am curious.

Hi strideynet, thanks for the question.

In our monthly report, you can see that we have increased our daily dividends by about 6.7% in August. They should now pay 0.000016 per day.

However, as this is the first time I scheduled dividends, I accidentally scheduled them by adding a fixed amount. I noticed the problem after we started buying back shares. I noticed the amount was slowly creeping up, which happened because the same amount was being spread over a fewer number of shares:


As you can see, as we started buying back shares the amount of dividends per share began to increase. This wasn't a problem because the cashflow of the company remained the same (I had bought back shares out of income from our investments).

But when I transferred NYAN.A's shares to a separate account to help keep track of the different assets of NYAN and BMF, I realized it was going to be a problem:


I happened to be managing the portfolio when the payment for 0.00000813 went through and I immediately scheduled a payment for the balance (0.00000787).


This totaled 0.000016 per share. I then went back and canceled all the total amount payments and rescheduled them to be on a per-share basis.


Right now, everything is scheduled properly, and there shouldn't be any more problems with the dividend payments as we buy back shares. I'm sorry it was so confusing, I considered making an announcement, but there was no harm done so I let it be. I hope that answers your question. Thanks for investing with us :)

Chat soon~

Sorry. You are closing the security? Why are you buying back? I'm brand new to investment and I saw your managed Porto and got in.

No, I'm just buying back shares to increase the net cashflow per share. I just don't feel that the market is properly valuing shares of BMF. Essentially, if I reinvested the money somewhere else, I would have to come up with a place that makes more than 5% a month (BMF's ROI is 5% a month) and I can't find a place that does that. Until I do, I will buy back shares of the fund.

It has the secondary effect of providing liquidity; investors know that it's safe to invest in BMF because the company will repurchase shares at a fair price.

Okay that makes sense. Thanks for updating me. Might buy another set of shares later. Just read about the kidney, nasty man nasty. But you are off meds now right?

To post a statistic for interested investors.
roughly 10 shares generates 1 cent a day. Doesnt sound like much but it is steady and i think a good idea.

Quick update; news posted to BTC-TC (https://btct.co/security/BMF).

Leopards be Leopards. MPOE-PR has accused Burnside (i.e. BTC-TC) of being a fraud and a scammer. We find the comments as ludicrous as when they were lobbied against us. Don't you, as well? It's okay, hindsight is 20/20. No offense taken.

On the note of leopards and their spots. Deprived's comments against us on reddit and bitcointalk.org. Why? Again, competition. Deprived calls his investors idiots and retards, so he needs to make us look like total frauds in order to get people to invest with him. Remember, Deprived based his entire reputation on taking me down last year. He failed and was shown to have lied. So that leaves him on very shaky ground. But leaving that aside for the moment let's play a game to see if he's right and you are a retard. You do the math on what % you lost investing in DMS.PURCHASE and/or SELLING. DMS.PURCHASE went from 0.03353( (August 1st) to 0.01588 (September 1st). SELLING fell from 0.022 to 0.0128175. Personally I don't think you are a retard. I think you can do the math. For the interested reader, compare and contrast Deprived's performance as a fund manager with Usagi's.

There's not much to say, I've been told my quite a few people that no one listens to Deprived's crock anymore and I'm a bit too busy making money for the fund to get involved with it these days. Once again thanks to all and let's make some money this month!

I (as a random DMS investor) didn't lost a satoshi with DMS.PURCHASE, DMS.MINING and DMS.SELLING.
The value of PURCHASE and SELLING is falling because they pay the difference (and more) as a dividend, read through the DMS contract for more details.

Aye, but as I said, do the math and compare. For example, PURCHASE went from 0.03353 to 0.03408678 (in current price + paid). That's a gain of just 1.66% -- less than half of what BMF achieved this month. It's pretty straightforward. I'm not calling Deprived a scammer or a fraud. That's what he said about me. The problem is that facts and reality are not Deprived's strong point. Maybe if he stopped trolling the forums and started actually working for his investors instead of calling them retarded idiots, he would be a competent fund manager. As it stands now he's second rate. If you want to be invested with a guy like that, well, enjoy your 1.66% a month. He's a crackpot. He claims to make over 10,000% a month that he apparently keeps for himself. You might want to ask him about that sometime.

Why aren't dividends being paid?
Just curious as to what happened to dividends, i'm not sure if I missed something.

If you're a holder, it doesn't matter if dividends are paid today or tomorrow from the standpoint of how much you will get when they are paid, and from the standpoint of capital gains considering the book value. However the market value may fluctuate significantly. My suggestion is to watch the market fluctuations and "buy low sell high" considering our published financial information, which is accurate. The market OTOH does not know what it is doing, clearly, considering BMF.

I can see how you might have gotten used to dividends "today". We were one of the first companies to run daily dividends as a promotional event way back when GLBSE was still around. We still frequently run month-long events where we pay daily dividends. August was a great example of that. But we remain a strongly focused towards monthly statements. Monthly reports make more sense from an accounting perspective. Our contract states, "2. Payments are due on or before the 7th of every month for the previous month’s trading and investment activity." So you can expect payment in full for September's income on or before the 7th of October. You'll actually receive payments long before that date, the extra time is just breathing room.

Was there a reason you liked "daily dividends"? If you bought enough shares to reinvest a share a day I can see how going back to our contract after the promotion would feel kind of slow and pokey.

p.s. thanks for the concern stridey. Yes I'm fine now, I just need to start exercising again! My job allows me freedom in the mornings so I have plenty of time for that now. I'll also be practsing my piano now. My daughter is finally in school so it's a great time for me to explore freedoms I didn't have before. I'm having lunch much more often with my wife right now. We went out to a nice cheese steak place yesterday for example. The food was so great I ordered a second sandwich. Getting back to that exercise comment above...... Oh well, at least my appetite has improved.

Chat soon~

Realistically, it doesn't make a difference whether the dividend pays daily or monthly. I honestly simply liked the feel of it being a daily payment more than a monthly one because I can simply see the progress of dividends 'now' as opposed to 'later'. But thank you for the response! It really helped clear up that bit of the contract for me as well.

News Flash: LTC-ATF buys controlling stake in BMF
September 17th, 2013

TOKYO (bitcointalk.org) -- In a suprising all-cash deal which stunned investors sources reveal that LTC-ATF has obtained controlling interest in BMF. Deprived now holds more units than any other investor in the fund. "I have no intention of interfering in how it's run," said Deprived earlier today, "[unless usagi does something stupid]". He continues, "I'm in it to make a profit not just to screw [usagi] around."

As a vote of confidence, Deprived has committed not sell his shares back to BMF for a minimum of two months.

Commenting privately on the deal to investors, usagi quoted famed investor Seth Klarman, who once said "Risk is not inherent in an investment; it is always relative to the price paid. Uncertainty is not the same as risk. Indeed, when great uncertainty – such as in the fall of 2008 – drives securities prices to especially low levels, they often become less risky investments." Continuing, "I'd speculate BMF is a lot less risky as an investment today than it was a year ago." "I think the deal is great for existing investors. In fact, I think you will be pleasantly surprised where I take the fund with this money. Keep an eye on it even if you don't decide to invest right now, [...] it [BMF] may be something you are interested in later."

Under the terms of the private placement, each share was granted an additional assignable purchase warrant for one share at 0.032. These warrants expire one year from the date of purchase (they will expire as at September 17th, 2014 -- however the repurchase clause expires as at March 17th, 2014). These warrants imply that the bid price of BMF will not rise far above 0.032 since warrant holders can immediately exercise their warrants and take the price difference. For example, if the bid for BMF rose to 0.035, each warrant could be exercised for 0.032 and the share sold for 0.035, netting a profit of 0.003. In response to accusations of giving money away and ruining the future prospects of existing shareholders, usagi commented "There are a limited number of warrants. If the price is going to rise to 0.035 or 0.04, even if all the warrants are exercised the price will still be higher than 0.032. Investors will still make money." usagi then placed his fat-cat cigar into the ashtray and took another sip of whiskey. "I mean, come on. Volume was almost non-existant," he mused, munching on some mixed nuts. "The fund was always tightly held. Now, instead of 3 shareholders owning 75% of the stock, four shareholders own 75% of the stock. Big deal. The NAV didn't change. We were able to position ourselves more strongly. This deal is great for the fund and I think investors will agree." Deprived was quick to respond to this sentiment. "I'm still not convinced it's good for existing investors - but as I'm not one that doesn't bother me." In regards to what his investors might think, he speculated "Expect I'll take some serious flak for it ... but I've never really cared what people say..."

When asked to comment on BMF's current valuation and future prospects usagi was quick to point out that he hasn't lost much money this time around (yet). He then said "Now, you're going to love this. Look." He then pulled out a small black box, about the size of a FPGA miner. "This is our magic box," he said. He set it down on the coffee table and dramatically pressed one of the colored buttons on the top of the box. The box spit out a single white ribbon of paper with the number 0.031 printed on it. "What the heck?" we asked usagi. "Didn't you just publish a report containing the number 0.032? What happened?" In response, usagi picked up another handful of mixed nuts, mused for a moment, put them back and took another sip of the good stuff. He said, "Oh that. Due to investor concerns, we started valuing our face value bonds at face value instead of bid price. We'll make a full announcement at the end of the month. Look, see, if we value them at the 7-day average as reported by the exchange, it goes up again". usagi fiddled with some knobs on the side of the box and pressed some colored buttons in a deliberately drawn out "shave-and-a-haircut" knock-knock pattern. After a few seconds of silence we heard some whirring noises and started to smell something burning. Then suddnely a loud BANG. "I think it's blown a capacitor," he said. "Hold on, let me fix something." Usagi took some chopsticks and started fiddling with the paper tray. After a few moments he was able to draw out a small, fortune-cookie-like peice of paper upon which was revealed the number 0.03206137. "See! See! I told you it was ok. It's like what Warren Buffet said. 'Price is what you pay, but value is what you get.'"

Note: This story may contain inaccuracies. For more in-depth and accurate coverage of this story, please see the upcoming LTC-ATF announcement by Deprived.

I would like to get shareholder opinion for this:

MOTION TO LIST BMF.B1

Should you vote NO, the motion will expire and nothing will happen.

Should you vote YES on this motion:

1. BMF will fund the listing of a new issue on an exchange, called (BMF.B1--to be discussed). I.E. the listing fee will be paid by BMF.

If the issue is not approved by the exchange, we may lose the listing application fees.
If the issue is approved and does not sell 50% before the end of the year, a full refund will be provided to investors.
Should this bond be approved by the exchange(s) and the listing successful (at least 50% of bonds are sold);

2. A payment of 100 BTC will be made to BMF as minimum* payments of 0.5 BTC per week, starting January 2014. BMF will have no other connection with the bond. (*payments may be made early.)

3. The bond will pay a minimum* payment of 0.0001 BTC per week per bond, tied to MTGOXUSD, starting January 2014, until such time as the bond has repaid 0.02 BTC to investors. Should the price of BTC remain stable, this will take approximately four years. (*payments may be made early.)

4. The bond will be backed by the redevelopment and/or sale of a property which was bought out of a distressed mortgage for 50% off. To finance the purchase and redevelopment of this property, the bond will sell 150,000 bonds at 0.01 BTC per bond. No further bonds will be issued.

5. No interest or ownership of the underlying property is granted by ownership of the bonds.

6. Force-Buyback
- The bond may force repurchase of bonds with a 10% penalty on what is remaining to be paid to investors.
- The formula used will be (IPO - (payments/2)) + 10%.
   - ex. If we sell all 1500 worth of bonds and repaid 500 BTC in weekly payments, we would calculate (1500 - (500/2)) * 10% as a penalty.
     The total repurchase for the 150,000 bonds would be for 1250 + 125 BTC, or 1375 BTC.
     This would only be done if we were forced to sell the property early for some reason.
     It's the most important clause which protects investors.
NOTE: The 10% penalty would easily covered by what we have put into the land already, we have already paid approx. 240 BTC into the land mortgage.

7. RISKS
--> the immediate risk that BitFunder (or whomever) will say no and we lose the listing application fees. This risk will be slightly mitigated if the discussion is positive on bitcointalk.org. If the community likes it, we are far more likely (but again, not guaranteed) to get approved.
--> The major risk to bondholders is that we get forced to sell the property and repay the bond immediately (see formula for early repayment above).
--> Fine print states, "There are or may be other risks undisclosed at this time." We can discuss it.

8. Why am I doing this (sharing) instead of keeping all the profit for myself?
--> There are businesses which have guaranteed their interest in renting out space in the building, and we have guaranteed rental income from students who live at nearby schools. Short answer, the faster I build this the more money I get from rental income waiting in the wings.
--> Second answer, doing it this way allows me to buy a small neighboring property and join it with this one, which I desperately want to do but cannot do until I finish paying off the current mortgage (which has about 600 BTC left to be repaid on it). Buying that property for cash all out would increase the value of what I have significantly. Short answer, TIME. I'd love to get this done by next year and not over the next ten years. I'm willing to give up around half of the profits for saving me that time. Time is money, that about sums it up.
--> If we can pay the development deposit and start development before the end of the year we will get a 500 BTC development bonus from a certain prominent paternal party (and pair) pandering for this purveyance..
--> Other major benefits (we own the street up to the intersection, our family owns the house across the street as well which means we own the entire block of property at the end of the street)

Final Note:
Please give me your thoughts on whether or not I should launch this motion, any ideas regarding it. For the moment I would like to put discussion of the property aside and discuss whether or not this is a good deal for BMF. I am of course suggesting that we pass this motion, but I'd like to discuss it before I put it to vote.

Edit: I just spoke with the designer and after a few thoughts I have cut the bond issue in half. The original was for 300,000 shares but I doubt we will "really" need all that much all at once. I could do 300,000 but there seems to be no point; 100 or 150k is enough to get property A and extend the house, and we can worry about the interior and clean up the lot on our own steam.

I'm commenting here purely from the perspective of a BMF shareholder - not evaluating the bond itself.

First, though, you need to fix the math here:


Repurchase there should be 1250+125=1375 unless I've totally misunderstood something.

From a BMF shareholder's perspective BMF would lend you 5 BTC then receive back at least 0.5 BTC/week from Jan next year until total payment of 100 BTC had been received.  With the risk that if listing were denied or the offer was less than 50% subscribed the 5 BTC would be lost.

The problem then is that we CAN'T put the property aside and just discuss whether it's good for BMF - as how good/bad it is for BMF depends very much on how likely it is to be listed and sell out.  And that depends very much on the detail of the property.

As a BMF shareholder I'd vote to approve the motion if you can convince me there's better than about a 20% chance that it would sell out.  Which pretty much, ignoring detail, means convincing me that the property deal is real and profitable.  More accurately, it means convincing me that you've convinced the forum in general that the property deal is real and profitable.

Q&A ROUND 1


1.
That is what I am looking for. I'd like this to pass as a BMF motion, I.E. for it to make sense to my shareholders, and for my shareholders to trust that this is a sane plan. With community backing, I feel I can succeed.


2.
Fixed! Thank you. I was working from 200,000 bonds when I wrote that then decided to cut the issue lower.


3.
Sure, but all of that detail comes from me (I can explain the details but the conclusion won't change). The problem is, obviously, the more information I reveal the more it becomes apparent I'm revealing personal details to people who are not qualified to evaluate real estate. So what I am willing to do beyond just explaining details and throwing out numbers is to contact people like Rentalstarter (or yourself -- for example) and explain details and offer a sort of "information escrow" -- information escrow with someone who understands what the information represents. Then that person can act as a reference and say "Ok, usagi is telling the truth, it's real" and we can go from there. But until that can be done, when I say it's a good property, please take that on faith.


4.
I think the best way to illustrate this point is to discuss the bond issue as if we were going to bond the entire property @ 300,000 bonds (instead of 150,000). I still may want to do it this way, just for the sake of accounting. After all, we have already put a significant amount of money into the property, which can be documented to the information or identity escrow. So, for the money we have already placed onto the property, I will immediately receive 25,000 of 300,000 bonds. Further, we have approximately 11,000 bonds worth of capital sitting in the mortgage account which represents another 1 year of mortgage payments on the property. That raises the total interest I already own to 36,000 of 300,000 bonds. Now, in 2014, interested parties will donate (as in bestow) 50,000 bonds worth of capital to us towards the construction of the new structure. Why are they doing this? Because they have a vested interest in seeing this project come to fruition. Again, this can be documented to the identity escrow. This will bring the total number of bonds I own to 86,000 by mid 2014. During 2014 I will be buying approximately 1000 bonds per month out of my own personal paycheque -- which does in fact turn this into some sort of personal loan -- but one which I would have no trouble paying in any case given the strength of our bank account and projected 2014 cashflow.

Again, this property has already been bought. We've already paid 1/3rd of it and will likely end up paying off the land before summer 2014. But that means we can't build the house until next year, and that causes "problems". Then there is the issue of neighboring property "A" which I want to acquire and which may easily be acquired by someone else if we have to wait a year or so before we can buy it.

Point being it /is/ selling out, one way or another, before 3 or 4 years is up -- because I can and will buy it out all myself given enough time.
The question is, how much interest can I raise from others? Well, let's hope others chime in and give their thoughts :)



5. Anonymous via PM (letters added to questions for reference)
a) This is a bond denominated in USD (or we could say tied to initial BTC/USD rate) with interest 52% per year (in fiat, paid in BTC).
b) It will end after paying 200% of initial value or by the formula: (IPO - (payments/2)) + 10%.
c) This is backed by actual house - what is the probability for investor that the backing will be lost/without (fiat) value?
d) Will there be any option for redemption any time?
e) I would prefer listing at BTC-TC because of much lower fees - 0.4% vs. 1%, also at BF there already competition for you: Ukyo.Loan and Graet.Loan.
[/quote]

5a) No, it is not denominated in USD. It is denominated in bitcoins. However because I am buying bitcoins to pay the coupon, the bonds will tend to float against a basket of various currencies. To be absolutely clear the US Dollar, Canadian Dollar, or Australian Dollar will never be in this basket. I did say it would be tied to mtgoxusd, but now that I think of it, that is actually impossible. It may be close to mtgoxusd but it won't be mtgoxusd. Maybe mtgoxjpy?

5b) Yes.  The point is, you will get roughly the same purchasing power sent to you per bond per week until the bond returns 100% in terms of bitcoins. However, I will probably include a clause that caps the payout should bitcoins rise more than, say, 100%. I think that's more than fair considering what the investment represents. As you see, it wouldn't be possible to build a bitcoin economy with a highly volatile price without such a clause.

5c) Well, we already own the land. The great thing about this property is we bought it at 50% off (considering what people are asking for neighboring properties). If we have to sell it, we can pay off the bond. Keep in mind we have already placed a substantial amount of money into the property which we will get back when we sell. And we will likely be able to sell for at least 50% more than what we paid if we have to sell in a rush (100% more if we wait). I don't see any way for someone to steal a title in this day and age, so unless I stop making mortgage payments we should be fine. But there won't be a mortgage if we float any significant portion of this bond, so barring an act of god I don't think it is possible to lose all your money. There is a chance of loss but I feel it's really remote. I mean, the house could burn down. But we would still own the land, and we will be getting house insurance obviously so... the chances of losing the principal investment into the house are exceedingly remote in my opinion.

5d) Yes and no, because once we sink the money into the house the only way to redeem bonds would be to sell the house. The "yes" is if I launch with 300k bonds instead of 150k and don't pay a coupon (but instead, sell at under-face-value). For example, if I state that the bond is guaranteed to be repurchased in full after 1,200 days, and 120 days pass, the bond would be worth 0.011, After 240 days, 0.012. I could just repurchase any bonds listed below that price. What I would do is just add bids to the market instead of paying the mortgage (which wouldn't exist if we floated as much as 50,000 bonds). There are other issues. As I've alluded to, we will be receiving a large payment towards the development in early 2014. In theory I could use that to repurchase bonds. I am not sure how I will structure it but I will review what you have said deeply and come up with something that I am comfortable handling. I just don't want to get into a situation where I have to default on a clause. I definitely will not sell this house at the whims of bondholders, so the terms have to be clear in expressing that. This bond is not the kind of vehicle where you are going to be able to sell it back to me personally before the house is done. On the market, sure, at what price I don't know, but I can not afford to repay that much money until 3 or 4 years.

5e) I understand the desire to list on BTC-TC, however, I would like to consider myself closer to Ukyo because of our shared interest in Anime. Burnside is a really cool guy and I guess in terms of look and feel BTC-TC is better, but BitFunder has a lot of money going through it, and I wouldn't mind being on the same exchange as RentalStarter, too. Time will tell. Maybe we'll end up on Havelock or Crypto::Stocks? C::S is severely under-rated.

Thanks for the comments and questions.

Right now I am going to work on a re-hash of this with the following in mind:

1. Who wants to be the information escrow wrt. the title to the property, etc? (I am planning to provide a video walkthru of the property as well, for public consumption).
2. Issue of the full 300,000 bonds, with myself holding up to 1/3rd based on documents showing I've invested that much worth into the house already.
3. Some kind of repurchase clause.
4. Possibly issuing the bonds without a coupon (i.e. traditional bond) whereby the bond has a face value of (say) 0.02 but it is sold at 0.01 This would require guaranteeing a date upon which the bonds would be bought back. (This might be the most convenient thing. Actually, Deprived suggested it in PM).
5. Some kind of clause which limits my liability should BTC go to $5000. The fact is, you're not investing in BTC here, you're investing in a property and merely transacting in BTC. I may decide to tie it to gold, I may decide to tie it to case/schiller. Something realistic. If I do it that way it would be coupon (payment) based.
6. I wanted to make this into a super-duper bond but it may turn out to be another BTC-BOND copy with a high rate simply because I think it's more popular.

It seems to me that BTC-BOND is quite different from what you drafted here. BTC-BOND is also sold for BTC, but the most important question is if the underlying asset has value tied to BTC or to fiat.
In case of BTC-BOND the underlying assets are BTC securities (if I remember correctly). In your case the underlying asset is real house, which has predictable value in fiat, but totally unpredictable in BTC.

How would you repay the bitcoins if the price of BTC will raise e.g. to $500 or $1000? Do you expect profit from the house in fiat being big enough to cover this?


On the other hand you could denomitate the bond in fiat (and use BTC only as transaction medium) - both face value and interest. If you explain the backing and offer high enough interest the investors won't mind it's not BTC denominated (similar to CIPHERMINE.B1's interest).


Other question: I'm not sure which country are you from - the house is in Japan?

Thanks for the tip re: Ciphermine. As an artistic concern, I would prefer not to have to mention fiat currency at all in the contract. Unfortunately, the property is not just denominated in fiat, but is massively denominated in fiat. This isn't a situation where if BTC goes to the moon my paycheque can cover the interest. I'm not willing to take a significant hit on the exchange rate. Looking at Ciphermine's contract for their bond, they seem to have created a perpetual bond. That is really more of a loan than a bond. I wanted to create an issue which was not perpetual.

A CIPHERMINE.B1-style idea:
1. 300,000 bonds are to be created priced at 0.01 BTC each.
2. 0.3%/week is 15.6% annually. Based on mtgoxjpy (http://bitcoincharts.com/markets/mtgoxJPY.html), 0.01 BTC = 131 yen. 0.3% of this is 0.393. Let's say 0.4 to keep it simple. So I could say, 0.4 yen into bitcoins per bond per week, that would give it an interest rate, to start, of 0.305%/week. If I paid 0.5% a week that would be 0.382% (closer to what ciphermine pays).

Ciphermine.B1 has some other clauses;
  - After 12 months, each bond may be redeemed at any time by bondholder for 0.01 BTC.
  - If before 12 months, three months notice is required to redeem bonds and rights to interest waived during that period.

I actually think these terms are fair, however I would extend the period from 12 months to 24 due to the nature of what we're buying. By the time 2 years is up I will have paid off 90% of the property and will be in a much better position to start redeeming bonds. But the issue is probably moot since you can likely sell these on the market.

"CipherMine has the right to redeem any bond in full with one month's notice to the bond holder at face value plus 12% less the number of months since issue." Actually, ciphermine's clauses sound very similar to what I had in mind.

"For example, after three months the redemption value would be 0.0109 BTC/bond, and after 12 months the redemption value would be 0.010 BTC/bond." This is a lot like the face value - (payments/2) * 10% penalty payment I came up with. I'll keep my version of the clause.

"The redemption value will always be at least 0.010 BTC/bond"
(that just determines face value.)

"The bonds shall ultimately be secured against the assets purchased with the funds, but this security would only be needed in dire circumstances where CipherMine had completely run out of cash."
Sounds similar to my idea.

I like what I am reading here so I will be moving the contract in the direction of what Ciphermine did.

The final question is what to do with investor's need to have a repurchase clause. If I use a lower interest rate, say 0.4 yen/bond/week, I would be much more comfortable guaranteeing a bid. I think that is better than forcing investors to wait 3 months to redeem shares. As an investor, what would you prefer; a slightly lower interest rate and the ability to sell shares back at 99% of face value, or a higher interest rate and the inability to redeem shares until a certain date (1-2 years into the future)?

I would prefer higher interest rate. I wouldn't mind no redemption (prior to the scheduled end date) if other conditions (mainly interest) will be compensating that.


I understand that you don't want to expose yourself to BTC/USD volatility, that's why I suggested both face falue and interest fixed in fiat.
Example:
1)start selling the bonds for BTC0.01, note the BTC/USD price (converted to whatever currency).
2)pay interest based on the initial price, each week different amount of BTC depending on current BTC/fiat price.
3)buyback and everything else is also based on the initial fiat price.

I think that could be better for your need, because unlike CIPHERMINE you are unable to generate bitcoins.

Note: BMF investors please be aware that a large number (more than 2000) shares of BMF may hit the market soon, and the intent is to sell them below NAV (0.032) to move the shares as fast as possible. Please see https://btct.co/security/NYAN.A for more information.

The motion will be considered passed if 50.1% of total shareholders vote YES, since at that even if everyone else votes NO the motion will pass.

If you're interested in getting at these shares, my suggestion is to place your bid now. BMF will not place bids until after the shares are on the market, so there is plenty of time for public holders to get in on this.

happy investing~

You might want to Options->Wrap lines.

http://www.mergely.com/nSpOy3ho/

Thanks, but there's no option to edit a motion in progress. That being said, the motion will probably have to be redone or NYAN/A shareholders will receive significantly less for a couple of reasons. Those reasons are also relevant to BMF (and NYAN/A shareholders will likely read this) so a few comments.

1. The major loss here is that we bought 25 shares of BTC-TRADING-PT a while ago and those are now worth zero. This has reduced the value of BMF shares to around 0.29.

2. The secondary loss is that face value bonds were sold out at an average of only 100% and not 106%. We were LUCKY here. I was online and trading throughout this whole thing and was able to dump a significant amount of shares in the 20 minutes between when I read burnside's post and when he stopped trading. That (and other minor losses associated with a depressed market) reduced the value of BMF shares to around 0.025 (assuming I get a reasonable price for the very few remaining unsold assets).

3. If Deprived chooses to exercise his bonds around the middle of November, the value of BMF is expected to fall to about 0.02. However, I hope to interest him in a deal. The deal involves the new bond issue I've been mentioning on this thread, which is slated to take center stage in this thread because it represents salvation for BMF investors.

So here's the plan:

1. confusing mix of explanations and apologetics
3. BMF is worth 0.033 per share.

Yes, I know, this doesn't make sense. But I've learned the hard way from GLBSE closure how to handle this situation. So there it is, BMF is now worth 0.033 per share, and I will prove it by buying back every share on the market at that price.

If you don't believe me, then you're crazy. But go ahead. If Deprived executes his warrants, or not, every share will be bought back at 0.033 or above.

But, if you need me to force buyback your shares off-market, you will get 95% of 0.033 (which is in the contract) or 0.03135. So basically, if you have to send me a PM or e-mail because you can't sell your shares on the market, you are guaranteed to get a minimum of 0.03135. That's the long and short of it. It makes no sense to involve BMF in any other company or bond issue. This way things are kept exceedingly simple.

But!

There is a new way forward. BMF isn't closing. We are still here, and we have a special plan for those who choose not to redeem their shares.

I will now discuss that plan.

Well over the long weekend (it's moon festival in China) I met with a few key figures over a property I am buying. I met with the designers and contractors for the project and we now have a very clear financial estimate of what this is going to cost. It's going to cost 130 bitcoins for the development deposit, and it will cost 500 bitcoins to finish extending the house.

We are going to be able to come up with 90 of the 130 bitcoins needed for the development deposit, and if we can come up with the remaining 40 bitcoins, certain parties with a vested interest in seeing this go thru have guaranteed that we will get the other 500 bitcoins free and clear. Did I mention we already bought the property for 50% off? Yeah, the people who sold it were desperate for money. It's a long story but that's the gist of it.

Why is this super duper news? Because BMF is going to invest in the property too! That's right, BMF will invest the other 40 bitcoins (and then some) in seeing this through. No problem right? I can still do that even if Deprived exercises his warrants. And in reward, I will personally guarantee that BMF will be worth 0.033 per share. I think you can see that the 80 bitcoins I need to come up with to make BMF worth 0.033 is vastly less than what we are going to get to do this property. I am more than happy sinking another four or five months of my income into BMF to make it worth 0.033, and I will do so. You have my word.

But,

A vital part of this entire project is that we acquire a neighboring property and merge it with what we have now, squaring the lot. This will allow us to extend the house to the north and place on the nexus of the development, with garden paths leading directly to two different highschools. We will use the extra space to build student housing and rent it out. We can do this because the schools frequently have students from out of town living at the school and we will be able to offer a competitive rate. It's guaranteed we will be able to make a profit from that development. Secondly it will allow us to build 2 floors instead of three, with a massive walk-out roof garden and laundry facilities. I can't express to you how important the acquisition of that property is, it is worth far more than what it will take to acquire. The magic number here is 300 bitcoins. I need 300 bitcoins to get that property. That is where a new bond issue comes in. We will need to sell more shares of BMF. We need to sell 10,000 more. Theoretically they would be sold at less than face value (0.032) so that there would be some kind of profit allowed for new investors.

Finally, I would pay a fair and reasonable interest rate during the approximately 1 year it will take to repurchase all of BMF at 0.033 (I could repurchase much sooner, if I didn't invest into this house). Given the amount of money I expect to make on this I do not mind paying 24% (at 2%/month). This would of course be tied to mtgoxjpy (yen). This places BMF along the same lines as FIMB, CIPHERMINE.B1 or RentalStarter.

The great thing is, BMF can continue operating exactly as before, selling shares at exactly the same price, and so on. See, all this is just a back explanation for why BMF is peachy keen and you have nothing to worry about. We will want to list on another exchange. We will use almost exactly the same contract, too. But as a confidence booster we will place a minimum guaranteed interest rate on BMF so that you know we are serious and not screwing around.

The long and short of it is this; (--edit: this will be put to vote before it is implemented.)

1. BMF is now a bond with a face value of 0.033.
(intended but not guaranteed to get Deprived to drop the redeem clause on his warrants).

2. BMF pays 15.6% per year as weekly payments of 0.3% tied to yen at 13,000/BTC.
(intended to get investors to be happy about holding their shares until I can buy them back with my paycheque).

3. BMF will sell an additional 10,000 (and no more) bonds at 0.032 in order to finance the acquisition of the neighboring property. Should this sale be completed the face value of BMF will rise to 0.035, granting an instant 0.03 profit per unit to the investors.
(intended to allow us to acquire and develop the neighboring property).

4. BMF will become redeemable at face value after December 31st, 2014.
(At this point you will be able to redeem for 0.033 or 0.035/bond).

5. BMF will seek to relist on a different exchange or if invited to do so.
(to facilitate coupon payments and repurchase).

The important thing to understand is that the bond will be tied to yen (I think mtgoxjpy is 13,000 now). So if BTC doubles vs. yen, you will not be repaid 0.033 but less. This should be obvious since we are investing in real estate and merely transacting in BTC.

So right now I advise every investor to do one of the following:

1. Sell out now for 95% of NAV by sending me a PM.
You are advised to do this before the exchange closes. When the exchange closes this offer will be suspended for several months because I will sink all of BMF's capital into the property.
Of course, if you have warrants, you can sell for 0.032.

2. Buy more shares of BMF at less than face value
If we sell out 10,000 more at below face value (0.032 --edit: assuming the vote for this plan passes) we will increase the face value from 0.033 to 0.035 and everybody wins.
The 15.6% will be based on the new face value as well, so you will get even more money out of your existing shares.
This offer will expire in early December. We need the money before then for the development deposit.
After December the house plan will be set in stone and will be difficult to change, so we need the money to buy the neighboring property before then.

3. Do nothing.
You will begin receiving payments of 15.6% once the development deposit has been paid (--edit: assuming the vote for this plan passes)
You will get more if other people buy more shares and the face value rises to 0.035 because of them.
You will have the opportunity to sell your shares back to me at 0.033 or 0.035 before the end of 2014.

How do you buy more shares of BMF? Send me a PM. We can run much like the old GBF and hold it manually for you. Hopefully we can relist on another exchange, but where, I do not know. I'd like to list on BitFunder but have been told we can't get an answer until after October. We shall see.

So to confirm: This means that you'll be placing market bids at 0.033 BTC/unit on BTCT to fill up any open asks at that price or below? If so, when do you plan on doing this?

Ehh? Didn't I give a date in my last post? I just got home from work, I'll have to check that in a bit. For now please re-read my previous post, I am pretty sure there's a date in there.

Well, the two posts are slightly confusing about the exact terms of the change of the fund into a bond. You first say that one unit is worth 0.033 and that you'll prove that by buying any share on the market for this price. By market do you refer to BTCT or to the market in general? You then mention redemptions at 95% of NAV as per the contract for redemptions that are "off-market". Finally, your second, larger post details how BMF will operate as a bond and there you do specify a date for the redemption at face value of the bond. However, your first post implies that the units are already worth 0.033 and will be bought back on the market, which I assumed to be BTCT, which is due to close in <2 weeks.

My precise situation is that I have some units of BMF that I am seeking to liquidate as I have decided to reduce my exposure to securities (at least for now) because of the BTCT closure. And my question is whether this will happen via the market/BTCT for the price of 0.033 or "off-market" at the price of 0.0315.

The basic idea here is that it's not BMF's fault, nor our problem, that BTC-TC is closing. We have lots of BTC we can invest in stuff like Ukyo.Loan or XBOND, or to hold with people like coinlenders or just-dice. That means there is no rush for me to repurchase anyone's shares. What I am doing now is adding a "don't panic" guarantee that I will a) pay fixed interest and b) buy back shares for 0.033, at a date in the future. Both of those guarantees did not exist before.

Unfortunately a lot of people will still want to liquidate their shares because they are afraid about BTC-TC closing. So it is my duty to stand by the contract and place bids at 95% of NAV. That means about 0.023 per share right now, maybe 0.024. If that's what you would like to do just xfer your shares to usagiBMF and I will send along the coins.

OTOH, if you want to stick it out with BMF and maybe buy some more shares, I will give you a special guarantee for 0.033/share (or 0.035/share) and 15.7% interest for 1 year (then repurchase). I will probably end up running a vote on this before BTC-TC shuts down. It is the right thing to do to allow shareholders to vote on what is going on, so I don't think it would be proper to allow mass redemptions until people are made aware of their choices. After all, i've sold out almost everything we own and I am holding bitcoins. We're not going to lose any more money, so it's ok to be patient and wait a couple more days.

What I am looking for is to use this crisis to strengthen BMF. If Deprived and the other shareholders (like you) agree, I will tie BMF to the real estate deal I am working on, and we can all make a lot of money. It's either that or 95% of NAV.

I wish burnside didn't do this to us. Especially to us, given the crap I had to go thru to get approved. But it's really out of my hands. Offering my investors these special guarantees and an option to get a profit out of this is really the best I can do.

This is not what you said in your earlier post.

Here you first offer a redemption at 0.0315 BTC per share and then you follow up with stating that "for those who choose not to redeem their shares" there is a new plan for the future. This implies that there is first a possibility at redemption for 0.0315 BTC per share for those that want out and those that chose to stay in, will be part of the altered offering that you detail in the post that follows.

In your post of september 22, you mention that a new batch of shares may be sold "below NAV (0.032)".

So I am slightly confused by your statement that the current NAV is significantly less:

I can accept that the 0.033 buyback guarantee applies to the new bond-structure, but the way I see it, investors that do not want to opt to move over into this new structure should be able to redeem their shares at 0.0315 BTC as per your recent posts.

No? Well let's take a look; I have not added or deleted any words, just highlighted what you quoted:


I believe I was very clear when I stated "we have a special plan for those who choose not to redeem their shares". The issue is that this really has to go to vote before I can start making these kinds of sweeping changes. If you are going to vote NO, you might as well redeem your shares for 95% of NAV now. Trouble is, that will almost certainly become a mistake, as everyone who stays is bound to vote YES because it is "free money".

I know it would be very convenient for shareholders if I took on all the risk for only a fraction of the reward, but that would be extremely unfair to me. I only get 5% of dividend income -- less than $50 a month for a 300 BTC fund. I can't possibly be expected to step in and cover the losses of a fund over something like this. That's why I was very clear in the contract that I will not be made liable for damage caused to the fund by actions of the exchange. OTOH, if I made a stupid investment decision, then you could vote me out as the fund manager. That's your option, it's in the contract. I accept full responsibility for stuff that is my fault.

However, as I stated, there is a way we can move forward. It depends on shareholders not redeeming their shares and supporting the move to invest into a real estate project (as explained elsewhere). If everyone redeems their shares there won't be any capital left to invest anywhere and all I will be able to do is give NAV, because that's all we will have left.


Why should I give 80 BTC to BMF investors merely because BTC-TC closed? That does not make sense.

I haven't even taken this to vote yet.

But I will say this. If people are going to stick with the fund and support what I am doing then I will do everything I can (including guaranteeing a face value and fixed interest by securing the fund with my house). But to ask me to do that for nothing, well, I'm not sure that is really fair to me.

I understand your frustration. I share it. It took me 10 months to get listed and literally the next month the exchange shuts down. I've poured a lot of blood and tears into this. So I want to keep fighting, and make this a good deal for shareholders. I'm not giving up yet.

Ok, after reading your posts carefully and giving the matter some thought, I get what you're trying to convey. I still place high value in the liquidity of my investments, but in this case that may come at a high cost. In addition, I don't like being exposed to JPY, with funds that were meant to be exposed to BTC. I expect BTC to appreciate against my local fiat-currencies (EUR & CHF) and recently JPY has gone down considerably against EUR & CHF.

I do have a few additional questions (apologies for being so bothersome :P):
- You first mention "I do not mind paying 24% (at 2%/month)." and after that you mention an interest rate of 15.6%. Which one is it? I assume 15.6% since it's mentioned several times.
- What happens if the motion to approve this plan fails?
- What happens if only part of the new batch of 10000 bonds is sold and there is insufficient funds to finance the second property? Other than the mentioned increase in in face value to 0.035 not going through? (you forgot a 0 in the "instant 0.03 profit" part by the way) Are there different outcomes depending on how much is sold (e.g. if 50% is sold, then ..., if 80% is sold, then ...)?
- What is the precise NAV/U that current investors can use for the 95% redemption clause?

Q: I don't like being exposed to JPY, with funds that were meant to be exposed to BTC.
Of course when investing in a security you are giving up your exposure to bitcoins, for exposure in the security. If that security invests (or otherwise represents) non-bitcoin denominated assets, such as computer hardware, gold, or real estate (or for example, IP such as BTC-TC) that asset determines the value you have. At some future point (now) when you want your exposure to bitcoins back, you need to give up your exposure to the asset you've invested in. That's totally fine with me, I don't mind giving you your share of the NAV of the company as it stands right now.

Q: I expect BTC to appreciate against my local fiat-currencies (EUR & CHF) and recently JPY has gone down considerably against EUR & CHF.
It doesn't have to be tied to Yen. I'd tie it to Euros if you prefer. The idea is not to make or gain 10 or 20% on yen-eur. It's to stop a 200% gain in BTC from forcing me to default. Bitcoins are like any other asset in that they have value or utility, as does gold, computer hardware, Euros or and Yen. But the main difference between BTC and, say, yen, is that yen is much more stable since it is traded billions of times a day -- and more importantly, it represents trillions in assets such as real estate, clothing, and food. That means that when considering value for value's sake -- guaranteeing a return tied to yen is actually a clearer and more interesting deal than guaranteeing a return in BTC. You have to remember that if you invest with BMF (or anyone) you are no longer exposed to BTC.

Even if you invest in mining hardware, you are not exposed to BTC. Your return is based on the value of the mining hardware but merely transacted in BTC. This is easy to understand; when difficulty drops so do the total bitcoins you will ever get out of your hardware. But a higher difficulty does not increase the number of bitcoins mined over time (in general) and therefore does not really affect the cost of BTC. So I'd point out that having your return in BTC is not actually better than having it in BTC/fiat -- it's just more volatile. I dunno, some people like that volatility. Personally, after watching BTC-TC and GLBSE blow up with half my money I prefer something a little less volatile.

The very guarantees I want to give, such as a fixed face value tied to a currency, and a fixed interest rate with a guaranteed rate of return, do not exist in your current investment and I feel they may provide a solution to the volatility.

Q: You first mention "I do not mind paying 24% (at 2%/month)."
Sure, I could do that. Please see the response to Progressive. (https://bitcointalk.org/index.php?topic=229036.msg3209867#msg3209867)  A higher interest rate means that there will be less chance to redeem the bonds, and that the term may be longer. The essential numbers are, if I can pay 5 BTC a week at 1% interest, that means I can float 5/0.01 or 500 BTC in bonds. If I lower the interest rate to 0.5%, then I can float twice as much capital. So I need around 350 BTC max, and if I pay ~24% (0.462%/week or 2%/month) that means I need to afford 1.615 BTC a week to pay the interest on the bond. But this is not a perpetual bond, and 24% is a very high interest rate. Typically you would see 10% or less on this kind of bond. So for 24% I would ask for something like being irredeemable for 2 years. Investors said they didn't really want that so I offered lower numbers as well. I think we need to discuss it here and then make a vote. Do you prefer something like 24% a year or 10% but being able to sell back at any time, or a combination, something like 16% but only being able to sell back at 95%, etc?

Q: What happens if the motion to approve this plan fails?
If investors are voting NO for me to lock down the funds into real estate for a year, then they are voting to get their share of what's left of the BMF pie "now". They are free to redeem their shares for 95% or to wait and see what else I do. This needs to go to vote because it will change the contract. If I invest the money into a real estate deal I cannot place a bid for 95% and that would violate my contract. I want to change the fund so that you can't sell back to me at 95% on demand. For that, I will guarantee a face value of at least 0.033 and so forth.

Q: What happens if only part of the new batch of 10000 bonds is sold and there is insufficient funds to finance the second property?
Good question, because I didn't think of that. It would be easy to allow a refund or buyback since we wouldn't need the money. That's interesting, I will put that in, thanks. That way, people who buy in expecting to get a face value increase to 0.035 won't be disappointed.

Q: What is the precise NAV/U that current investors can use for the 95% redemption clause?
I don't know what is going on with BTC-BOND. It would be unfair for me to write his asset to zero, so I will have to give you a share of cash and of BTC-BOND. Unfortunately BTC-BOND and several other assets we hold have been locked by the issuer, so we can't sell out even at a significant loss.

The floor is about 0.02, but if Namworld pays us back and there's no other losses I can say 0.0245 right now.

In response to your very last point, namworld is back - he's on holiday at present but will be redeeming bonds at face value if you return them to him.  Check his thread for details: he made a post then locked the security to prevent people selling on the market cheap (I actually disagree with that - security should only be locked when you're about to make a final full settlement).

I don't have time to go over the proposal in detail but here's a few pointers on how I look at things:

1.  If any motion is being made for a massive change like this (which is effectively to use the cash for a brand new security) then, if the motion passes, anyone who wants out should be bought out at full NAV/U.  i.e. They shouldn't be worse off then if the security had closed in accordance with the contract.  I'm obviously not thinking of myself here - as I can sell back at .032 later anyway.  When I say bought out at full NAV/U I mean immediately - not in the future.

2.  Normally where I have a (near) controlling interest I vote down any motion with significant opposition (e.g. on LTC-ATF my position was always that if there were 10% NO votes I'd vote against my own proposal).  So long as point 1 is very clear I wouldn't do that - as they suffer no disadvantage then if the motion passes compared to if it fails.

3.  Even if I disagree with the motion I'd vote yes if the majority of other votes (excluding those controlled by yourself) voted yes - as my warrants/redemption rights give me personally protection.

4.  For me to even consider giving up my warrants/right to sell back for 6 months at .032 would need some very good offer.  As it stands I could approve any motion then have 6 months to see which way the exchange-rate moves.  That sort of ability is worth a lot more than a few extra points on an interest rate.  With my warrants/sellback rights if the change occurs as proposed I can effectively pick whichever is worth the more of .032 BTC or the current fiat value of .032 BTC converted back into BTC in 6 months.

5.  One issue I see is that because of my sellback rights NAV/U for everyone else could be adversely effected if you close down - as they end up footing the bill for the excess of .033 over actual NAV/U.  If you end up closing now then, in principle, I'm fine with just taking an equal share the same as everyone else and surrendering the sellback rights (the warrants would be worthless anyway as with no NAV left buying at .033 would be futile).

6.  I'm not opposed in general to fiat-denominated investments.  In fact I believe anyone whose entire investment portfolio are 'pure' BTC is making a serious error.  Of course many (most?) will have their fiat-denominated investments elsewhere already - which is why there's fairly widespread opposition/resistance to them.

Easiest way forward by far is just to close BMF down - then start a new fund.  No arguments from anyone over fairness or feeling pressured into accepting the change - and no need to get voting approval or worry about the thorny issue of my warrants.  But I won't stand in the way if the majority of investors want to go for it - and will make my own decision on what to do when I see what exactly is on the table.

Right now my focus is on working out what to do with DMS and also where I can get another security listed.  Not one of my own - but one I'd helped with the prospectus/contract for and which HAD been scheduled to be IPOing tomorrow (well, opening for bids) - if the ability to create new securities on BTC-TC hadn't been shut off a week or so back.

Nowhere in the contract does it say I have to invest exclusively on BTC-TC. In fact I was invested all over the place. The reason why I am trying to change the contract is only to lock people in for about a year, so I can invest into a real estate project. To compensate I am offering to guarantee a face value for the bond about 50% more than what it's worth right now. But there's no special need to liquidate our assets just because we are running a motion. If the motion doesn't pass, life will go on as usual for BMF. There will be special considerations made for you of course, explained in greater detail below.


If the motion passes the disadvantage is that the shares would not be redeemable upon demand for a certain period of time, like six months or a year. I am guessing that the advantages will outweigh the disadvantage and investors will choose to take the 0.033 vs. the 0.022. Yourself included. But you are right in guessing if you vote no the motion will not pass.


Ok so you're going to wait for the other shareholders to make up their mind? Hmm, ok, however be aware that this motion is designed to benefit you personally (and take the other shareholders along for the ride, of course).


Sure, except if you don't vote yes you will not get more than 0.032. The big problem here is if you vote no, your money will not be participating in the real estate deal and I won't have any incentive to offer you a higher face value. That's why we will run a motion. Either you vote yes, or you vote no. If you don't vote and it doesn't pass, that's the same as if you voted no. So it is important that you vote.

That way I am not faced with closing the fund (ex. closure clauses I and II which permit me to simply close and liquidate given 30 days notice). Of course were I to do that you would redeem at 0.032 immediately, and I wouldn't mind you doing so. You wouldn't loose anything. You could just hold the 0.032 bitcoins for 6 months and decide what to do with them then. So, all things considered, it kind of feels like I'm buying your vote, doesn't it? No matter what happens, you get more money if this motion passes. Especially if your planning to wait around 6 months anyways.



The only situation in which I would close down is to force you to redeem. That won't happen since we're going to vote on it. You're either in or out. If you want to redeem, it's ok, I have the BTC sitting in my wallet right now. But don't you want more money?


Starting a new issue might be better. It depends. I've spoken with a few exchange owners, and we will see what happens. Essentially I would run a FIMB/CIPHERMINE.B1 style issue -- tied to EUR, guaranteed buyback date, good interest rate. But where to list?

Given that I only need 300 BTC and the fund won't trade for a year, it might be better to just try to come up with the funding here or on the lending forum.

Said shareholder is me.

I'm waiting for an updated NAV/U and holdings list - plus there's some details in the motion which need to be clarified before I can vote YES on it.  I'd expect an amended motion to be needed before I could vote YES.  I'll explain in more detail why I voted NO later - some reasons were for self-interest (e.g. issuing new warrants diluting my own), others because the posted motion is too vague on things I believe have to be clear.

But most of all I need to see where all the money went to before I can vote at all (current NAV represented by the bid indicates more value was lost than the total of all assets before I invested - which is pretty hard to do when a lot of it was in safe bonds with redemption at face value).  Unfortunately at around the time BTC-TC annoucned closure the web-page with the assets list for BMF stopped working.  Hopefully that will be corrected soon.

I am also a bit puzzled by the current top bid, considering that my question regarding the NAV/U yesterday was answered with 0.02 being a floor if BTC-BOND defaulted or 0.0245 if it didn't. Since then, Namworld has posted in the BTC-BOND thread that he is currently on vacation but will handle redemptions and possible transfer to a different exchange soon, so we can assume that BTC-BOND will be redeemable at face value.

Additionally, 1 minute (assuming BTCT and bitcointalk clocks are in sync) before Usagis post, 1500 units were sold into a 0.016 bid on BTCT, a timing and volume which caused me to raise an eyebrow.

I am freezing the fund until Deprived and I can hammer out some sort of deal. It's too volatile now and until Deprived makes a decision I cannot value the fund. (edit: as he ended up confirming the next day).

Ideally I want to have BMF trading at 0.030 again within 1 or 2 months, and I have faith that the plan I am presenting to Deprived will get us there. But he's in the driver's seat right now with more than 50% of the shares, so it's up to him. Hopefully he will see what the benefits of this are and we can move forward.

Part of the confusion is that NAV/U isn't being clearly presented.

As soon as NAV/U fell below .032 the fund has a liability in respect of my warrants.  At that stage there are two ways to calculate NAV/U :

1.  Total assets / number of shares - 'High' NAV/U representing NAV/U if I don't sell back.
2.  Total assets - ((.032-High NAV/U)*my warrants) - 'Low' NAV/U represeting what NAV/U would be if I DO sell back.

Which one is correct to use is situational - but in broad terms usagi shouldn't sell below #1 and shouldn't buy back above #2, as doing either makes the situation worse.

Having these 2 ways to value means a massive spread - and is ONE of the reasons why selling warrants/put rights is very dangerous and should only be done where there's very clear benefit to existing investors.

But that's why usagi's having problems saying what NAV/U is - as there's 2 different values for it, neither of which is correct in all situations.  Technically #2 is the correct one - the N in NAV/U stands for 'Net' meaning after deduction of liabilities, which my warrants are (actually it's the sellback right that's presently the liability).

The same thing exists if NAV/U rose over .032 as well.  As then there's a liability which has to be accounted for in respect of my right to buy at .032 (which lowers NAV/U) - the calculation for that one is actually a bit trickier.

As my warrants are half the outstanding share count, it only needs a loss of 25% to knock 50% off actual NAV/U after liabilities.  Assuming 30 BTC of near total losses on LTC-Global shares accounts for almost half that.

Deprived and I appear to have hammered out a deal in PM, and we will be posting a new motion shortly -- likely after the weekend (let's relax and have a barbecue or something this weekend and stop fretting over internet spaceships).

The new motion is expected to be extra fair (Deprived has gone over it with a fine toothed comb) and I expect that I will be able to repair much of the damage caused by BTC-TC shutting down. So there you have it, everybody wins. If you do not want to be a part of this merger, I can only advise you to sell out now, because this motion is going to pass. I've refreshed bids at the maximum I can pay people who do not come along for the merger. Get it while you can.

+1

Why do you expect there would be one? Everyone has been mailed, and anyone is free to contact me. I check my messages and respond to all of them.

I'm in the middle of processing TU.SILVER holders right now, in fact I just handled a 10 oz and a 40oz redemption (the 40 is shipping out today if the post office is open). No one's silver is missing.

Just send me a message signed with your public withdrawal address and I'll get back to you. As you can imagine going to the post office 40 or 50 times is a little time consuming with everything else I have to do. Thx ^^