updated

[usagi]

updated

[bels]

If you can share.  When do you plan on executing this aggressive buy back?

I ask not because I'm trying to unload my shares in CPA at an unreasonable rate (I already have them for sale for what I think they are worth) but instead because I am more or less studying the GLBSE.  I've often talked to my friend who mines about how a mass buy back from a share issuer would affect the price of the shares and would like to see if my predictions are correct.

If you can't share the start date I understand, keep up the good work.

[Fjordbit]

Are you doing the buy back with your own funds or with the corporate funds?

Typically when a corporation does a buy back, it undilutes the shares, giving each remaining shareholder a larger dividend. This is the cause of the price rising. Will this be the case in this buy back, or will shareholders just continue to receive a share of the profits as if those shares were still issued?

[Fjordbit]

Are you doing the buy back with your own funds or with the corporate funds?

Typically when a corporation does a buy back, it undilutes the shares, giving each remaining shareholder a larger dividend. This is the cause of the price rising. Will this be the case in this buy back, or will shareholders just continue to receive a share of the profits as if those shares were still issued?

Yes, it will be to buy back the shares with the company. I.E. NYAN.C will be buying back it's own shares, CPA will buy back it's own shares, and so on.

So then remaining shareholders will each get a larger dividend share?

[BinaryMage]

Are you doing the buy back with your own funds or with the corporate funds?

Typically when a corporation does a buy back, it undilutes the shares, giving each remaining shareholder a larger dividend. This is the cause of the price rising. Will this be the case in this buy back, or will shareholders just continue to receive a share of the profits as if those shares were still issued?

Yes, it will be to buy back the shares with the company. I.E. NYAN.C will be buying back it's own shares, CPA will buy back it's own shares, and so on.

NYAN.C is currently trading at about 0.3 BTC - significantly above its NAV. You know much more about finances than I, but it seems to me buying at this price would decrease, not increase, shareholder value.

Example with rough numbers:
NYAN.C starts with 1.25kBTC in assets and 5k shares outstanding, giving a NAV of 0.25 BTC.
You buy back 1000 shares of NYAN.C for 0.3 each, totaling 300 BTC.
NYAN.C now has 0.95kBTC in assets and 4k shares outstanding, giving a NAV of 0.2375 BTC.

I understand dividends come into play, but dividends are generally proportional to NAV. I just fail to see how buying above NAV increases shareholder value or dividends. Perhaps you can enlighten me, usagi.

[EskimoBob]

CPA has 52078 shares outstanding, 2012-07-31 you had 46423.
Looks like you sold another 5655 shares.
How many % of CPA are you planning to buy back? Looks like you only had 102.96 BTC
This will get you about 770 shares or so of CPA or about 1.4%
Aggressive buyback?

[Deprived]

CPA has 52078 shares outstanding, 2012-07-31 you had 46423.
Looks like you sold another 5655 shares.
How many % of CPA are you planning to buy back? Looks like you only had 102.96 BTC
This will get you about 770 shares or so of CPA or about 1.4%
Aggressive buyback?

They have more cash than that.

https://bitcointalk.org/index.php?topic=110122.0

[Fjordbit]

NYAN.C is currently trading at about 0.3 BTC - significantly above its NAV. You know much more about finances than I, but it seems to me buying at this price would decrease, not increase, shareholder value.

Example with rough numbers:
NYAN.C starts with 1.25kBTC in assets and 5k shares outstanding, giving a NAV of 0.25 BTC.
You buy back 1000 shares of NYAN.C for 0.3 each, totaling 300 BTC.
NYAN.C now has 0.95kBTC in assets and 4k shares outstanding, giving a NAV of 0.2375 BTC.

I understand dividends come into play, but dividends are generally proportional to NAV. I just fail to see how buying above NAV increases shareholder value or dividends. Perhaps you can enlighten me, usagi.

Usagi's first point was that future projected cashflow (and thus dividends) and not NAV should determine value, and I agree. This is the standard by which other companies are held. Apple doesn't have 655.35B worth of assets.

If anyone cares, I can go into a deeper explanation of how future cashflow is the primary determination of company market capitalization. It's a pretty important concept if you hope to invest in securities.

[Deprived]

NYAN.C is currently trading at about 0.3 BTC - significantly above its NAV. You know much more about finances than I, but it seems to me buying at this price would decrease, not increase, shareholder value.

Example with rough numbers:
NYAN.C starts with 1.25kBTC in assets and 5k shares outstanding, giving a NAV of 0.25 BTC.
You buy back 1000 shares of NYAN.C for 0.3 each, totaling 300 BTC.
NYAN.C now has 0.95kBTC in assets and 4k shares outstanding, giving a NAV of 0.2375 BTC.

I understand dividends come into play, but dividends are generally proportional to NAV. I just fail to see how buying above NAV increases shareholder value or dividends. Perhaps you can enlighten me, usagi.

Usagi's first point was that future projected cashflow (and thus dividends) and not NAV should determine value, and I agree. This is the standard by which other companies are held. Apple doesn't have 655.35B worth of assets.

If anyone cares, I can go into a deeper explanation of how future cashflow is the primary determination of company market capitalization. It's a pretty important concept if you hope to invest in securities.

Apple also hasn't lost 60-70% of its asset value and isn't having to borrow funds at around 2% per week because of a liquidity crisis.

Where the value of assets is relatively stable then yes - valuing just based on those assets is horribly naive.  When the assets are mainly investments (with unstable prices and low liquidity) then the valuation of the company has to be much nearer to the value of the assets.

If CPA ever reaches a point where it generates steady revenue from its core business of insurance, outweighing any fluctuations in its investments then it would make no sense to continue to value it on nav.  But right now that just isn't the case - its track record is one of losing asset value far faster than it generates operational profit: which doesnt tend towards a high valuation by ANY method.

[Fjordbit]

Are you doing the buy back with your own funds or with the corporate funds?

Typically when a corporation does a buy back, it undilutes the shares, giving each remaining shareholder a larger dividend. This is the cause of the price rising. Will this be the case in this buy back, or will shareholders just continue to receive a share of the profits as if those shares were still issued?

Yes, it will be to buy back the shares with the company. I.E. NYAN.C will be buying back it's own shares, CPA will buy back it's own shares, and so on.

So then remaining shareholders will each get a larger dividend share?

Usagi, will the remaining shareholder each get a larger dividend share? I've asked this 3 times, but it seems you are missing the question each time.

[markm]

If anyone cares, I can go into a deeper explanation of how future cashflow is the primary determination of company market capitalization. It's a pretty important concept if you hope to invest in securities.

That sounds like the makings of an interesting thread of its own.

I am particularly curious whether/how retaining such earnings versus paying dividends would affect that since so far on my server everything is NAV based, nothing deployed there so far has any current intention of ever paying any dividends.

-MarkM-

[theasian09]

who needs sleep!
Curious to see where this goes, sad I have no extra $ to invest but oh well

[drekk]

usagi, I salute you for management *and* communication skills. I've followed events in "Economy" for a quite a while and you're one of the few havens of rationality in here.

Should I ever consider putting some notable amounts of cash in the market, I just might knock at your door.

~drekk~

[Deprived]

CPA has 52078 shares outstanding, 2012-07-31 you had 46423.
Looks like you sold another 5655 shares.
How many % of CPA are you planning to buy back? Looks like you only had 102.96 BTC
This will get you about 770 shares or so of CPA or about 1.4%
Aggressive buyback?

Figures are a little off. I don't think you can get there from here. CPA makes money over time, as do it's holdings, which is how we are doing this.

NYAN.C is currently trading at about 0.3 BTC - significantly above its NAV. You know much more about finances than I, but it seems to me buying at this price would decrease, not increase, shareholder value.

Example with rough numbers:
NYAN.C starts with 1.25kBTC in assets and 5k shares outstanding, giving a NAV of 0.25 BTC.
You buy back 1000 shares of NYAN.C for 0.3 each, totaling 300 BTC.
NYAN.C now has 0.95kBTC in assets and 4k shares outstanding, giving a NAV of 0.2375 BTC.

I understand dividends come into play, but dividends are generally proportional to NAV. I just fail to see how buying above NAV increases shareholder value or dividends. Perhaps you can enlighten me, usagi.

Usagi's first point was that future projected cashflow (and thus dividends) and not NAV should determine value, and I agree. This is the standard by which other companies are held. Apple doesn't have 655.35B worth of assets.

If anyone cares, I can go into a deeper explanation of how future cashflow is the primary determination of company market capitalization. It's a pretty important concept if you hope to invest in securities.

Apple also hasn't lost 60-70% of its asset value and isn't having to borrow funds at around 2% per week because of a liquidity crisis.

Where the value of assets is relatively stable then yes - valuing just based on those assets is horribly naive.  When the assets are mainly investments (with unstable prices and low liquidity) then the valuation of the company has to be much nearer to the value of the assets.

If CPA ever reaches a point where it generates steady revenue from its core business of insurance, outweighing any fluctuations in its investments then it would make no sense to continue to value it on nav.  But right now that just isn't the case - its track record is one of losing asset value far faster than it generates operational profit: which doesnt tend towards a high valuation by ANY method.

Wow you love to embarrass yourself don't you. I *just said* we make money, and you even quoted a thread where I said approx. how much money CPA makes in a month. See, investors like you always think they are the wise guy. It's the classic "I have been scammed before so I know how to spot a scam" mentality. It's so blindingly obvious but they can't see past their own nose. Think: "I have been scammed before" and "I can spot a scam". Here's another one; You quote how much money CPA makes and acknowledge they have loads of cash, while on the other hand you claim that valuing CPA by it's revenue over it's nav is "horribly naieve". Hahahaha. You personify why I am doing this. Investors who have conviction but are fantastically wrong about it. CPA makes A% on it's contracts, it makes B% on it's investments and you can take this to the bank, it makes C% on people just like you, who think they know what they are talking about. I mean how hard is it really? All the information is out there, a digger like you who likes to follow me around and increase his post count any way he can (including by setting himself up for some pretty massive bitchslaps, I have to admit) could do a lot better than this you know.

Revenue is not the same thing as profit.  You consistently fail to realise that and believe you're doing well even when your nav falls by 60-70%.

Quoting a thread where YOU said how much money CPA makes in a month is in no way the same thing as ME saying CPA makes that much money in a month.  Becasue our definitions of making money are different.

If a company has $1000 of assets at the start of a period, pays out $60 in dividends but ends with only $400 of assets then our interpretations would be entirely different.

I'd say the company has done horribly and incurred a loss for its shareholders of $540 - 54% of initial capital.  I'd also say that the company didn't "make" ANY profit.  Accordingly, at most I'd value it at nav.
You'd say it should be valued based on the 6% it paid in dividedns during that period.

That's no shock - as that company is basically CPA.

Every investor who bought 10 shares at 1 BTC has received around 0.06 BTC in dividends and their 1 BTC has ended up being backed by 0.3-0.4 worth of assets.  And the value of assets backing CPA is pretty directly relevant to ability to generate profit - as you have to have assets to back up the insurance policies you write.

If you really believe investments should be based only on dividend stream then you should be going all-in on OBSI.HRPT - as it's a real snip when measured in those terms at 1.0.  But you won't (nor should you).  Why?  Because there's a high-risk associated with it.

News-flash: There's also a high-risk associated with ANY company where the manager erodes NAV faster than paying out dividends.  Why?  Well do the math of what happens if it continues - as nav falls, to generate the same dividends per share then earnings have to increase progressively faster as a percentage of capital.  But capital keeps falling.  So either dividends stop/reduce (meaning valuing it on past dividends was wrong) or the company gos bust.

You can repeatedly keep claiming those who disagree with you are wrong.  But you're now on what? Your 3rd company to lose asset value?  It's hardly surprising you don't want asset-based valuation to be used is it?

[EskimoBob]

...
If anyone cares, I can go into a deeper explanation of how future cashflow is the primary determination of company market capitalization. It's a pretty important concept if you hope to invest in securities.

Good idea and please do! Educational materials are always welcome in BTC world.

[BinaryMage]

NYAN.C is currently trading at about 0.3 BTC - significantly above its NAV. You know much more about finances than I, but it seems to me buying at this price would decrease, not increase, shareholder value.

Example with rough numbers:
NYAN.C starts with 1.25kBTC in assets and 5k shares outstanding, giving a NAV of 0.25 BTC.
You buy back 1000 shares of NYAN.C for 0.3 each, totaling 300 BTC.
NYAN.C now has 0.95kBTC in assets and 4k shares outstanding, giving a NAV of 0.2375 BTC.

I understand dividends come into play, but dividends are generally proportional to NAV. I just fail to see how buying above NAV increases shareholder value or dividends. Perhaps you can enlighten me, usagi.

Usagi's first point was that future projected cashflow (and thus dividends) and not NAV should determine value, and I agree. This is the standard by which other companies are held. Apple doesn't have 655.35B worth of assets.

If anyone cares, I can go into a deeper explanation of how future cashflow is the primary determination of company market capitalization. It's a pretty important concept if you hope to invest in securities.

But cashflow will decrease when assets are used to buy back shares. Usagi may have many admirable qualities, but I don't think she can make capital appear out of thin air or generate cashflow from nothing.

[Deprived]

NYAN.C is currently trading at about 0.3 BTC - significantly above its NAV. You know much more about finances than I, but it seems to me buying at this price would decrease, not increase, shareholder value.

Example with rough numbers:
NYAN.C starts with 1.25kBTC in assets and 5k shares outstanding, giving a NAV of 0.25 BTC.
You buy back 1000 shares of NYAN.C for 0.3 each, totaling 300 BTC.
NYAN.C now has 0.95kBTC in assets and 4k shares outstanding, giving a NAV of 0.2375 BTC.

I understand dividends come into play, but dividends are generally proportional to NAV. I just fail to see how buying above NAV increases shareholder value or dividends. Perhaps you can enlighten me, usagi.

Usagi's first point was that future projected cashflow (and thus dividends) and not NAV should determine value, and I agree. This is the standard by which other companies are held. Apple doesn't have 655.35B worth of assets.

If anyone cares, I can go into a deeper explanation of how future cashflow is the primary determination of company market capitalization. It's a pretty important concept if you hope to invest in securities.

But cashflow will decrease when assets are used to buy back shares. Usagi may have many admirable qualities, but I don't think she can make capital appear out of thin air or generate cashflow from nothing.

You honestly believe she's really going to do an aggressive buy-back of shares?  There'll undoubtedly be a small immediate rise in the value of her securities - as people buy to speculate, hoping to be able to sell at a profit when her bid walls appear.  When significant bidwalls don't emerge at above nav the price will fall back below to around nav/share - with the usual spikes up when she posts her weekly spin then the falls back down when everyone notices that despite her spin she's still steadily pissing away the funds they invested.

[Atlas]

I just take this as Usagi investing in her own businesses. I wouldn't even call this a stunt. It's good business.

[totaleclipseofthebank]

But cashflow will decrease when assets are used to buy back shares. Usagi may have many admirable qualities, but I don't think she can make capital appear out of thin air or generate cashflow from nothing.

You're right, but I will be using revenue to buy back shares while we don't have new contracts to sign (vs. just investing it or holding it). I will be keeping our existing assets on the books to back existing contracts and some room for signing new ones.

This is a very common thing to do in business.

Shares undervalued? Buy back to reward long-time shareholders.

Shares overvalued? Issue new shares to raise capital and grow the business (although usually a tough sell to current investors)

[BinaryMage]

But cashflow will decrease when assets are used to buy back shares. Usagi may have many admirable qualities, but I don't think she can make capital appear out of thin air or generate cashflow from nothing.

You're right, but I will be using revenue to buy back shares while we don't have new contracts to sign (vs. just investing it or holding it). I will be keeping our existing assets on the books to back existing contracts and some room for signing new ones.

I see; makes financial sense as long as no more promising investments are available, which doesn't seem to be the case at the current time. Thanks for explaining!