[LTC-GLOBAL] LTC-ATF

[Deprived]

Exchange-Rate : .00583

Adjusted NAV/U : 16.3288

Bid at 16.06

Over half the new batch of bonds have already sold.  I've deployed funds to BitFunder - for now temporarily increasing our own BTC exposure (only up to 13.5%).  That will drop to under 8% once remaining bonds are sold.

I've updated the OP with a list of where we trade and rough percent ranges of total capital held on each platform.  That gives a bit more information for prospective purchasers of Units or Bonds to assess platform-dependent risk.

[1714813396]

1714813396

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WEEKLY RESULTS




Another fairly slow week - we made 2.8% trading profit, up from last week's 2.4% but still well below what we'd been used to previously.  Whether this sort of result or previous ones represent the 'norm' is up for debate - I believe the likely average result lies somewhere in between.

We still have fairly significant BTC exposure - due to me moving extra funds over to BTC.CO.  I'm not sure whether we need more there permanently yet (I'm certain we'll need significantly more before too long).  For now I'm just going finish selling last of current batch of bonds (up to 1600 total) - think that'll do us until another liquid security or two relist there.

We made a profit on all 4 sites we trade on this week - the extra capital from bonds is definitely paying for itself.  I'd guesstimate profits this week from LTC-Global only would be around 1.5% - there's a few securities in a slump and others where large-scale market-fixing is going on, making it harder than to usual to trade profitably there (though a slump CAN sometimes deliver slightly longer-term profit when price recovers).

Management fee this week is 1 unit - which will be transferred after posting this.  Note that if profits ever fall below about 2% per week I won't get a management fee at all (though I'd still do OK on the ~half of units I personally own of course).

Bid at 16.16

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Trading's been fairly slow over Christmas (expected) but we've been lucky enough to manage a few decent trades.  All bonds on market have sold out (1600 total released) and there won't be any more sold by us this week (unless someone sells back).  I'd expect some more to be issued before too long (for more capital on BTC.CO) so would recommend against buying bonds at any significant markup to face value.

Exchange-rate : .00572
Adjusted NAV/U : 16.8860134

Bid at : 16.55

[Deprived]

WEEKLY REPORT




I'd been expecting a very quiet week over Christmas - in the end we made a pretty healthy profit of a it over 7%.  LTC fell vs BTC significantly - but even discounting that we made a trading profit of just over 6%.

Of the BTC exchanges we trade on:

BTC.CO is picking up nicely - we're going to need more capital there as the range of securities expands (at one stage this week we had almost all our funds there invested in assets).

Bitfunder is picking up more slowly - I DO expect us to need more capital there eventually, but not in the short-term.

CRYPTO - there's very few assets with any liquidity there.  There ARE a few good opportunities there but I'm not expecting to need more capital there in the foreseeable future (it would take some large asset relocating to there - which I'd say is fairly unlikely given how horrible the platform is to use).

This week we'll be releasing 400 more bonds (taking BTC bond-capital to 20 BTC) with that being moved to BTC.CO for use there.

At the moment we still have a fairly significant percentage of Net assets in BTC - in fact it rose this week (I did no fund movements - the rise is due to us making a higher percentage profit in BTC trades than LTC ones plus the fact that bond interest and the continuing depreciation of the ticker cost are both charged in LTC).  There's three ways to lower that:

1. Convert some BTC back to LTC.
2. Sell more units in the fund.
3. Sell more bonds and don't convert the proceeds to BTC.

All of these are unacceptable for the same reason - we don't need more LTC-denominated capital.  So for now we'll just accept slightly higher BTC exposure than ideally I'd like.  If the LTC-GLOBAL market stays with some assets market-manipulated (into artifical trading ranges - where a collapse any time is possible), others totally illiquid and others totally unreliable then we can reconsider down the line.  At least the bonds have got our exposure more than halved from the 38% it would be had the capital been raised from selling more units.

We've now passed 3 months of operation - and despite losing over a quart of NAV due to GLBSE closing, we're up over 75% from where we started.  Not a bad start - hopefully we can build on it next year.

I've updated the historical results table in OP of this thread.

Bid at : 17.1 (a bit wider than usual as the exchange-rate is currently moving quite quickly).

Management fee of 3 units will be transferred shortly after posting this.

[Deprived]

Exchange-rate : .00527

Adjusted NAV/U : 18.243257

Bid at : 18.0

Trade was almost non-existent News Year's Eve/New Year's day - but since then we've had a few very profitable trades meaning we're up a decent amount already this week.  As majority of this was BTC denominated there's no longer any great need to sell all of the 400 bonds I'd planned to this week.  Got 41 left on market at moment, which would take us to 1800 total - then won't btoher with other 200 this week unless some great deal shows up.  No point raising capital just for the sake of it - even though the interest we pay IS pretty minimal compared to the profit we make using the capital (consider we pay just over .1 BTC to service our current bonds and have made over 2.5 BTC profit on bond-raised capital THIS week - i.e. half a year's interest on them) and made similar last week.  Can definitely say the bonds are a great success for us so far (though a week of heavy losses and the bond-holders would be the ones with the smug grin on their faces as they got interest and we got losses).

Oh - and the increase in NAV/U doesn't tell the whole story.  As we had a big jump in one go I went ahea and wrote off the remainder of the ticker cost (150 LTC).  So we actually made nearly 2% more profit than this update reflects.  So no more depreciation of ticker to do - that's reduced our apparent profits for the last month as we'd been gradually writing it off.

[Deprived]

Exchange-Rate : .00524

Adjusted NAV/U : 19.026466

Bid at : 18.6 (put it at 18.5999 as someone already had a bid at 18.6)

The week continues to be very profitable - only need a small bit more profit for a 10%+ trading on the week.  In fact we've already made over 10% profit trading as I wrote off rest of the ticker cost.

I don't expect a huge amount more profit this week - as we're currently back to a mainly cash position (all cash other than the ASICMINER and some assets of LTC-GLOBAL).

ASICMINER's chips arrived from the foundry, passed initial tests and are now being packaged ready to place on boards and start mining.  Unless something gos hugely wrong at that point, our tiny holding in ASICMINER is likely to increase greatly in value.  I still haven't received final confirmation of how many we hold (spreadsheet shows 10 - but it could be a bit more) and at present they're not tradable.  They should be available for trading shortly.

I wouldn't be surprised to see significant price drops on other mining securities once ASICMINER starts hashing - and have almost entirely cleared our positions in mining securities.  There's a few reasons why a drop is likely:

1.  A large chunk of new mining power obviously reduces the immediate output of all other mining companies.
2.  Companies with pre-orders in at BFL etc are going to have to have a serious rethink about their plans.  It's now extremely unlikely they'll gain an advantage from being first to mine with ASICs - so there's no longer any justification to pay premium prices for being in first batch of ordered ASICs.

Pretty obviously BFL hiked up the price of its first batch to recover development costs.  This is clear from them offering a full refund on their FPGA gear against the price of their ASICs.  That returned hardware will be of little value to them - and obviously reflects that the price they're quoting for ASICs has a huge enough markup to soak up that discount.  Anyone ordering ASICs who is NOT trading in should likely immediately request a refund - the mining revenue they'll miss out on by waiting for hardware is likely to be more than compensated for by significantly cheaper hardware.

With ASICMINER's development costs being recouped via mining, they'll be able to start selling hardware at far more competitive rates - though likely not for a few months.  Friedcat has given out some information on costs of chips - and it's pretty obvious they could sell at around 1/3 BFLs cost (in GH/s per $) and still make a very good margin.  So I'd expect ASIC prices to head in that direction fairly rapidly - once the other ASIC manufacturers have got back their development costs from the first batch of purchasers.  The issue thus becomes for miners upgrading whether buying at first-batch ASIC prices from BFL/etc is going to make back 2/3 of the cost in a few months from mining.  That seems VERY unlikely if ASICMINER will already be mining 0 along with all the other people with pre-orders.

My expectation is that most other mining companies will actually STICK to their current plans - even though doing so likely condemns them to loss (remember - in mining companies, the operators typically make THEIR profit on mining: so they make most profit by mining as much/as soon as possible even if doing so makes less profit/more loss for the investors).  That won't change unless/until mining companies beging paying operators based on profit rather than turnover - which is highly unlikely given how few mining companies actually make any profit at all.

Getting back to the point - at a minimum there's going to be uncertainty over the value of mining companies.  And that uncertainty can only be over whether/by how much the ASICMINER news devalues them - there's very few for whom it's good news (debatably ones with no commitments to pre-orders + MOORE).  So for now I'm not trading MOST mining companies unless I can buy at a much lower price than I'd previously have required.

[Deprived]

Weekly Report




Well, officially it didn't quite manage to be a 10% profit week.  We got over 10% trading profit then LTC rose significantly vs BTC pushing profits down below 8%.  Then LTC fell back against BTC, not quite getting back to 10% profit for us on the week as I type this (it may well be there by time I finish posting - but have to take a snapshot at some point to do the report).  In fact we still DID make over 10% trading - just it doesn't show in results as I wrote off the last 150 LTC of the bond ticker cost.

We have 1900 bonds in the wild now - I sold 100 to an order on the market when exchange-rate rose past the price it was at.  Of course exchange-rate then moved back other way - so whoever I sold to won't have any complaints.  Despite that we still have over 20% of fund capital exposed to exchange-rate changes.  As discussed previously, the obvious two solutions (sell more bonds and/or convert some BTC back into LTC) aren't really all that feasible - as we just don't need more LTC-denominated capital right now.

I have, however, figured out a wait around it.  What we ideally want to achieve is ALL of the following:

1.  Decrease or at least not increase our LTC-denominated capital.
2.  Keep our BTC-denominated capital the same (or a small increase wouldn't do any harm).
3.  Reduce the percentage of fund exposure to BTC.
4.  Ensure we keep bonds measured as a percentage of BTC-denominated capital below 90% (around 85% would be ideal - right now its 64%).

This can ALL be achieved by one simple measure - increase the number of bonds without actually selling any.  So the amount of capital the fund controls would be unchanged - just the BTC-denominated portion would now consist far more of bonds, lowering the fund's exposure to currency movements.

Based on current fund breakdown this would be done by issuing to every owner of units in the fund 2 LTC-ATF.B1 bonds for each unit they hold of the fund.  I would then further need to convert around 3 BTC-worth of the fund' LTC reserves into BTC.  We'd then end up with slightly more BTC capital than now (3 BTC more), slightly less LTC (3 BTC-worth less - around 550 or so) and exposure to BTC for the fund down from 20%+ to 12%ish.  Investors would still own the same percentage of fund as before.  NAV/U of fund units would drop by the value of 2 bonds - and future growth on those units would be at a higher percentage (assuming we make over 0.6% profit per week).  Total value of 1 unit + 2 bonds would be identical to the value of 1 unit had the bond issue not happened - and exposure/total profit for an investor would also be unchanged if you just held onto the bonds.  But of course you can then choose to decrease your BTC exposure by selling the bonds (or increase it by obtaining more on the market).  Were this to go ahead I'd offer to buy bonds at 100% face value from anyone who didn't want them (buy them with my personal account that is) and, of course, would offer a buy-back at over NAV/U on fund units if anyone simply didn't like the idea at all.

The principle behind what I'm suggesting is simply to try to reduce (as far as possible whilst maintaining obligations to bondholders) the fund's exposure to BTC - so that investors who WANT such exposure can choose to gain it to the extent they want (either by buying our bonds, holding BTC or doing anything else they choose).  Personally I actually WANT a decent amount of BTC exposure - but the correct way for me to get that is by investing seperately to the fund in BTC (obviously my preference is the fund's own bonds) so that I control the ratio.

The change would have minimal impact on management fees - I'd actually lose out on spread-sheet calculated fee due to bond payments being made before fee is worked out (so i'd lose out on 10% of the new bonds' weekly dividends).  But that would be balanced out by unit price being lower, so rounding down having less impact.

As the change would lower NAV/U, should new units need to be issued in the future (only likely if trade volume on the exchanges grows much faster than we make profit - we'd still have space to issue another 30 BTC or worth of bonds even before making ANY more growth) then I'd commit to offering them first to existing investors at NAV/U in ratio to current holdings - so noone lost out on the percentage of fund they hold due to the devaluation of units followed by issue of new units.

There's also a simpler alternative - issue a one-time dividend on the fund (of around 3.5 LTC per unit) then just sell new bonds on the market.  Easier for me to adminstrate - and could do it in conjunction with allowing investors to reserve 2 Bonds per unit they hold which they can buy for the value of the dividend (Dividend would be precisely the value of 2 bonds).  That would mean investors who didn't want bonds could just do absolutely nothing - and those who DID want bonds would just need to do an email exchange with me confirming the account name from which the dividend would be returned (and to which bonds would be sent).  I'd tend to go with the latter approach - as it avoids anyone who doesn't want bonds having to do anything at all.

Summary of Suggestion :

1.  A one-off dividend to unit-holders of 0.02 BTC (paid in LTC obviously).
2.  Sale of new bonds with a face-value equal to the total amount dividended.
3.  Unit holders would be entitled to purchase up to 2 bonds for each unit of LTC-ATF they hold at exactly face value (locked in at exchange-rate at time of dividend) - remainder would be sold on open market at usual rate.

Summary of impact of Suggestion :

1.  Reduced exposure to BTC for LTC-ATF - allowing investors better to balance their own exposure and minimising exchange-rate caused fluctuations in NAV/U.
2.  NAV/U of LTC-ATF units would fall by 0.02 BTC.
3.  Fund would have lower NAV - but same capital under its control.
4.  Funds controlled would be slightly less LTC-denominated and slightly more BTC-denominated - reflecting where growth is more likely and reducing need to issue more bonds in the short-term.
5.  Growth of NAV/U in future would be expected to be a slightly higher percentage - but a slightly smaller absolute number (ino change in either when aggregated for any investor who accepted and held 2 bonds per unit).
6.  Management fee would tend to decrease slightly as a percentage of profits but increase slightly as a number of units (very small difference in both cases - and often probably unchanged on both counts due to rounding).

Feedback (from anyone - but especially from investors) welcome - it may well be that noone except me actually cares about what extent the fund has exposure to BTC (or about accurately balancing their own exposure).  There's no desperate rush on it - so it's not an actual proposal yet.  It's just a suggestion on how the fund could address an issue that - whilst hardly disastrous - is presently not ideal.  Do note that originally there was no plan at all to deal with this - as back then nearly all trade was in BTC on GLBSE so there was no alternative other than massive BTC exposure.

Bid at : 18.6 or thereabouts (looks like currency has moved whilst typing all this up - so will calculate it after sending management units).

Management fee of 4 units - which will be transferred shortly.

[Deprived]

Exchange-Rate : .00538

Adjusted NAV/U : 19.4900979
Bid at : 19.1

Off to a steady, if not spectacular, start this week.  In contrast to previous few weeks the majority of profit so far has been on LTC-Global (though we've already made enough BTC-denominated profit to cover this week's dividend on the bonds).  Hopefully this pickup in activity on LTC-Global continues now the holiday season is out of the way.

New securities (mainly GLBSE relistings) are popping up on BTC.CO and Bitfunder - which means more opportunites for profit.  It also means more opportuniteis for fuckups - as someone found out when they overlooked (due it not being publicised well) that there'd been a 30:1 split on RSM and bought shares at what would have been a bargain pre-split but was about 15 times value post-split (our fund wasn't involved in this trade at all).

New bonds are being issued up to a total of 2500 - with funds from this batch earmarked for Bitfunder (in fact the funds are already on their way there).  Bitfunder doesn't allow leveraging same funds across orders on multiple securities in the same wat LTC-Global/BTC.CO do - so unfortunately we have to keep more capital there to maintain same volume of orders.  Because of that I have to pass up marginally profitable trades - but there's enough decent opportunities there to still make trading there worthwhile.

[Deprived]

Exchange-Rate : .00514

Adjusted NAV/U : 21.014388
Bid at : 20.5

Had a few decent trades overnight (I bought the shares before going to bed and they sold whilst I was asleep) which pushed us up over 10% adjusted NAV/U growth so far this week.  LTC falling in price has also contrbuted to apparent profits - without the exchange-rate movement we'd only be at about 9.85% profit for the week so far instead of at 11.4% (Those percentages are trading profit - increase in adjusted NAV/U is lower due to project management fee deduction).

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Not such good news today I'm afraid - whether it's bad news or not isn't yet clear.

At some point overnight the wallet on Cryptostocks was compromised (not OUR wallet - the site's own one).  At present there's just a news item up saying "Withdrawals are currently deactivated."  When I first logged into the site maybe an hour ago there was a longer news item saying that their main wallet had been compromised and that everyone would need to use new deposit addresses and that withdrawals would be suspended.

No information has been provided on how much (if any) actual funds were stolen/transferred.

At present our balance on Cryptostocks is 5.982 BTC and we hold no other assets there (the 1.15 BTC increase in this since last report is the profit we'd made on there so far this week).

Obviously worst case is the site is bust and we lose that ~6 BTC.  Best case is they only lost a small amount (or nothing) in a hot wallet and our funds are intact.  If a clear (and credible) statement is made that all depositors' funds are intact then we'll continue trading there as before.  If withdrawals are reactivated without any such statement then I'll immediately withdraw all our funds.

For now I'll be placing Bids by the fund as though the money had all gone - but I doubt that's actually the case.

In the absolute worst case (funds there totally worthless) it basically just wipes out this week's profits.  So I've already decided that even in that event, all of the loss would be applied to the fund - and the face value of bonds would not be reduced.  I've also checked and even if those funds were totally vanished we already still meet all necessary targets for servicing the bonds - i.e. we still have sufficient BTC-denominated capital etc.

Exchange-Rate : .00499

Adjusted NAV/U (assuming funds on Crypto intact) : 21.364
Adjusted NAV/U (assuming funds on Crypto gone) : 19.1349

Bid at : 18.7

Trading is possible as normal on Crypto (and our balance shows as intact) - but I won't be buying anything until the status of funds is clear.  I'm performing a clear of all orders on LTC-GLOBAL so noone is left with a bid over NAV/U up that they wouldn't want up with this new information.  I'll then place a bid with my personal funds at just over full NAV/U - so any smaller investors who want out can get out.  I personally expect our funds will become available in full - but have no right to make others act on that belief: hence the fund's own bid being placed conservatively as though the funds will not be returned (so there's no risk of dilution of value for investors if some sell out).

Obviously I am making no trades myself on LTC-ATF until after I've cancelled the order book.

[Deprived]

Looks like Crypto situation is resolved.  BTC withdrawals have been reenabled and are working there and on Vircurex (same problem and same owner).  Seems like they lost some funds but are covering it themselves.  Obviously I can't be sure they actually have enough cash to cover all deposits - but I could never be sure of that anyway (and same's actually true for ALL exchanges we operate on - none have public segregated deposits on display).

I withdrew just under half our balance on there anyway (as for a semi-related reason we don't need quite so much there) leaving us with just 3 BTC there.  I'm now trading again on there.

Exchange-rate : .00495

Adjusted NAV/U : 21.5477
Bid at : 21.0

The LTC/BTC exchange-rate has seen a lot of movement in last few days (prompted undoubtedly by BTC rising vs USD which nearly always triggers a fall in LTC/BTC due to arbitrage - with the low level of orders making the price fluctuate around a bit before settling). Will almost certainly do our weekly report tonight as not sure how much I'll be around tomorrow.  With crypto back functioning it's definitely been a very good week for us.

[Deprived]

WEEKLY REPORT




We ended the week with a trading profit of just over 14%.  At one stage it looked like we may not make any profit at all (the CryptoStock scare) then shortly after that it looked like we may make almost 20% (LTC dropped heavily for a while before recovering today).  I'd estimate that we make 2-3% trading profit per week from normal buying and selling of shares - with good weeks (such as this one and last) coming when I manage to get one or two highly profitable deals in addition to the normal fare.  Don't assume that I always make profit on deals either - there have been a few occasions when I've had to sell off assets for less than I bought them for (one this week I sold at a loss about 5 minutes after I noticed my buy order had been filled) or have had to mark assets' value down in the book.  In general I'm more aggressive about marking things down in value than marking them up - I'd rather undervalue our holdings than overvalue them.

I've given plenty of consideration over the past week about how to resolve our current surfeit of LTC-denominated capital.  My suggestion last week was to dividend some of it out - then replace it with more BTC-denominated bonds (either directly allocated to investors in lieu of dividends or just sold on the open market).  That still remains a feasible option - however we then run the risk that if our need for capital grows we could reach the point where we can't sell more bonds without massively exposing ourselves to heavy losses if only 1 or 2 investments go bad.

What I'm now considering is expanding our operations a bit.  Specifically, I'm looking into this fund running some pass-throughs (on LTC-GLOBAL).  The two assets I'm considering for initial pass-throughs are SatoshiDice and BitBet.  Both of these are listed on MPEx - I wouldn't bother running pass-throughs to anything on BTC.CO/BitFunder as there's no barrier of entry to anyone just making an account there and buying the originals themselves.

The fund would:

Cover the costs (ticker for each and  0.09 BTC/month brokerage fee)
Buy the shares that were then sold in the pass-throughs

All profits from the pass-through (cut of dividends plus margins made on buying/selling) would be treaeted just like any other profits the fund makes.

There's two specific risks the fund takes on if we do this:

1.  That we buy shares then their price collapses and we either can't sell them or have to sell them for less than we buy for.  This is actually almost irrelevant - as it's precisely the risk we take on in every trade I make already.
2.  That there's insufficent interest in the pass-throughs to make back the cost of tickers and cover broker fees.

Risks that we DON'T face are:

1.  Exchange-rate exposure,
2.  Changes in value of the underlieing assets.

All sold shares in the pass-throughs would give neither of the above risks to the fund - as the liability due to the investors in the pass-through would be exactly matched by the value of the underlieing assets we held.  And the two would move in tandem.

As both of those assets are BTC-denominated, the capital used to buy them would be largely bond-raised - but it would still soak up some of our surplus capital.  The actual capital needed would be pretty small - as we'd be buying small batches as and when needed: not buying some huge chunk then praying we could sell them.

I need to do some proper calculations to work out exactly what level of interest we'd need to make this a profitable proposition for the fund - and obviously won't intend to proceed unless I'm confident the fund will make some extra profit from it.  Any thoughts/feedback on this are welcome.  Note that I COULD just run the pass-thoughs myself and keep all profit (or loss) for myself.  I'd prefer, however,  to have everything run from one account - and to be able to use all funds where they're needed rather than keeping seperate wallets and having to do pointless currency conversions.

Management fee this week is 6 units (rounded down from 6.07) which will be transferred shortly after posting this.

I've updated the OP of this thread with up to date results history and have also updated the indication of where our funds are typically held.

[MPOE-PR]

WHAT IS LTC-ATF AND WHY DOES IT EVEN EXIST?

LTC-ATF is a small fund established to trade in securities denominated in crypto-currencies.  The fund's focus is very much on trading rather than investment - it doesn't sit on investments waiting for them to (hopefully) make a profit, rather it strives to buy and sell making profit in a much shorter time-scale.

The obvious question to ask is "Why bother setting up a fund with such a small amount of capital - couldn't you just use your own funds to trade?".  There are a range of reasons why the fund exists - hopefully the give some insight into
the rationale behind the fund and why it operates the way it does.  In no particular order :

Funding : Of course I have sufficient funds to use my own capital for an operation this size.  But if market conditions (range of securities and volume traded) change such that a much larger operation is desirable then without a track-record it would be hard to raise the funds to take advantage of that.

Fairness : I'm by no means shy about expressing criticism of other virtual securities.  It's therefore only fair that I run one myself and give opportunity for those I criticise to reply in like manner.  It's my hope (and expectation) that my performance, fairness to investors, reporting standards and transparency will make plain that - whatever else my faults may be - I'm no hypocrite when I
complain about others' lack of those same qualities.

Fun : It's far more enjoyable running the fund in public than it was when I just invested my own funds in private.

Motivation : Having a responsibility to my investors causes me to put more effort into my endeavours than I otherwise likely would.  If I become lazy, lax or careless then it will become a matter of public record - a great incentive to do none of those.

Start Small : It's painful watching people attempt to create new companies in areas they have no proven expertise in and trying to raise thousand or tens of thousands of BTC right from the start.  I'm doing it (what I believe to be) the right way - start small, prove you can do well whilst small then (and ONLY then) expand.

WHAT SECURITIES DOES LTC-ATF OFFER?

At present LTC-ATF offers two securities on LTC Global:

LTC-ATF - This is the parent fund.  Investors in this purchase units of the fund representing a portion of the assets owned by the fund.  This fund does not pay dividends - all profits (or losses) are reflected in a regularly updated and published fund valuation.  Liquidity is provided via a constantly maintained bid-wall just below NAV/U.  Units of LTC-ATF are valued and transacted in LTC.

LTC-ATF.B1 - This is a bond issued by LTC-ATF.  The bond's purpose is two-fold - to retain as much of profit as possible for LTC-ATF investors and to allow trading in BTC-denominated securities with greatly reduced exposure to fund value changes casued by exchange-rate movement.  This bond has a face value (and pays dividends) denominated in BTC but transacted in LTC.  Dividends are paid weekly at a fixed rate which can be raised by the fund manager at will (but never lowered again whilst there are bonds outstanding).  Liquidity is provided via buying back through the market at just below face value and by facilitating sell-back of larger quantities of bonds through direct transfer.

At present 2500 LTC-ATF.B1 bonds have been sold.  These have a face value of 0.01 BTC each and pay a dividend of 0.6% of face value each week.


PLATFORMS TRADED ON AND DISTRIBUTION OF FUNDS

I list below the exchanges/platforms our funds are used on - along with an estimate of the percentage of funds deployed at each location.  Some of these ranges are pretty wide - actual funds on each platform varies as profit/loss occurs and needs change.  I don't intend to update the percentages too often - they're only there to give a general idea of how funds are distributed.  I WILL, however, update the list promptly if we add an extra platform to which we have exposure.

LTC Global : 35%-55%.  Majority of funds will usually be here - as we can't use LTC denominated capital anywhere else (there's no meaningful LTC activity on Crypto).  This percentage will drop as activity on BTC.CO/BitFunder picks up and we issue new bonds to take advantage of it.

BTC-E : 10%-20%.  We hold reserves here (for faster movement between LTC/BTC, to exchange to maintain ratios and to ensure we can maintain bidwalls in the event lots of our Bids get filled).

BTC.CO : 10-25%

BitFunder : 10-25%

Cryptostocks : 3-10%  Significantly lower activity here than on the other two BTC denominated sites.

WeExchange : 0%  Have to pass through this site to deposit/withdraw from BitFunder.  No funds are left here for any period of time.


HISTORICAL RESULTS

The spreadsheet below shows the performance of the fund since its inception.



Here's an explanation of the various columns (from left to right) :

Date : With the exception of the first row (which records the start of the fund) this is the date at which a report was produced.  This is typically done each weekend - however it can be done more of less frequently.  Shorter periods between reports will only occur if either the fund is in significant profit AND is selling new units (where the ask price gets artificially inflated by unclaimed management fee otherwise) or if a very significant event occurs (such as the closing of GLBSE).  For the remainder of this post I refer to each of these periods as "a week"  - this should be read as an abbreviation for "accounting period (typically a week)".

Exchange-Rate : The LTC/BTC exchange-rate at the time at which the report was generated.

Start of Week NAV/U : This is the NAV/U of the fund at the start of the week.  If the previous week was profitable then this will be lower than the ending value listed for the previous week (due to the reported value at the end of a week being before deduction of management fee).

End of Week Actual NAV/U : The NAV/U of the fund at the end of the week.  This is the value before deduction of management fees, but after servicing any outstanding bonds or other commitments.

End of Week Actual Profit : This is the trading profit made by the fund expressed as a percentage.  Again, this is before deduction of management fees, but after servicing any outstanding bonds or other commitments.

%LTC : The percentage of the fund's net assets which are denominated in LTC.

%BTC : The percentage of the fund's net assets which are denominated in BTC.  Net assets refers to gross assets less liabilities.  Bonds are a liability at their face value.  So if the fund had BTC denominated assets (cash+securities) worth 30 BTC but had 20 BTC worth (at face value) of outstanding bonds then the fund's net BTC-denominated assets would only be 10 BTC and this percentage calculated accordingly.

Recalced minus E/R NAV/U : This is a (fairly crude) estimate of what the NAV/U would be were any exchange-rate movement ignored.  It is the average of (the average fund-split between currencies at the old exchange-rate) and (the average fund-split between currencies at the new exchange-rate).  i.e. the calculation assumes that the exchange-rate change happened steadily throughout the week and any change in the split between currencies also happened steadily through the week.  Sometimes one (or both) of those assumptions will be wrong.  This is just an approximation designed to give a crude view of what part of profit/loss was actually from trading rather than from exchange-rate movement.

Recalced minus E/R Profit : This is the profit that the fund would have made (expressed as a percentage) were the NAV/U at end of week the one recalculated in the previous column.

These last two columns are important - as the maximum rate that LTC-ATF is able to offer on bonds is one third of the average weekly profit adjusted to remove exchange-rate fluctuations.  This value needs to be defined ignoring exchange-rate impact as funds raised by issuing BTC-denominated bonds are immune to exchange-rate changes.  Below the main table are listed the average gross profit per week (i.e. before management fee) and the maximum rate LTC-ATF is allowed to offer on bonds.  Both of those are AFTER adjustment for exchange-rate fluctuations.

At the time of writing this, that figure sits at 3.2%.  There is no way a rate THAT high will ever be offered as I believe our results so far are above expectation and we shouldn't need to offer that high to sell bonds anyway (and why pay more than we have to?).

I had previously missed this, but I have to say (belatedly) that it is a pretty good example of how one should conduct themselves if they want to be taken seriously, at least going forward.

[Deprived]

Exchange-Rate : 0.00448

Adjusted NAV/U : 22.66454
Bid at : 22

We've made a decent start to the week - though not quite as spectacular as the growth may at first seem to show.  Although on first glance we're up over 5% a decent chunk of that is due to LTC falling significantly vs BTC (with ~25% of our holdings BTC-denominated a drop in LTC/BTC rrate of 10% converts into a rise of ~2.5% in NAV/U).  If we look at actual trading profits we're only up just over 3% - which is still reasonable for only being 1 day into the week.  We'd be up more if I hadn't had to liquidate a holding at a loss to avoid exposure to bASIC (where there's now significant questions over when and even IF their ASICs will be available).

I'm out for most of the rest of the day - will see about making some progress on getting our pass-throughs sorted tomorrow.

[Deprived]

I'm now putting a motion up for vote:

The following motion is being put up to vote on :

--- MOTION BELOW THIS LINE ---

This motion is to make an addition to the contract for LTC-ATF:

A new section to be added to the contract as follows:

PASS-THROUGH OPERATION

The fund manager is authorised to run pass-throughs on LTC-GLOBAL to securities issued on exchanges other than LTC-GLOBAL. 

Costs associated with creating these pass-throughs will be charged to the fund and treated as an non-realisable asset depreciated to zero over a period not exceeding 20 weeks.  No additional management fee may be taken for administering these pass-throughs (any profit from them would be treated as normal LTC-ATF profit and management fee applied as usual).

The following restrictions are placed in respect of these pass-throughs:

1.  With a single exception LTC-ATF must always hold at least as many units of a security to which a pass-through operates as (units outstanding + units for sale).
a)  The exception is that this may briefly be theoretically broken whilst buying back pass-through units from an investor.

2.  No pass-through may offer any guarantees in respect of the performance of the underlieing asset.  Specifically, no guarantees may be offered by the manager in respect of either future prices or dividends of any security to which a pass-through is operated.

3.  Risk of failure of any asset to which a pass-through is operated, along with risk of failure/default of any platform on which those assets are held or transacted MUST be passed on to purchasers of units of the pass-through.

Manager has authority to define the detail of how pass=throughs will be managed as he sees fit within the above parameters.

--- END OF MOTION TEXT ---

As with bonds I've kept detail out of the motion - so as to avoid the need for modification of the contract if any minor change needs to be made to current or future pass-throughs.

At present it is my intent only to offer pass-throughs to investments on MPEx - starting with S.DICE and S.BBET.  These will be purchased vis CoinBR - where we now have a working account and can trade MPEx securities on behalf of the fund as well as for pass-throughs.

I am proposing the following fees on them:

1.  A spread of around 2.5% on buys/sells.  Around 1% of this will be eaten up by fees to us (transaction fees, currency conversion fees, currency movement fees).
2.  A fee of 2% on dividends.  These would be converted based on exchange-rate mid-point, meaning we actually only make around 1% ourselves sometimes - depending on whether we need to actually convert currency or not.

The biggest potential profits come for LTC-ATF in the following situations:

1.  The traded range of a security to which we run a pass-though moves significantly and we can either sell or buy on the pass-through at a significant profit compared to buying/selling the underlieing asset.
2.  We manage to buy shares at Bid price then sell them on the pass-through at Ask price.

The risks to LTC-ATF are two:

1.  There is little/no interest in something we run a pass-through to - and we lose the 250 LTC ticker fee for it.
2.  We buy shares to sell in a pass-through and their price drops before we sell them, forcing us to sell at a loss.  This is balanced by the chance that we buy and the price rises before we sell - allowing us to sell at more than our standard 2.5% markup.

CoinBR has a 0.09 BTC per month fee (plus 0.5% per transaction).  We need to trade a volume of about 5 BTC in total pass-throughs per month to cover this.  As we'll be trading on our own behalf anyway this is largely irrelevant.

To cover the costs of a ticker for a pass-though, my estimate is that we need to trade around 25 BTC-worth of that security.  That could be 25 BTC of sales or 12.5 BTC of sales and 12.5 BTC of buy-backs.  Provided I pick securities with decent value I don't see that being a problem - there's a lack of good investment opportunites on LTC-GLOBAL right now.

Our actual margins are slightly lower than those of most pass-throughs (when you take into account that we're absorbing exchange-rate conversion fees and movement fees) which will hopefully make our offerings fairly attractive: our profit will hopefully come from volume and from smart trading on my part to increase our actual profit above the headlined 2.5%.

There is no guarantee the motion will pass - I currently personally hold just under 50% of units in LTC-ATF (I sold some recently at steep markups to NAV/U and bought a chunk of our bonds) so at least one other investor will need to vote yes for the motion to pass.  If there's any significant opposition (No votes) then I'll vote No myself anyway and run the pass-throughs personally (I have no inclination to drive out long-term investors by making changes/extensions to what the fund does against their wishes).  If the motion passes then, as with the previous motion, I'll offer a buyback above NAV/U for a week afterwards for anyone who disagrees with it (that option has been available for a while anyway - with buys over NAV/U up from myself and others).

We already have an account on CoinBR - setup last night - and have some funds there (and orders up).  I moved funds from BTC.CO to there (as we had most spare funds there and there was no fee for the transfer).  Will sell some more bonds now to replace the BTC.CO funds - even if we don't go ahead with the pass-through we'll still want to trade on CoinBR/MPEx.

One last unrelated point - I've now received confirmation that we do actually hold 10 units of ASIC-MINER.  Had been hoping we held 16 - but the 10 in spread-sheet was correct: we must have sold some shortly before GLBSE went down (explaining the extra 0.7 BTC we received as I'd guessed).

[burnside]

I think CoinBr is a great platform.

Have you considered going direct to MPEx?  The up-front cost is steep, though there is a referral discount I believe, but the transaction fees are lower, (0.2% to the seller, 0% to the buyer) there is no maintenance fee, and the risk to the passthru assets is lower.  I think rini17/Jurov is a good op and we've discussed the security of CoinBr at length (it's pretty good) to where I'd be comfortable using the platform personally.  When you're operating a passthru you have to set the gold standard and the risk of Jurov getting hit by a bus is non-zero.

Cheers.

[Deprived]

Exchange-rate : 0.0043
Adjusted NAV/U : 22.91129
Bid at : 22.4

Profit for the week has continued to grow - in part from weakening LTC and in part from actual trading profit.  So far this week all profits have been on LTC-Global and BTC.CO (last week the biggest profits were on Bitfunder - with good performance on Crypto and very little profit on BTC.CO : showing the benefits of operating on a range of platforms).

The motion passed with no votes against it (majority of shares held by people other than myself voted yes as well).  As I did last time a motion changed the contract, I will be offering to buy back shares at above NAV/U for the next week (until 23:59:59 GMT on 23rd January).  At present there's a bid up by the fund for 50 units at 23.5.  I will reimburse from my personal funds the 1.1 LTC above the fund's normal price for any units sold back (At this juncture I am inclined NOT to relist them for sale as we have more than sufficient LTC-denominated capital for the immediate future).  If anyone wants to sell back more than that - or wants me to update the order before selling (in case NAV/U has risen) then feel free to PM me.

I will shortly create the asset and contract for our first pass-through which will be to Satoshi Dice.  I HAD intended to to BitBet first but at the moment the price is in a small slump (it was to be expected due to the way the IPO is being done - which I'll explain when I do get around to doing it).  Creating a pass-through when the price is falling is very risky for our fund - as we could easily end up buying shares then selling the pass-through to them at a loss (to be accurate - the risk isn't in creating the pass-through, it's in populating it with stock).  S-Dice, on the other hand, is rising at present with a very narrow spread which is ideal both for us and for potential LTC investors.  In fact my fear is that the price of it may over-shoot its reasonable range before we get approval for the pass-through listing (there's remarkably little of it for sale and a very heavy order book).

Accounting for the pass-throughs will be very straightforward.  All shares we hold to which we operate pass-throughs will be listed as long-term with the total volume held shown in each week's report.  These will be valued  at the mid-point between highest bid and lowest ask.  The number of units sold of each pass-through will also be listed - and that number of underlieing asset discounted when calculating both total assets and net assets (those shares 'belong' to the investors in the pass-though and can't be traded - so aren't assets of the fund in any meaningful sense).  The value of shares committed to pass-throughs also (pretty obviously) can't be counted as BTC assets towards the ratio we need to hold to ensure bond backing - but unsold ones (equally obviously) can.

As with all other assets we invest in, I will be aiming not to commit more than 10% of total assets to a single share.  This will slow down the rate at which we can sell shares in the pass-throughs but is absolutely necessary to ensure we don't over-expose ourselves to a single asset.  For S-Dice (which is traded on BTC.CO and BitFunder) our exposure is considered to be all units we hold or have bids on across all platforms less the number of sold shares in our own pass-through.

[Deprived]

I think CoinBr is a great platform.

Have you considered going direct to MPEx?  The up-front cost is steep, though there is a referral discount I believe, but the transaction fees are lower, (0.2% to the seller, 0% to the buyer) there is no maintenance fee, and the risk to the passthru assets is lower.  I think rini17/Jurov is a good op and we've discussed the security of CoinBr at length (it's pretty good) to where I'd be comfortable using the platform personally.  When you're operating a passthru you have to set the gold standard and the risk of Jurov getting hit by a bus is non-zero.

Cheers.

There's no way the fund at present can justify spending 30 BTC on registering with MPEx.  Maybe at some point down the line we'll be able to - and the contract for the pass-throughs will explicitly make provision for that.  At present I don't have a clear view of the extent to which the fund can usefully trade on MPEx (the only way to get a clear view is by actually doing so - for example I have no way of knowing whether two competing orders are from the same person unless one of them's mine).

Indeed there's a non-zero risk of Jurov being hit by a bus: same as there is for me.  Jurov has already offered that, in the event I vanish, he would accept a list of investors and settle with them.  He will also have authority to verify that I hold shares to back the pass-throughs (GPG signed statements verifying this are already in his plans) and to delay any withdrawals I make if there is any question over that.  So at least investors will be gaining some mitigation of risk in return for the additional counter-party risk using a broker adds.

[burnside]

There's no way the fund at present can justify spending 30 BTC on registering with MPEx.  Maybe at some point down the line we'll be able to - and the contract for the pass-throughs will explicitly make provision for that.  At present I don't have a clear view of the extent to which the fund can usefully trade on MPEx (the only way to get a clear view is by actually doing so - for example I have no way of knowing whether two competing orders are from the same person unless one of them's mine).

Indeed there's a non-zero risk of Jurov being hit by a bus: same as there is for me.  Jurov has already offered that, in the event I vanish, he would accept a list of investors and settle with them.  He will also have authority to verify that I hold shares to back the pass-throughs (GPG signed statements verifying this are already in his plans) and to delay any withdrawals I make if there is any question over that.  So at least investors will be gaining some mitigation of risk in return for the additional counter-party risk using a broker adds.

Sounds great to me.  You have my vote.

[Deprived]

Ended up creating pass-throughs for both S-Dice and BitBet.  Had an exception thrown first time I tried to make the S-Dice pass-through so tried again and got same exception.  Then spotted that it had actually charged for two securities and created them - seems the exception was thrown after creation whilst trying to notify moderators.

Having made two tickers - and planning to make the second in next few days anyway - I got burnside to rename the second, so both are now up for voting.  There's discussion threads for the pass-throughs on both BTCtalk and LitecoinTalk.

Assuming they get past the moderators I'll begin selling shares in the S-Dice one immediately (I've already done a bit of profitable trading on S-Dice covering about our first 4 months of fees to CoinBR and 10% of our listing fees) as we hold shares in it.  The BitBet one I don't plan on selling shares until the trading range narrows - I don't want to buy at top of range and run the risk of trading moving to the bottom in return for a gain of 1.5% if we sell shares.  I will, of course, sell shares in the pass-through for it if either someone commits to buying at the Ask price or I manage to pick some up at the Bid end of the range.

Hopefully my contracts have covered everything - I tried to make them shorter and simpler than the previous ones.  If anyone spots something that need correcting please point it out.