[LTC-GLOBAL] LTC-ATF

[Deprived]

WEEKLY REPORT




Another good week - not as spectacularly good as the previous few, but 13.58% growth (11.64% from trading) is perfectly respectable.  All sites other than Crypto chipped in with a decent share of profits again this week.

DMC - 'Long-term' investment

For the first time in quite a while we have what is considered in the contect of this fund to be a long-term investment.  That doesn't mean that we'll necessarily hold it for months - just that my expectation is that we'll be holding onto it for a week or more at minimum.

Why DMC?  After all, I've been very critical of its management in the past - and it's lost well over 90% of its original NAV.  Let's have a look at its holdings and see.

DMC (https://bitfunder.com/asset/DMC) presently has 11,579 shares.

Its current assets are:

106 BTC-MINING
1000 BTCMC
1000 ASICMINER

The BTC-MINING are likely nearly worthless - as bulk of their assets were loaned to the scammer AmazingRando.  These can be ignored for the purposes of valuing DMC (they have a tiny value not worth adding in due to a few BTC in their wallet).

The BTCMC are of dubious value - the operator of that company seems to be constantly stalling on giving out information (one excuse/delay after another).  They'll probably have SOME value - but likely less than the around 0.25-0.4 BTC each they should be worth.  It's probably reasonable to assume these add a value of around 0.01 BTC to each DMC share.

ASICMINER - This is where the real value is.  Each DMC share is effectively backed by 0.0863 ASICMINER shares.  ASICMINER has passed the biggest hurdle it faced - getting chips produced that actually functioned.  Its first batch of 10-12 TH/s of machines should be going online within the next few weeks.

At present ASICMINER shares aren't tradable - but they will be before the first dividend on them is paid.  Trades have been agreed - with recent prices around the 0.5 BTC/share mark (there's been more deals than are visible in public).  Unless something gos horribly wrong I'm expecting prices to rise even higher than that once proper trading on an exchange starts.

At 0.5 BTC per share the ASICMINER shares would add 0.4318 to the value of each DMC share.  Adding on even a fairly pessimistic value for BTCMC shares we get a value for DMC shares over 0.05.  That makes the 0.02 we paid for them rather good.  I doubt we'll sell the DMC for that until ASICMINER pays its first dividend and DMC pays half of it out (the other half being used to buy back shares) OR DMC sells its ASICMINER and we get to cash out that route.  But by waiting until then it's highly likely we'll get far more than 0.05 per share - as once ASICMINER is tradable AND paying dividends its price will shoot up: after all it has low costs (in CHina), makes its own ASICs (so gets mining gear WAY cheaper than other mining companies), the shares also get a share of profits from any sales of those ASICs (and from development of next-gen ASICs) and all profit gos to the shares until the initial 0.1 BTC/share is paid off.

So that's why I bought DMC at an average of around 0.02 - because I'm confident we'll be able to sell them at 0.05 - 0.1 within a month.  Our shares ARE up for sale on Bitfunder - but we're not the cheap ones at the bottom.


PASS-THROUGHS

Both pass-throughs paid their first dividends this week.

S.BBET - Made tiny profits and paid a miniscule dividend.  This was expected (by me at least) - though the site's trade seems to be disappointly slow (and I didn't have THAT high expectations for the first month anyway).  There's very little trade happening on the underlying asset at present - those holding shares aren't deterred enough to sell off at a loss and there's not exactly a stampede of people trying to buy them.  As I've mentioend previously, I have concerns that their fundamental business model is flawed - specifically that they aren't providing what their target market (fairly heavy betters) wants (fixed odds).  This issue is made worse by the weighting system.

I'd recommend AGAINST buying these at the ask price until accounts have been published and there's a clear idea of what the site's plan is to pick trade volume up.  Someone has already got a bid up on our pass-through near the Bid on MPEx - but so far I've had no luck getting my top Bid there filled to pass the shares on.  If you want to buy in then I'd suggest you put up bids in that area rather than buy from Asks.  If you're losing your taste for this share then there's only a 1K order at .001 on MPOE I could fill before the price fell (the 1200 at .00105 is mine and will disappear if the bids on the pass-through it's placed to try to buy to fill get filled or taken down).

S.DICE - In contrast this paid a dividend that was a healthy ~2.75% of current traded value.  In fact S.DICE had a slightly unlucky month - had results been at the expected house edge rather than a bit below it then the dividend would have been aorund 3%.  Since the dividend was paid the Ask has briefly dropped a few times below the 0.0074 wall as people selling post-dividend put their Asks up, but those have been tending to get cleared fairly promptly.  The actual wall at .0074 is down to 177k.  A few days ago there were 400k shares in it - and it was at 200k earlier today.  My expectation is that wall will go this week and the price will move up a bit over 1% to the next wall (of 460k shares) at .0075.

I'd be very surprised if the price of S.DICE falls for any period of time in the near future.  It WILL probably dip on occasions - the bid side is always weak on MPEx - but has been recovering very quickly whenever it gets sold down (last week at one point the bid side got cleared down to .0038 - but was back up over .007 within an hour).  It remains a solid investment - whether the price will go significantly higher is open for debate: I wouldn't be surprised if it manages to (at least temporarily) get up to the big walls at .01 but nor would I be surprised if it stays in the mid .0007xs for the next month.

Do remember that both S.DICE and S.BBET are denominated in BTC.  If you believe LTC will rise vs BTC in the short-term then you should probably consider selling S.DICE now and buying back in after LTC has risen however far it is you think it will rise.  Remember that if there's no competetive bid up and you want to sell either pass-through you can put up an Ask - and if I can sell on MPEx and convert at Ask on BTC-E with a 2.5% markup then I'll fill your Ask for you and sell the shares off on MPEx (or keep them).  There's no need to sell at a huge loss compared to the MPEx Ask (at least not on S.DICE where theres usually some Bids not too far below the Ask).

I was going to discuss some other things - but will deal with those later in the week as this post is long enough already.

Management fee is 6 units (rounded down from 6.15) which will be transferred shortly.
Bid is up at 34.5.

[1714808172]

1714808172

[1714808172]

1714808172

[Deprived]

Exchange-rate : .00347
Adjusted NAV/U : 37.1578
Bid at : 36.4

Well we're up a bit over 6% (before management fee) nearly all of it from trade as the exchange-rate hasn't moved much.  But that doesn't tell the true story of whats happened this week.

We started off well - and by end of Monday were up around 4%.  Then all of a sudden a huge block of S.DICE showed up on MPEx at 0.0044 - when it had been trading at around .0074.  Turned out the asset issuer had decided to release 5 blocks of 1 million shares into the market at prices well below the range it was trading at.

I'd been trading S.DICE (as well as selling it to our pass-through) and when his block was put up it filled a buy order for 1k of ours at around 0.007.  Those then had to be sold to the pass-through at 0.0044 equivalent.  Problem then came when noone was around at CoinBR to manually approve my next deposit.  The sell wall at 0.0044 started vanishing fast (one purchase of 550,000 of them more than halved it) and I was unable to restock at the cheap price.

The net effect of that was to wipe out our profit so far for the week and leave us at a very small loss.

Since then I've traded us back solidly into profit - with a fair chunk of it coming from S.DICE.  The second block of S.DICE sold out immediately last night at 0.055.  The third block is going up tonight at 0.0062 - I'd expect it to sell out immediately or very quickly too as there's a lot of demand for the shares on the various pass-throughs (think around half the block last night was bought by various pass-throughs).

This sort of scenario is the way we're most likely to have a bad week - when the price of something collapses for whatever reason and our order(s) get filled on the way down.  There's no way to avoid it - as a good chunk of our profits come from those very orders.  WE just have to hope it doesn't happen too often - or on multiple shares at the same time.  In this instance the drop was in price not value - but in a lot of scenarios a sudden price drop is caused by an actual major fall in (real or perceived) value making the drop long-lasting.

[Deprived]

WEEKLY REPORT




This was the week of S.DICE - there's been more volume in the pass-throughs to this on BTC.CO and Bitfunder than on all their other assets combined.  The release of more shares at below-market prices produced a bit of a feeding frenzy on them which is only now finally dieing down.  Activity has been limited on other assets but we've managed to claw out just under 14% growth for the week (both before and after currency adjustment as the exchange-rate really hasn't moved much).

LTC seems to have settled into a range now vs BTC - it's actually fairly impressive that it managed to stay above .0034 all week despite BTC rising strongly vs USD (which produces downwards arb pressure on LTC/BTC).

With ASICs about to arrive our activity on some mining stocks has been largely curtailed - irrational exuberance has driven the prices of some up well above where they should be.  When valuing mining stocks the main thing I look at is what value of hardware (at the higher of second-hand value and replacement cost for same hash-power) backs each share.  When you see a share trading at three times that number (i.e. for each BTC of shares there's 1/3 of a BTC-worth of ASICs/FPGAs/GPUs) then you KNOW it's overpriced - as there's other shares you could buy where you got nearly 1 BTC worth of hardware for each 1 BTC you spent on shares.  The biggest culprits for these are shares that have previously lost a lot of their value - it's as though investors somehow believe that a share that originally cost X BTC has some divine right to return to being worth X BTC in the future.  They are, of course, wrong.  I refer to BTC not LTC here - as this problem is one fairly specific to BTC.

Linked to this is another area of irrational behaviour - that investors who absolutely wouldn't buy a share of something for X BTC will also refuse to sell shares they hold of it for X BTC.  They're unable to fully accept that whatever they spent on the share is gone - and all shares have the same value whether or not they personally previously bought it or not.

These two factors make trading certain stocks non-viable for our fund.  There's no way I'm going to chase a 10% profit on something that's overvalued by 200% - and likely end up wearing a 50%-70% loss if investors wake up and realise that no way they should pay X BTC for the share when they could pay X/2 BTC for a different one and get more hash-power/share.

Added to this is that investing in mining stocks right now is a total gamble.  There's no guarantee BFL will ship imminently and it's still unclear to me to what extent Avalon have actually shipped in bulk as opposed to just having the intent to ship in bulk.  And of course if/when ASICMINER comes online companies invested in both BFL/Avalon will take an extra hit to their projected profit (or loss).  So right now i'm being very cautious on mining investments (and I wear gloves when I touch them normally) as I only really like to gamble when I know the odds AND am getting better odds than are fair.  This may negatively impact on growth in the short-term - although I don't tend to trade mining stocks a lot we HAVE had some very good profits some weeks from them.

On our pass-throughs, the last batch of S.DICE (1 million at .0062) were all snapped up by someone and relisted higher.  Evoorhees has annoucned he won't be releasing the other 2 planned batches and now has no intent of releasing more onto the market in the foreseeable future.  The remaining walls of these on BTC.CO/Bitfunder have now gone - and our LTC-GLobal one is now the only place you can get these for (slightly) under .0062 (from resellers - our own listing is higher).

S.BBET has seen little trade all week - other than the previous lowest Ask getting impatient and selling into Bids.  So at present there's a huge spread (Highest Bids at ~.0005 and lowest Asks just short of .00195 other than one 500 unit one at .0016).  At present there's no interest in our pass-through in selling into the Bids or Buying from the Asks, so what trade IS happening is investors buying from other investors.  That won't change unless we get a Bid filled at the low end or the spread tightens significantly with some volume.

Bid is at 38.6
Management fee for this week is 6 units which will be transferred shortly.

[Deprived]

WEEKLY REPORT




Another week of good results has passed.  BTC gained significantly vs USD this week, causinf LTC to fall fairly heavily vs BTC.  We ended with growth of 17.33% before adjustement for exchange-rate movement and 12.68% once exchange-rate movement was factored out.

There's been little of great significance happened all week - just steady growth from trading.  The most important news for us was that ASIC-MINER got its first units hashing.  As a result of that, and with ASIC-MINER shares trading off-market for over 0.4 BTC each I have revalued our 10 shares from 0.1 to 0.25 - which is still very conservative.

In related news, DMC (who you may recall we have a stake in - due to their ASIC-MINER holdings) have now decided to allow trading of 11 DMC shares for one ASIC-MINER once ASIC-MINER becomes tradable on an exchange.  My intention is to take this offer up (in fact I was the one who suggested/requested it).  Whilst it means we'd be taking slightly less value than the DMC shares are worth we'd be gaining liquidity.  Our DMC shares are still listed in the spreadsheet at a value of .02247 each but will almost certainly be worth significantly more than that (in fact they could be sold right now for a 50% profit).  Once these are converted to ASIC-MINER and sold I expect a resulting jump in our NAV of somewhere in the 10%-25% range : so there should be a bumper week for us in the not too distant future.

The DMC situation is a good example of why I don't in general disclose our holdings.  Whilst I was accumulating out stock of them cheaply it would have been a very bad move for me to show that we were holding them and gradually accumulating more cheaply (and an absolutely terrible move for me to reveal why).  Once we had as many as we needed (based on restricting our exposure) then I disclosed them - as at that point the market moving up didn't matter any longer (and potentially even helped - as in addition to the long-term ones I still trade it).  Hopefully some LTC-ATF investors managed to grab cheap ones after I explained what was happening.

Trade has been fairly sluggish on both pass-throughs.

S.BBET has seen only buys occurring on MPEx this week - I'd guess these were mainly the two new pass-throughs to it (one on BTC.CO and one on Bitfunder) stocking up.  Noone on LTC-GLobal seems interested in buying from the Asks at 0.002 (and I don't fault them on that) and in fact we've actually repurchased a few (I sold via an Ask at the top on MPEx and bought back some from Asks on our own pass-through).

S.DICE has seen a fair amount of profit-taking on our pass-through.  The price of the underlying has risen which, coupled with the fall of LTC vs BTC, has meant a significant rise in the price of these in LTC.  The fund has sold AND bought back these this week - ending with about the same amount outstanding as we started the week at.  The majority of trading of these on the pass-through this week haven't involved the fund at all - they've just been new investors buying from old ones with the trading occurring within the spread on MPEx.

This week I'll be opening a new pass-through run by our fund - to S.MPOE.  That's the asset which gets the profit from trading on MPEx as well as (sometimes) overflow profit on MPOE.  It has a pretty stable price and pays regular dividends so is a good candidate for inclusion in the portfolio of investors who want some BTC exposure.  I'd been holding off on this until activity on the existing pass-thoughs had slowed down - as our ability to supply to pass-throughs is limited by the speed of converting/moving funds from LTC-Global via BTC-E to CoinBR.

Management fee for this week is 7 units (rounded down from 7.
Bid at 44.6

[Deprived]

WEEKLY REPORT




Slightly worse results this week compared to recent ones - 13.2% growth but only 8.43% after adjusting for exchange-rate movement.  There are a few reasons for this:

• With BTC rising sharply, there was very little buying going on at BTC-denominated exchanges.
• Bad timing.  I launched our S.MPOE pass-through and immediately it dropped a bit - so instead of selling at a small profit, we were selling at a small loss compared to what we bought at.  That's no big deal - as we expect to absorb profit/loss on out float for pass-throughs and just make sure we're replacing sold stock at a small profit.  However:
• Shortly after that, LTC dropped.  That had the effect of forcing me to raise prices on pass-throughs (as, although the underlying BTC price hadn't moved, the LTC-denominated price obviously had rose.  That made the shares look expensive compared to what they'd previously been sold at and pretty much killed all pass-through sales for the rest of the week.
• More bad timing.  I put new bonds up for sale, went afk for a few hours, came back and LTC had dropped and the bonds had sold at below face value instead of slightly above it.  Not much I can do about this until we get a fully functioning bot that can set prices AND convert on BTC-E when sales occur (without the conversion, pricing is pretty meaningless - as we end up gambling on exchange-rate movement).

Still, hardly a disastrous week - I'm still not totally sure how we ended up making such a respectable profit at all.  I did quite a few trades but nothing especially spectacular - it just shows how if you keep making 5% here, 10% there etc it can add up.

On the pass-throughs there's finally signs of upwards movement on S.DICE again, with the Ask wall at .0069 gone.  I'd expect price to go up a bit before dividends.  At present S.DICE looks like dividending out upward of 10k BTC this month (still less than last month) - it sounds like a lot, but remember there's 100 million shares to spread it between.

S.BBET seems stalled - with little activity on it.  This week I again bought back some shares, decreasing the number outstanding.  I'm buying back well above the price they sold at - but it's slow as I can only buy back when I manage to sell some on MPEx.  Have had top Bid pretty much non-stop for the last few weeks but never had anyone sell into me - so been unable to sell more at a competitive price.  Noone wants to buy at the MPEx Ask rate (and rightly so in my opinion) so for now this is pretty stagnant.

S.MPOE hasn't really sold much yet - I'm blaming a combination of market saturation (a few IPOs recently that have sold quite nicely), uncertainty in general with LTC's price drop (some will have cashed out to BTC at least temporarily - or to buy into the Novacoin pump/dump) and the apparent price hike on it (actually BTC price fell but that tiny drop was drowned out by the much larger drop in LTC).

Bid is at : 49.8
Management fee this week is 6 units which will be transferred shortly.

[Deprived]

LTC-ATF WILL BE SELLING NEW UNITS TOMORROW

Exchange-rate : .00228
Adjusted NAV/U : 56.4537
Bid at : 55.2

At present we're up around 12% this week, with the vast majority of that trading profits (exchange-rate isn't much different to at start of week).

Main purpose of this post is to announce that new units in LTC-ATF will be sold tomorrow (later today for some time-zones I guess).


WHY SELL MORE UNITS?

This will (or should) be the immediate question that springs into the minds of existing investors - after all, I've repeatedly said that I saw no need to sell new units.

Let's look back at a previous post of mine where I qualified that - and explained the circumstances under which new units WOULD be sold.

Just to clarify, the only circumstance in which the fund would currently be likely to issue new units would be if the ratio of Bond capital to Fund Net assets got too near to the 150% limit (at which stage we have to either issue new units or buy back bonds).  For that to occur would need some mix of the following three things to occur:

1.  Our need for BTC-denominated capital significantly grows.
2.  LTC weakens significantly further vs BTC (for this to cause a need to issue new units on its own the exchange-rate would need to fall to around .0015).
3.  We incur significant trading losses (for this to cause a need to issue new units on its own we'd need to lose around 40% of NAV).

So IS the ratio of Bond capital to Fund Net Assets near the 150% limit?

The simple answer is NO - it's at just under 100% (97.35% to be precise).
The more complicated answer is NO - but it SHOULD be (and WOULD be, were I not keeping it low).

Let me clarify by looking at the first 2 numbered points in my quote above (point 3 does not apply - we've NOT made any trading loss).

1.  Need for BTC-denominated capital significantly grows.  This HAS occurred.  The most obvious area where we could use more capital is on BitFunder for two reasons:
a)  There's new very tradable securities (if less clearly worthwhile as investments) there.
b)  BitFunder HAD been implementing a similar system to BTC.CO - where the same capital could back orders on the bookds for multiple securities.  Our account there was one of a handful of accounts given this ability during their tests of it.  A few weeks back this was removed - and now every order has to be backed by its own cash.  That's obviously a total pain - given only a small percentage of our bids get filled on any given day - and of itself pretty much immediately doubled the capital requirement to maintain the same orders.

We've also on occasion run low on funds on BTC.CO (to the extent, once, of having orders auto-cancelled).  And on a few occasions now I've had to pull funds back from CoinBR (cancelling orders I'd rather leave up) for more pressing bids - which costs us 0.1 BTC per withdrawal.  Finally, I'd like us to be trading ASICMINER - but we don't really have the spare cash to do so.

In short there's now opportuniteis for fairly significant more BTC capital to be used.

2.  LTC falling further vs BTC.  From the time of the quoted post to now LTC has fallen about 50% in value vs BTC.  The immediate impact of that is to increase the ratio of bond-debt to NAV - restricting our ability to safely issue new BTC-denominated bonds (we've been able to do so to an extent purely because we've been making a profit so can sell new bonds backed by the profit).

In short, the actual circumstances have precisely matched two of the three criteria I listed - so this isn't actually a reversable of policy.  The only reason the ratio of bond-debt to NAV is NOT near 150% is because I've held back from issuing bonds (that we could do with selling) to STOP us getting near 150%.  I feel obliged to exercise this caution as if BTC continues to rise there has to be a significant chance of LTC falling lower - and the absolute last thing I want is to sell bonds then be forced to buy them back at a premium or issue new units in a rush.


PROTECTING EXISTING INVESTORS

In the past I've toyed with the idea of, when any new units are issued, giving first option on them to current investors in proportion to their current investment.  There are, however, a few big problems with this:

1.  It's a cumbersome and impractical way to do things - as there's no functionality allowing any automation of it.  At a vasic level I don't even know the account names of the various investors (with a few exceptions) to do a transfer to IF they chose to take up such an option.  And I can't offer at a fixed price - as the value of a unit can change very rapidly (either through trades, major price-changes in an investment or simply through a change in the LTC/BTC exchange-rate).

2.  If the extra units are offered at any sort of discount to what the market would pay then investors who take up the option are advantaged compared to those who don't (as fund value doesn't grow to the degree it would if units were sold on the open market).

My belief is that issuing extra units (but not an excessive quantity) will have a minimal (but non-zero) impact on growth per unit.  Some small reduction IS likely (predominantly because around 70-80% of the extra LTC raised from selling units won't be used - it's the BTC raised by selling more bonds backed by the units that will actually be put into play).  This is offset to some degree by a reduction in our fixed fees (per-transaction transfer fees, monthly fee on CoinBR) which won't rise but will represent a smaller cost as a percentage of NAV.  I DO, also, have a proposal to put the LTC to use - which I'll hopefully get time to type up for discussion before too long.

My intention is to sell the new units at a more significant markup to NAV than units were initially sold at.  If they won't sell at a reasonable markup to NAV then they won't be sold.  That markup will generate an immediate small growth in NAV/U for existing investors which I believe should compensate for any tiny short-term drop in weekly profits.  In practice profits could rise OR fall significantly after sale of new units - we could currently easily have a +25% week or a +1% week (or a -5% week if an asset openly defaulted whilst I was offline and we had bids on it) and that won't change.


MECHANICS OF SALE

100 units will be sold (or placed for sale) at 22:00 GMT 2nd March 2013.  That's around 22 hours after the time of this post.

Of these 100 units, 25 will be purchase via transfer by myself at NAV/U +1%.
The other 75 will be placed on the market at a price of NAV/U +10%.  If there are existing orders then the highest of those will be filled.  If no (or insufficient) Bids then I will adjust the price thereafter as/when NAV/U changes.

I will endeavour to provide some updates to current NAV/U during the period before placing the sale.  Based on current NAV/U the ask price is likely to be in the range of 60-65 LTC (dependent largely on how exchange-rate moves) but obviously that could change significantly if there's a major exchange-rate move or substantial tarding profit/loss.

In case anyone wonders why I get 25 at NAV/U+1% here's a quote from the contract:

"When new units are authorised for issue the manager additionally has the right
to buy up to 25% of those units at NAV/U + 1% before releasing the remainder to
the market. "

That clause was always in the contract to allow me to maintain ownrship of a significant portion of the fund personally when expanding.  That I get them at a discount to what (hopefully) the market pay is explicitly part of my reward for running the fund in a manner such that units DO (hopefully) sell at a premium to NAV.

I will NOT sell any of my personal holdings (including the new 25) into bids placed tomorrow.  I will also NOT bid on more units myself prior to placing the sell order but if they don't all sell at NAV/U+10% I WILL then buy more up myself.

At the time of making this post I personally hold 248 of the 533 outstanding units of the fund.

On the pricing of shares at 10% over NAV/U, all the contract says on pricing is this:

"Other than as detailed below under "MANAGEMENT FEES" the manager is only
entitled to sell issued units on the LTC-GLOBAL exchange. Such sales may only
be made at or above the current NAV/U (to avoid dilution of existing investors'
holdings). "

So any price at or over NAV/U is acceptable under the contract.  The referral to "other than as detailed below" refers to my own right to buy 25% at NAV/U without them being listed on the market (necessary as there's no way to transfer to myself via the market at that price if there's higher Bids up).


SALE OF FURTHER BATCHES

Whether more such batches are sold depends a lot on what happens with the exchange-rate and with trading conditions (and with what demand there is for this batch).  My expectation right now is that another few batches of 100 units could usefully be sold - but when they're sold depends as much as anything on how quickly we can sell extra bonds backed by them (as the goal is to back BTC-denominated capital - right now the actual LTC themselves aren't too much use).

There's a risk that it will be difficult to sell bonds if units are available (although the bonds have less risk, the much higher historic profit of the units will outweigh this to many investors).  Should this prove to be the case then I'll revisit the idea of listing bonds on BTC.CO.

[Deprived]

Exchange-rate : .00236
Adjusted NAV/U : 56.6615
Bid at : 55.2

Just a quick update for those placing bids for the units later tonight.  We've made a little more trading profit but LTC rose vs BTC slightly cancelling some of it out - so no real change in adjusted NAV/U.

[Deprived]

Release of the 75 units is about 40 minutes away.

Exchange-rate : .002395
Adjusted NAV/U : 56.544

No real change since previous post.  I won't update again unless there's a significant move in either direction (LTC seems fairly stable within a few % at current which would only move NAV/U under 0.5% in either direction).

At present adjusted NAV/U Ask would be placed at 62.198 and would immediately be filled by existing bids.

I'll try to place the ask as near as I can exactly to the hour - so snipe away if you want.

[Deprived]

LTC rose very slightly causing a tiny drop in NAV/U.  No trade occurred in the last 40 minutes.

At time of sale:

Exchange-rate : .00242
Adjusted NAV/U : 56.4266874

The 75 units sold into market were in theory placed at : 62.06935614
In practice they sold a bit higher into a single existing bid:

Received Ask Order: 75 @ 62.0694 LTC
Sale 75 @ 67.25 LTC Complete.

Looked to me like there were at least two people trying to place bids at last minute - well done whoever won.

The 25 units bought by myself were transferred for 56.99095427 each (a total of 1424.77385677 LTC)

Weekly payment has now been made on our bonds (the funds for this were already put aside when calculating NAV/U).

Adjusted NAV/U is now 57.2767 - the increase being due to the premium paid on the freshly sold units.

1000 new bonds are being placed on the market.

Weekly report, as usual, tomorrow.

[ThickAsThieves]

[Deprived]

Just a quick note that I'm holding off on doing the weekly report until the LTC/BTC exchange-rate settles down a bit.

I don't want to produce a report that could be off by a few % by the time I've finished writing it (and I don't want to take a management fee then LTC rises further and by time I submit the post I'm no longer entitled to the fee).

Even with the large rise in LTC, NAV was still above where it was at after selling the extra units yesterday.  We've made tradng profit since then and have pretty low exposure to BTC right now.

I WILL do the report before I go to bed tonight.

[Deprived]

Posting the spreadsheet then will do rest of writeup in a second post.  I want the spreadhseet to be posted whilst the quote exchange-rate is roughly right (this is third try - the previous two times the rate move a mile whilst I was preparing the screen-shots).

[Deprived]

At the time of posting the spreadsheet in previous post, highest bid (on LTC/BTC) was at .00298 and lowest ask at .0032 giving a rate of .003.  By time I finish this post it may well have moved significantly in either direction.

We've ended this week with growth of 13.83%.  I'd estimate trading profit (ignoring exchange-rate movement) at around 18-19% (my spreadsheet says 21.27% but I know the assumptions it's based on aren't correct).  Final adjusted NAV/U is 57.333 - it was over 59 before LTC started to move up and we've definitely made profit since then.

The sale of new units was responsible for around 2% of growth - with the rest being from our usual trading.  DMC shares are no longer listed as long-term : with their price rising and there still no easy way to directly convert them into ASICMINER (as no trading platform) I have sold some of them and will sell the rest assuming I can get the right price.  We'll have made over 100% profit on them in the few weeks we've held them.  Around 8% of trading profit this week came from sales of part of our holding of them - with another nice chunk still to come.

The sale of new units went smoothly and so did the sale of 1k new bonds shortly afterwards.  At present I'm in the middle of selling a further 200 bonds (last part of it is taken down for now - so I can type this without having to keep checking exchange-rate).  This week the timing worked out much better for us than it did last week - the sharp rise in LTC didn't happen until after the units/bonds had been sold (and a portion of the proceeds converted to BTC).  That meant that our percentage exposure to BTC was lower than it had been for the last weeks - just in time for the LTC rise.

It's not at all clear (to me) where the LTC price will go now.  I may sky-rocket or it may fall back to (or below) where it was until earlier today.  Until I get a clear view of what's happening I'll just be keeping us in my target range of 15-20% BTC exposure (we can't fall much below that due to our commitment to ensure proper backing for bonds).  If the LTC price stays where it is then I don't see there being a need to issue new units for at least a few weeks - for the coming week my expectation is that I'd only consider issuing more units if LTC falls back below .0025.

S.BBET and S.MPOE have both been paid their small dividends for this month - the (much larger) S.DICE one should arrive within the next day or so.  Trade has been sluggish on all the pass-throughs - with the main activity being when LTC rose sharply and I was suddenly able to fill some orders (and with LTC falling back down a bit those purchasers can now likely sell at a profit).  I've also managed to buy back some more S.BBET - the fund has actually made enough profit just from buying back units of that to more than cover its ticker cost.

With ASICMINER pass-throughs now starting on both BitFunder and BTC.CO, as well as a few fairly active (trading wise) new companies on Bitfunder we don't look like running short of trading possibilities for a while.

The main concern for us now should be the mountain of largely unused LTC we're building up.  I have an idea or two how to deal with that which I'll hopefully post about later in the week.

Tomorrow (Monday - actually today now for me) I'll be out nearly all day on business.  With the LTC price currently in flux I won't leave orders up on the pass-throughs.  I'll be back around and conducting business as usual from Tuesday (I WILL be around for an hour or two on Monday but not my usual active self).

Management fee for this week is 7 units (rounded down from 7.79) which will be transferred shortly. 
Bid at : 55.5 (a bit wider than usual due to the exchange-rate volatlity).

[Deprived]

Exchange-rate : .0049
Adjusted NAV/U : 54.063
Bid at : 52.5

The massive jump in the price of LTC has taken into loss so far for the week.  We're down 5.7% - all of it from the exchange-rate movement (if exchange-rate is factored out then we're up about 3.4% from trading - in line with the results of recent weeks).

The above exchange-rate is only an estimate as BTC-E has been down most of the time today for me.  This has stopped me properly trading our pass-throughs as I can't do the currency conversion I do as part of every set of trades.  Whenever I buy or sell on one of our pass-throughs I (nearly) simultaneously execute a trade in the other direction on CoinBR and a currency conversion.  This removes all risk from us - as we just take our cut whilst being immune to currency/price movements (exception being if the orders I'm trying to fill vanish right at the second I try to fill them - but that pretty much never happens and I do the riskiest one first).

LTC seemed to be peaking out last time I was able to actually see the BTC-E trade screen briefly.  So long as it doesn't rise much more I'm fairly confident I can trade us back to at least even for the week.

We would have been not quite so badly off had I not somehow failed to cancel some gold buy orders (which were very low when placed) and ended up buying gold shares at what shortly became over the going rate.

If LTC manages to stay anywhere near where it is, then we won't be needing to sell more units for quite a while.  The bonds : NAV ratio (which was at 100 prompting me to sell the last 100 units) is currently sitting at just under 50%.  And that's AFTER I dropped 500 more into overpriced buys in the market - on average they were 8% over face value meaning the profit on selling them has paid the first 3 months of their interest.  As I was planning to sell more bonds later this week anyway, there was no way I was passing that up.  At current exchange-rate we could issue another 80 BTC worth of bonds before needing to stop (can't see me actually wanting to sell more than another 10 BTC worth this week - and I'd prefer to make sure LTC isn't going to plummet straight back down before even selling those).

[ThickAsThieves]

Thanks for the update.

[Deprived]

Exchange-rate : .005
Adjusted NAV/U : 55.244 (as it's below last week's HWM it's same as unadjuested NAV/U of course)
Bid at : 52.5 (can't change it as LTC-Global not functioning)

LTC dropped a bit but has now gone back up above where it was when last I reported.  As you'll notice, our NAV/U has grown from then anyway - though is still about 3.6% down on where it started the week.  Ignoring the impact of exchange-rate movement we're up a bit over 7% from trading so far this week.  I'd settle for losing 3.6% of NAV and LTC rising by 2/3 in value EVERY week if given the choice.

Trading has been painful this week - with BTC-E down a lot of the time, issues with MPEx (CoinBR not reporting proper market data for most of yesterday and now reporting MPEx as offline for insfratructure upgrades) and now LTC-Global unusable for last 10 hours.  But we'll soldier on - and hopefully end the week at break-even or better on NAV/U but with a much more valuable LTC than we started the week.

The issues with BTC-E and MPEx have seriously crippled my ability to properly make is (and investors in our pass-throughs) money from buying/selling with the movements of LTC.  Luckily I've found some decent spots for trading on BTC.CO/BitFunder/LTC-Global - though have also had a few cases of buying with bad timing (inevitable with massive exchange-rate moves - but no big deal so long as the occasions I buy with good timing continue to outweigh them heavily).

[Deprived]

Exchange-rate : .00533
Adjusted NAV/U : 56.7897
Bid at : 55.3

Been giving more updates this week so investors have an idea what's happening with the large LTC exchange-rate movements.  Don't expect me to keep doing this when exchange-rate stabilises - normally I'll only give mid-week updates if something major has happened (though you can get an idea how NAV/U is moving from what my Bid is at - as I update that after any decent sized change).

LTC has risen further against both BTC and USD - meaning we're still in loss for the week (though significantly less so than on my previous update).  At present we're down about 1% on the week - with about 12% trading profits if exchange-rate movements were factored out.  I think this very clearly shows the benefits of the policy with our BTC-denominated bonds - when LTC fell we made very nice profits and when it rises sharply we only make small losses (and the value of our units in BTC or USD has gone through the roof).  You'll struggle to find ANY other fund which delivers this (a price that's fairly stable even with major exchange-rate movements against another currency in which it holds very significant investments) - as it's essentially impossible to do without hedging vs currency movements in one way or another.

It's touch and go whether we'll end the week in profit or not.  I COULD put us in profit immediately (there's holdings we have which could be sold to realise an immediate profit - and our ASICMINER shares could be marked up significantly from 0.25 BTC) but I'm not going to change my valuation policies just to make the figures look better this week.  A 1% loss with a 100% rise in the value in BTC and 200% in USD would hardly be a disaster after all.  We just need one or two half-decent trades to go through to end in profit anyway.

Investors should also be aware that LTC rising is likely to DECREASE our profit anyway.  That's because the majority of our profit comes from BTC-denominated trading.  If LTC is twice as strong vs BTC then we need to make twice as many BTC to get the same percentage rise in LTC-denominated NAV/U as we did before the rise.  Taking that into account I'm actually very pleased with a ~12% trading profit this week.

Weekly report will be tomorrow (later today in some time-zones) as usual.

[Deprived]

WEEKLY REPORT




Well - it's been an interesting week to say the least.  LTC has well over doubled in value vs BTC.  Even with out BTC exposure heavily limited by our bonds we still ended up making a 4.82% loss on the week.  My spreadsheet indicates a trading profit of around 17% - it's hard for me to work out whether thats correct or not as the change is so dramatic that the precise timing of when we made the BTC-denominated profits which kept our percentage exposure roughly unchanged is of massive importance.  I know actual profit from trading was somewhere in that general area (it was over 10% before the last big spike and we've had more profit since including some from actually trading LTC/BTC on the two most obvious drops back down).

During the big jump today, an investor sold back 46 units to the fund at 55.3.  As I was afk when the spike happened they actually managed to sell back at slightly above NAV/U (which I'd guesstimate to have been around 53.5-54.5 at the time).  On the face of it that's bad news - in fact, given we already showed we can sell units at over 10% above NAV/U it's no problem at all.  If investors would prefer it, I'm happy to take those units off the fund's hands at 60 LTC each - otherwise I see no reason or need for the fund to sell them at all.  With LTC having risen so much we're no longer anywhere near our limit for bond-selling - so I believe the increased share of profits for all investors is worth far more than the ~0.1-0.3% drop in NAV/U caused by the sale being slightly over NAV/U.  As we aren't near our bond limit and don't use most of our LTC, the sale back of some units has zero impact on the amount of profit we can generate but increased the growth/unit per week week by about 5% or so of what it would otherwise be.  i.e. one week of making 5% growth then everyone left in the fund is better off than if those units had not been sold back.

This week I've started trading a bit more aggressively on LTC-Global.  I just haven't been trading big batches at a time recently - my sizing of Bids has fallen well below where it should be given our growth.  This sunk in when, at one stage this week, we had holdings in TWELVE different securities on LTC-GLobal - yet in total it amounted to under 5% of our NAV.  I've been placing Bids worth 100-200 LTC when I should be placing ones worth 500-1000 LTC : simply because I just haven't properly adjusted to the fund being worth over 5 times what it used to be.  This won't solve the issue of our LTC stockpile but will make a start on it.

I've referred a few times to a proposal for using our LTC.  There's actually two things I have in mind - one of which I can't discuss until it's ready to go.  The other one is that I'm giving serious consideration to offering LTC loans - and would welcome feedback on this (especially from investors - though potential borrowers' views are also definitely welcome).  They key points to it are:

1.  All loans would be very solidly secured - with no exceptions.  This would be done by requiring securities to be provided as collateral - with them valued very low for the purpose of collateral.
2.  Each loan would use a diffierent account - into which the securities would be transferred, so zero confusion over dividends etc (on repayment I'd change the password and they borrower could then access the account and verify all dividend history themself).
3.  Only a small subset of securities would be valid for collateral - ones where there was a long enough (and solid enough) history to make default a low risk.
4.  Only individuals with a significant history and/or contribution to the community would be eligible for loans.
5.  Surrendering the collateral instead of paying off the loan would NOT be a valid option for lenders - doing so would be explicitly defined as scamming.  Hence the only way we don't get repaid is if the securities default AND the borrower defaults.  With pretty tght selection criteria on both that should be extremely unlikely.
6.  Rates would be very competitive.  I'd be looking at a minimum loan size of 1K LTC with a 1% arrangement fee then interest at about 0.14% per day compounded - just under 1% per week.
7.  Repayment terms could be anything (reasonable) borrowers wanted - from gradual pay back to payment in full at a specific date.
8.  Borrower would NOT have to disclose any personal ID or even provide the reason for the loan.
9.  Details of loans would be published - minus the identity of the borrower (that would be provided only if they defaulted).
10.  In the event of late or non-payment we'd have the right (but not obligation) to immediately sell collateral into the market to reduce or totally pay off the debt owed.  In practice I'd be reasonably flexible with this - all the time that the collateral more than adequately covered the debt.  But obviously any piss-taking or trying to f*ck around and the collateral just gets dumped into bids and they get whatever change is left over.

I think we could safely lend out somewhere around 15k LTC with zero impact on our trading and bring in an extra 150 LTC (which is now 1 BTC or around $40-$50) profit per week (plus the 1% arrangement fees).  Too much effort for too little reward?  I believe the risk to be absolutely minimal - as I just wouldn't loan unless I was certain about the collateral (e.g. I wouldn't take over 50% being one security with exception of LTC-ATF - meaning multiple defaults necessary to realise any real loss).

I think the number of people valid for such a loan AND needing one would be small - but there's a few obvious circumstances where it could be useful: one of which being to buy MORE of the securities being used for collateral : where obviously they can't sell them to raise the funds (if they believe the securities will rise in value by more than a few percent per week then this makes perfect sense).

I also have another project in the works - hopefully I'll be in a position to disclose this and put the securities for it up within the next week or so.  I won't be progressing the loan idea further until this other project is done - so there's plenty of time to discuss it and it's by no means certain that we'll go the loans route at all.

For now I've shelved running an ASICMINER passthrough.  Aside from anything else, it's not a great idea to start a new pass-through whilst LTC is so volate - I'd have to be glued to the screen to leave any orders up.  And with pass-throughs already on Bitfunder/BTC.CO at near zero fees there's no real need for one.  Our own 10 ASICMINER shares should be getting transferred to the BTC.CO pass-through in the next few days - whilst there's no urgent need to sell them, I'd like the option to do so if/when I can get the price I'm looking for (or if events make me revise that price down).

There's no management fee this week.  As per the revised contract the HWM is NOT adjusted down (under original contract it would have been).  So no management fee will be taken on growth up to last week's ending adjusted NAV/U.  Looking again at BTC-E, LTC seems to have dropped back a bit since I made the spread-sheet - as HWM is not adjusted this has zero impact (we're still not in profit) hence me not worrying about posting the spreadsheet immediately whilst it was up to date (which I had to do last week as the exchange-rate altered what units were taken as management fee).

Bid for now is at 52 (and quantity at 50) - I'm being cautious as the exchange-rate has been moving a lot.  If anyone DOES want to sell back, try to PM me - I'm always willing to work out a more accurate (and almost certainly higher) one based on the exact rate at the time.  Once LTC settles back into a new range I'll put more competitive rates and the usual quantity of 100 up.  Right now the fund could buy back every unit except my own with cash on hand and STILL have sufficient backing for the bonds - so I've no objection at all to buying back any number of units at a fair price.

Spreadsheet in OP has been updated with all results up to and including this week's.

[Deprived]

WEEKLY REPORT




Another week of LTC rising sharply - but, much to my surprise, we managed to make a profit anyway.  In fact we've almost exactly made back last week's loss (I've been watching the NAV/U as I updated for changes - and am intentionally doing the report just after we got back to where we were).  My spreadsheet indicates  trading profits of a bit over 16%, however that's overestimating it slightly - I converted some LTC into BTC at the second peak (after hitting $.75 then dropping and rebounding) as that was clear sign LTC wouldn't go through $.75 again in the short-term.  That tend to exaggerate trading profts as the crude calculation used assumes the conversion into BTC occurred gradually when it didn't.

Profits were helped by people panicking on LTC-Global: selling down too low when LTC rose then buying back too high today after it looked like LTC was going to dive.  The fund picked up a bunch of stuff cheap during the rise - and sold a fair bit off it off for a nice profit, especially last night/today.  Not everything went so smoothly of course - there were a few buy orders I left up too long which had to be marked down immediately.  But some failed trades is the price you have to pay to get a bunch of good ones.

I've held off for now on my next expansion plans - as there's a significant possibility I may be very busy with work for 2-3 days in the coming week.  I have, however, sold more of our bonds whenever I've seen bids up at a good markup to face-value (in general looking for around 6% over face so the first 10 weeks of interest are already paid by the purchaser, giving more than ample time to get the bonds into profitable use).

All the ratios are in good shape for us - bonds are only about 1/3 of NAV, meaning if LTC stayed at current area we could potentially issue around 300 BTC more of them safely.  I'm not confident enough in LTC's stability in this range to do that - nor could we usefully use anything like that much more capital now anyway.  But having the capability is great - and it would take a pretty huge drop in LTC price for us to need to sell more units.

Our ASICMINER shares have now been sold on the pass-through on BTC.CO.  They definitely justified being my first pick of shares to hold long-term.  The sharp rise in LTC means their sale hasn't had the sort of impact on NAV/U that it otherwise would have - which brings me to a more general point.  The recent trading profits of 10%+ per week are just not going to be sustainable with LTC having risen so much.  Normally the overwhelming bulk of out profits comes from BTC (this week was an exception with the irrational behaviour of some investors to the price swings in LTC).  With LTC having risen to around 5 times what it was a few weeks back, each BTC of profit now has 1/5th the impact on NAV/U.  We made around 5 BTC profit selling our ASICMINER shares.  Not too long ago that would have been the best part of a 10% rise in our NAV/U.  With our growth and the huge increase in LTC value, a 5 BTC profit is now not much over a 1% rise in NAV/U.

A further factor is that a lot of the growth from LTC's rise is tied up in LTC that aren't in use (having said that, a few days back we actually had nearly 25% of the fund invested in securities on LTC-Global - over half of which have now been sold at a profit).  We've gone from having nearly 100% of NAV matched by .B1 bonds to only 32.4%.  In practice that means a much smaller percentage of the NAV/U backing each unit is actively being used.  There's no simple solution to that - as there just aren't the range of liquid, viable securities on BTC.CO/Bitfunder to deploy three times our current BTC-denominated capital whilst maintaining what I consider to be a reasonable risk profile.  I can't just do three times the volume of the same things I do already - as there's not enough volume on a lot of what I do to do more than I already do.

To get a 10% growth in NAV/U next week (assuming no change in LTC price) would require a profit of about 42 BTC - the best part of $2000.  I don't see me being able to consistently deliver that.  Before the rise in LTC price it would only have taken 1/5th that - far more manageable.  I know I've said it before (and been wrong) but this time I really don't see double figure growth/week continuing.  Obviously I hope I'm wrong (I get about half of growth with my near 50% holding of units plus management fees).

Both LTC-Global and Bitfunder have released option trading (with BTC.CO following shortly).  I'll be buying, writing and rewriting options a bit - but I don't see it becoming a major part of our activity.  Very few securities have the kind of profile where I'm willing to commit to holding them for a period of time just to make an option fee writing CALLs - and writing PUTs isn't attractive to me as it ties up funds for what is likely a low rate of return with a significant down-side.  Writing options is more for long-term investors happy with a few percent per month.  Buying options, on the other hand, is something I'm fine with doing - if the price is right of course.  For accounting purposes if we buy options then the fee we pay will just be deducted from NAV immediately - and any profits from executing the option added in full if/when we actually execute.  I won't make any effort to value options we hold.  If we write CALLs then I'll ensure the backing securities are on the books at under the strike price - so no drop to NAV/U is possible from the buyer executing the option.  I'd say it's highly unlikely we'll write PUTs at all - unless to hedge a position: when I'd have to enter and maintain a liability onto the books equivalent to the difference between strike price and highest bid.  Essentially, as with the way I value our normal holdings, I'll err on the side of undervaluing rather than overvaluing.

The last two weeks may not have made any overall profit - but I view them as the best two weeks of trading I've done for the fund.  We've managed to come through a five-fold increase in LTC's value with the entire value increase maintained - total justification (in my view) of our decision to be valued in LTC and to issue the .B1 bonds to keep BTC exposure down.

No management fee taken this week (rounded down from next to nothing).
HWM will be updated slightly to the new adjusted NAV/U.
Bid up at 55.5

[Deprived]

Oops - somehow managed to edit last week's report instead of this weeks when making a minor change.  Will fix shortly.

EDIT: Both fixed.  Luckily all major posts are duplicated on LTC-talk, so was easy enough to copy the correct ones across.