[LTC-GLOBAL] LTC-ATF

[Deprived]

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.  As part of its strategy LTC-ATF now operates pass-throughs to securities which have a significant barrier to entry that would otherwise prevent smaller investors buying them.

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 four 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 25000 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.

S.BBET-PT - This is a pass-through to the BitBet security listed on MPEx.

S.DICE-PT - This is a pass-through to the Satoshi Dice security listed on MPEx.


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 : 25%-45%.  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 : 10-30%

BitFunder : 15-35%

Cryptostocks : Currently no funds here.

CoinBR/MPEx : 5-25%  CoinBR is a brokerage through which we trade on MPEx (the 30 BTC MPEx registration fee to trade cirectly on there is beyond the fund's budget at present).

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

BitFinex : 0%-10% Used to arbitrage LTC/BTC, as an alternative to BTC-E for exchanging.


SUMMARY OF RESULTS TO DATE

The table below shows the overall performance of the fund to date.



There's a column for each of LTC and BTC showing how the fund has performed measured in that currency.  From top to bottom the rows are:

Fund Start :  Shows the date on which the funded and the initial NAV/U.
Last Report :  Shows the date at which the latest report was produced and the NAV/U at that date (that's the NAV/U after deduction of any management fee) plus the total of all dividends paid to date.
NAV/U Change : The change (growth) of the NAV/U from the fund's start until when the latest report was produced.
Growth (%) : The percentage the NAV/U of one unit has grown since the fund's start.
Days Elapsed :  How long the fund had been running for when the last report was produced.
Daily Multiplier :  What the starting NAV/U would have to multipled by every day (compounded) to reach the current NAV/U.
Daily Growth : The daily multipler shown as a percentage.
Weekly Growth : How much on average the fund has grown in a 7-day period.
Annual (APR) : What the annual growth would be if the current growth were maintained over a period of 365.25 days.

Whilst these figures DO represent the actual performance of the fund to date they should NOT be taken as any sort of sensible prediction of future behaviour.  A lot of the growth to date has been achieved with a much smaller amount of capital AND a much lower-valued LTC : both factors which allowed growth of a scale it is unlikely can be sustained.

No promises or predictions are made, intended or implied as to future profitability.


DETAILED HISTORICAL RESULTS

The spreadsheet below shows the performance of the fund since its inception.  Do note that the ending NAV/U reported for each week is BEFORE management fees - the starting NAV/U for the following week represents the actual NAV/U units were worth to their holders.




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?).

[Deprived]

[[Contract for asset on LTC-GLOBAL
UPDATED 23rd November 2012 in accordance with a motion passed by investors
UPDATED 16th January 2013 in accordance with a motion passed by investors
UPDATED 5th May 2013 in accordance with a motion passed by investors
]]

----- CONTRACT BELOW THIS LINE -----

DEFINITIONS

(The) Issuer / (The) Fund Manager : The individual controlling the user account with the name "Deprived" on The bitcointalk forums.

The Fund : The Litecoin Actively Traded fund (Ticker : LTC-ATF).

Unit : The smallest portion of the fund which may be traded.

NAV : NAV (Net Asset Value) refers to the total value of all assets held by the fund.

NAV/U : Net Asset Value per Unit.  This refers to the NAV of the fund divided by the number of outstanding units.

HWM : High Water Mark.  This is the previous highest NAV/U at which units have been valued.


OVERVIEW

The fund exists to trade share, bonds and other securities denominate in Litecoins (LTC), Bitcoins (BTC) and other crypto-currencies.  The fund is itself denominated in LTC and has the long-term objective of primarily trading in LTC-denominated assets.  Due to the current paucity of such assets initial trading will be largely in BTC-denominated securities.

The majority of the fund's capital will be used for short-term investment (sometimes referred to as "day trading") rather than for long-term investment.  Long-term investments will, however, be made where the fund manager believes it to be sound.

Initially trading will only be made on the BTC-based exchange known as GLBSE and the LTC-based exchange known as LTC-GLOBAL.

The fund is a growth fund - no dividends will be paid and profits (or losses) can only be realised by selling back units to the fund.


UNITS

Equity in the fund is distributed and measured in units.  Each unit represents ownership of 1/(Units outsatnding) of the total value of the fund's assets.

100,000 units have been originally created.  A portion of these units (2500) will be initially authorised for issuance.  At various times in the future additional units may be authorised for issuance.  The manager is entitled to authorise for issue whichever is the larger of 2500 units or 25% of current outstanding units each week.

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).

The manager is entitled (and expected) to buy back units.  This may only be done on the LTC-GLOBAL exchange at prices below the current NAV/U.

The current value of a unit will be regularly calculated and posted in the forum thread listed above.

Units have no voting rights.  The manager may, on occasion, issue votes to obtain feedback from investors.  Such votes are purely for information purposes and are in no way binding on the manager.


MANAGEMENT FEES

At least once per fortnight (with the goal being to do it weekly) a report will be prepared and posted in the forum thread linked above.  This will include a current valuation of the NAV and NAV/U for the fund.  This valuation will be in LTC (a BTC valuation will also be posted).

When that valuation is above the current HWM then the excess is considered to be profit.  The manager is entitled to receive 10% of that profit as a management fee, paid in LTC-ATF units at the calculated adjusted NAV/U.


INVESTMENT METHODS

The following are intended as an overview of the TYPE of strategies the manager will be using.  The following is not exhaustive, definitive or restrictive - the manager is entitled to invest as he sees fit within the constrainst described elsewhere in this document.

Long-term investment:  A minority of the fund (no more than 25%) will be allocated to long-term investments.

Spread/margin trading: Securities will be bought with bids and sold with asks to make a profit.

Bot-exploitation: Some securities on GLBSE have bots trading on the spread/volatility.  At least some of these bots are exploitable due to their having very naive interpretations of market depth.

Panic-trading/Liquidity crises: A lot of trading on GLBSE is from investors who need to raise cpaital quickly.  As there is very little liquidity for most securities on GLBSE this forces them to sell at way below a fair price.  This can be doubly taken advantage of - first by collecting their initial sales, secondly by buying during the temporary price-slump that often then follows.

IPO trading: Often when a new security is issued, some portion of securities are offered at a discount.  Profit can be made by buying then reselling.


LIQUIDITY & FUND CLOSURE

The fund does not pay dividends - so the only way for investors to realise profits (or losses) is to sell their units.  The fund shall attempt at all times hold at least 5% of fund value in LTC for the purpose of buying back units.  When the manager is online (and has an accurate current valuation of the fund) this shall be done by bid-walls placed on LTC-GLOBAL at between 95% and 99% of NAV/U (the precise value within that range may be set by the manager - based, primarily, on volatility of the LTC/BTC exchange rate).

If significant bids already exist at above 99% of NAV then the manager is released from the obligation to place bid-walls - but not from the obligation to hold sufficient liquid LTC to place such walls if the need arises.

If circumstances arise such that the manager is no longer able to continue operating the fund then the manager shall dispose of all assets held by the fund and distribute the proceeds to unit holders.  Such process shall be conducted in as timely a fashion as is possible without incurring major loss by selling into under-priced bids.


DIVIDENDS

It is not LTC-ATF's policy to pay regular dividends - in general profits are retained increasing the value of units.

On occasion the fund may grow to a point where it is the manager's view that there is excess unused LTC-denominated capital which should be returned to investors.  In those circumstances the manager is entitled to pay a dividend provided ALL of the following points are met:

1.  The dividend shall be paid immediately after a weekly report (and the payment of any management fee units plus adjustment of the HWM if required).
2.  The dividend may not be so large that, after its payment, the ratio of LTC-ATF.B1 debt to fund NAV exceeds 100%.
3.  The HWM will be reduced by the amount dividended per unit.
4.  If any market Bids are up that would be above the new NAV/U post-dividend then manager will briefly suspend trading and clear orders so noone is sold to at a markup to NAV/U higher than they intended when they placed their Bids.
5.  No management fee may be taken on the dividend - though the manager WILL receive dividends on any units he holds the same as any other investor.


DISTRIBUTION OF HOLDINGS

The manager should always aim to hold at least 5% of fund NAV as liquid LTC on LTC-GLOBAL (obviously this will not be the case immediately after someone has sold back units into a bidwall).

Target initial distribution of funds is:

5-10% uncommitted LTC on LTC-GLOBAL
10-20% LTC-denominated securities or bids on the same.
The rest BTC-denominated securities or bids on the same.

It is hoped that over time the proprotion allocated to LTC-denominated investments will rise - but that depends almost entirely upon suitable such securities being able.  The above distribution is a guideline only - and not a strict target which has to be achieved.


BOND ISSUING

The fund manager is authorised to issue interest-paying bonds with a face value denominated in BTC.  These bonds may be issued on ones or more trading platforms of Manager's choice.  Costs associated with creating these bonds 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 bonds and the manager's fee must be taken on profits AFTER payment of interest due on the bonds.  For accounting purposes bonds are treated as a liability at their face value.  Although face value must be in BTC, the bonds may be transacted (and dividends paid) in any currency of manager's choosing.

The following restrictions are placed in respect of these bonds:

Bonds may not be issued with a total value greater than 1.5 times the NAV of the fund.  If, through exchange-rate movement or trading loss, NAV falls below this requirement then either more units must be sold or bonds redeemed.

The fund must maintain BTC-denominated assets such that outstanding bonds amount to a liability of no more than 90% of such assets.  When this ratio is not met (such as after issue of new bonds transacted in a currency other than BTC or after significant BTC-denominated trading losses) it must be promptly restored.

The interest offered on new bonds issued may not exceed 1/3 of the estimated average trading profit (excluding exchange-rate caused elements) of the fund for the previous 26 weeks (or since the start of the fund if it hasn't been running for 26 weeks).

No risks associated with normal trading may be passed on to the bonds - all loss from trading is applied against the value of fund units.  The risk of trading-platform failure may, at manager's discretion, be fully or partially shared with the bonds.

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


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.


CAVEATS

The performance of the fund (expressed in LTC) is strongly dependent on the exchange-rate of LTC/BTC.  It would not be wise to invest with the expectancy of making an (LTC-denominated) profit if you believe LTC is likely to significantly appreciate vs BTC in the short to medium term.

For the purpose of this offering, BTC and LTC are considered virtual currencies with no intrinsic value (akin to currencies in online games).  This fund is being run for the entertainment of the manager and investors with no expectation of financial gain or loss for either party.

----- CONTRACT ENDS HERE  -----

----- OLD POST BELOW THIS LINE -----

STARTING PROCESS

Though not part of the contract I believe it would be useful to explain how the startup phase of the fund will occur (assuming the asset is approved by LTC-GLOBAL).  After approval I will do the following:

1.  Place a sell order for 500 units at 10 LTC each (or sell into existing orders if such exist).
2.  Calculate NAV based on my own current holdings on LTC-GLOBAl, GLBSE and BTC-E at the exchange-rate at that time.
3.  Assign to myself (a seperate LTC-GLOBAL account) units equal to NAV/10.1 (by contract I am obligated to buy shares either through the market or at NAV + 1% if I just transfer them).  Doing it this way saved myself the fees of converting BTC to LTC and saves the fund the cost of then converting those LTC back to BTC to invest.

The only shares I currently hold and will transfer are a few BTC-worth of ASICMINER.  These are one of the most liquid securities on GLBSE with a steady trading range (0.11 - 0.2 typically).  There will be no ponzi assets or unsellable fixed-rate mining bonds transferred from me (it is unlikely I'd ever even day-trade in such offerings).

Thereafter those LTC-GLOBAL and GLBSE accounts will only be used for this fund.  I already have a second LTC-GLOBAL account to hold my own units in - and will make a second GLBSE one if I ever see a need for it.  The BTC-E account may be used to do trades unrelated to this fund.

I will be using units gradually (up to the authorised 2500), rather than all at once for a few reasons:

1.  To get the best price possible,
2.  Most of the funds will need to be exchanged to BTC - I don't want to impact the exchange rate if possible.
3.  It takes a bit of time to get funds into play - I do noone any good by taking funds faster than I can actually usefully apply them.

[smoothie]

...just in case you don't want to day trade your own funds/value. 

[Deprived]

Asset is now live.

LTC was trading at 0.00356 vs BTC when first units were placed on the market at 10.0.  Price of units for sale (and the buy-back bid) will be adjusted appropriately if that exchange rate significantly varies: from now on all bids/asks I make will be based on actual NAV/U of the units.

[Deprived]

FUND VALUATION

The contract for this fund does not spell out any details of how the fund will be valued.  This is intentional - I did not want to commit to a specific means for valuing securities only to then be compelled to use it in circumstances where it would be irrational to do so.  Here, however, are the guidelines I will be following when valuing the fund:

LTC/BTC exchange rate : This will be the mid-point between bids/asks on BTC-E.  I toyed with the idea of just using the rate quoted at the top of LTC-GLOBAL, but unfortunately that's just the price at which the last trade completed.

Securities : The first rule with these is simple:

The valuation must always lie in the range (Highest Bid - Lowest Ask).  This seems obvious - yet I see funds trading where they religiously use 5-day average even when that value now lies outside the range at which the security trades.

Bearing the above in mind, the means by which a security is valued is determined based on whether the security is one I'm trading or one I am investing in (i.e. intend to hold for more than a day or two).

Investments:  Securities I purchase with the intent to hold will be valued at the 5-day average (GLBSE) or 7-day average (LTC GLOBAL) adjusted where necessary to fall within the bid-ask range.

Traded Assets: Securities I purchase with the intent to sell back in the short-term will be valued at the price they were bought for (adjusted if necessary to fall within the bid-ask range).  There will be no optimistic valuations based upon the price I expect to be able to sell them for.

The regular reports for the fund will NOT include details of which securities are currently held for trading (long-term investments WILL be shown) - those lines of the spreadsheet will be hidden when the screenshot is posted.  I AM willing to provide the full spreadsheet to any investor holding 10% or more of authorised issued units (currently 2500 units are authorised for sale): if you hold 10% or more of units (250 until more are authorised for release) then email me (at the email address listed for this asset) from the email address associated with your LTC-GLOBAL account.  When I produce the weekly report (1st one will be this weekend) then I will email you the full spreadsheet showing all securities held, their valuations etc (after verifying that you indeed hold the required number of units).

[Deprived]

NAV/U at end of (my) trading today is 10.1112 LTC.

LTC/BTC Exchange rate is 0.00357

A small quantity of Asks will be left up overnight at 10.25 LTC and a small bid-wall at 9.7 LTC.  I do NOT recoomend buying into (or out of) the fund at those prices - but the option's there if you're desperate.  The reason why these values are significantly either side of NAV/U is so as to protect existing investors in case of a minor swing in the LTC/BTC exchange rate.  Whilst I'm online I regularly adjust the asks/bids - I cant do that whilst I'm asleep.

Exception to the above would be if the LTC/BTC exchange rate DOES move significantly - in which case buying or selling could make sense (which makes sense depends on which way the exchange-rate has moved).

30.75% of the fund is in LTC (or LTC-denominated securities), the other 69.25% in BTC (or BTC-denominated securities).  With those percentages and the NAV/U a bit of basic math will allow you to work out the current NAV/U at any exchange rate that transpires.

Throughout the day (when I'm online) I update asks/bids every hour or so - typically the Ask will be about 0.5-1% over NAV/U and the Bid 1-5% below NAV/U.  These spreads represent the costs involved in processing each type of action - and ensure existing investors dont lose any value when someone new invests or an existing investor divests themselves of their holding.

The small premium on asks reflects that there's a 0.2% fee to the fund for the sale plus a small cost in transferring the bulk of the funds across to BTC.  There's also a hidden cost to existing investors - that earnings on their working funds are being shared with the new investors whose capital is not yet in play.

The larger premium on bids reflects the fact that if a signficiant number of units are sold back then holdings may have to be liquidated to get the reserve 5% LTC back in place.

The degree of the spread is also determined by the current situation of the fund: if I have an immediate use for capital then the ask will tend to be lower and the bid significantly lower.  Conversely, if I have surplus liquid capital then the ask will be raised and bids made more attractive.  The spread will also tend to widen when the LTC/BTC exchange-rate looks volatile and tighten when there's significant walls on both sides of the current value.

On a final note (for today) if anyone at any point knows in advance that they will need to sell back their units at a particular time then feel free to let me know - and I can ensure I have funds available (even if it's over the 5% I'm committed to).  It makes my life easier - and in return I'd be able to buy back at 99% of NAV/U rather than anywhere in the 95-99% range you'd get trying to sell back to me through the exchange.

[Deprived]

Turns out that whoever bought the handful of units up at 10.25 did well for themself.

LTC/BTC rate is now 0.00356

Adjusted NAV/U is now 10.3129

Adjusted NAV/U is the standard NAV/U modified to what it would actually be if my 10% management fee were deducted.  Bids/Asks are based around this - so anyone buying in doesn't pay for "profit" that wouldn't actually end up being theirs.  And also so anyone cashing out doesn't get to take profit that they wouldn't keep if they stayed in.  Management fee is NOT actually taken from the fund until the next report of course.  NAV/U before adjustment was 10.34772.

Bids will be put up at 10.15 and Asks at 10.36 (Adj NAV/U+0.5%) shortly after this post is made.  Those will be adjusted throughout the day as profit/loss and exchange-rate changes occur.

[Deprived]

Someone's been seriously buying up LTC - whether an attempt to manipulate the rate, laundering or what I don't know.  But there's essentially no volume at pressent from 0.0036 right up to well over 0.004.  If I had to estimate a current exchange it'd be about 0.004 - but it could end the night significantly either side of that.

There's no doubt that this will majorly reduce the value of LTC-ATF units (expressed in LTC) - as majority of funds/investments are in BTC or BTC denominated securities.

Assuming a rate of 0.004 then current NAV/U is 9.699 LTC.

To see how the exchange rate move (of over 10%) impacted NAV/U the NAV/U if rate was same as at start of day (0.00356) would have been 10.57888013.

Obviously not the start I wanted for the fund - but it was always an explicit risk of an LTC-denominated fund whose investments were mainly in BTC-denominated securities.  Whether the exhcange-rate rise sticks remains to be seen - but with the rate in flux as at present I can't leave a Bid-wall up overnight at any reasonable value.

An Ask is being left at 10.5 - that becomes good value if the rate returns to below 0.00365.

[Deprived]

Right now LTC/BTC exchange ate is at about 0.00382 - but there's no volume either side for quite a way, so that's likely to vary a lot during the day.

Adjusted NAV/U is 10.1226 at that exchange rate.

Will be putting up Bids at 9.65 and Asks at 10.4 - the spread is wider than usual as the exchange rate is far from steady.  Rates will, of course, change throughout the day as the exchange rate moves and trading occurs.

[Deprived]

Exchange rate's been all over the place today - it finally seems to be settling down a bit, though there's little support on the sell side (so a rise is more likely than a fall in my view).

LTC/BTC Exchange rate at 0.00377

Adjusted NAV/U at 10.5612 (NAV/U before projected fee adjustment 10.6236).

Will be leaving Asks up overnight at 10.75 and Bids at 10.1

Would recommend against buying in if exchange rate gos much over 0.00385.  Would never recommend selling to my overnight bids unless either LTC/BTC rate really tanks or you're absolutely desperate.  Were I staying online ask would be 10.68 and bid 10.3 (meaning the first few investors could cash out for a 3% profit less 0.4% fees if they chose).

[killerstorm]

Y U NO release a detailed report?

I guess you track NAV using a spreadsheet of some sort, so just releasing that spreadsheet makes a lot of sense.

I think it's important to release it sooner rather than later because you started with non-transparent transfer of assets.

It's great that you post NAV updates, but since we don't know what holdings consist of they might as well be bullshit.

(It's worth noting that contract and communication makes a really good impression, like it's done by a pro. So I'm parking little spare money I have in LTC-ATF.)

[Deprived]

Y U NO release a detailed report?

I guess you track NAV using a spreadsheet of some sort, so just releasing that spreadsheet makes a lot of sense.

I think it's important to release it sooner rather than later because you started with non-transparent transfer of assets.

It's great that you post NAV updates, but since we don't know what holdings consist of they might as well be bullshit.

(It's worth noting that contract and communication makes a really good impression, like it's done by a pro. So I'm parking little spare money I have in LTC-ATF.)

I'm actually still around - got bogged down in other stuff.  Give me 10 minutes and I'll see if I can upload shot of the spreadsheet.

I can't show what shares are held - for two reasons:

1.  I day-trade, not invest: within a few hours of any details being released that information will usually be out of date.  Seeing a list of securities we hold at a specific point in time doesn't tell you anything about how I rate those shares, nor does it actually prove that we DO have those shares.
2.  I don't want to give away to competitors details of which shares I trade on - only a small percentage of shares on GLBSE meet my (pretty tight) criteria to invest in.

There's some pretty specific things I do which work pretty well - they only work on securities with certain characteristics.  Some of those characteristics are fairly obvious - e.g. they aren't obvious scams (which could vanish any time leaving me holding worhtless junk), they trade within a fairly well defined range etc.  Some are a lot less obvious.  It's not in my (or my investors') interest for me to provide information which would assist the competition (yes there IS competition - though it's not from other funds afaik).

Let me give an old example of the sort of thing I do - then maybe you'll be able to see why I really can't give detailed info on trades.

The below is an extract from a set oftrade done BEFORE the fund started.  You can likely find the trades in the GLBSE twitter feed - and i'm fine with nefario confirming the trades listed were done by me, in the order listed with no other trades in between.  These trades weren't particularly profitable - but as a proof-of-concept they did the job.

buy   23/09/2012 21:48   0.11399999   ASICMINER   34
sell   23/09/2012 21:42   0.11900001   ASICMINER   10
sell   23/09/2012 21:40   0.11900001   ASICMINER   11
sell   23/09/2012 21:38   0.11900001   ASICMINER   13
buy   23/09/2012 21:34   0.11399999   ASICMINER   46
sell   23/09/2012 21:32   0.11850001   ASICMINER   9
sell   23/09/2012 21:30   0.11850001   ASICMINER   11
sell   23/09/2012 21:28   0.11850001   ASICMINER   12
sell   23/09/2012 21:26   0.11850001   ASICMINER   14
buy   23/09/2012 21:24   0.11399999   ASICMINER   36
sell   23/09/2012 21:20   0.11850001   ASICMINER   11
sell   23/09/2012 21:16   0.11850001   ASICMINER   11
sell   23/09/2012 21:13   0.11850001   ASICMINER   13

What you see there is me selling shares at one price then buying back the same shares at a lower price.  In fact it was the SAME shares being traded back and forht with me making a profit every cycle.  The actual tarding went on for quite a lot longer in simialr fashion - with one share sniped by some third-party plus a buy at wrong price due (I guess) to a mislick.

The other side of those trades was a remarkably dumb bot - that always undercut asks by 1 satoshi and overbid bids by 1 satoshi.

There was a gap in trading range on asci miner including from .113 - .1195.  So all I did was:

Put up a bid of 1 share at .1185.

(Wait for him to outbid me.
Sell to his order.
Cancel my bid.) Looped until he stopped putting up decent quantities


Put up an ASK at .114
wait for him to undercut me.
Buy all my shares back from him.

Rinse and repeat.

After a bunch of these cycles the bot must have hit some stop-loss and halted.  It cam back again next day and did the same thing lol.  It was SO dumb that before putting up at ask at .114 i'd put up a BID at .11399999 - and the dumb thing would STILL undercut me, selling into my order so he landed with the trade fee.

That bot no longer operates on ASCIMINER (that share is now tricky to trade in for a few reasons - though proft can be made in an entirely different way).  It DID, for a while, contine trading but only doing 1 share at a time (which makes the strategy I used too risky).

Not you've seen the above, hopefully you can see why I absolutely can't afford to identify which securities I'm active on at a particular time.  At present my bot-exploloitation is largely on hold - GLBSE's way too slow to do it manually and I've yet to finish off my own bot (which, as well as monitoring my trades, executing stop losses etc will also be able to be set up to strip cash off other peopke's badly designed bots).

There's other types of trades I do (which require far less effort) - and a few more things that will come online if/when the fund grows a bit.

Now I'm definitely off to bed.

Oh - the initial transfer of assets was purely BTC + asicminer shares.  The asicminer shares I transferred in ( a dozen or so from memory) sold for more than I valued them for the first day of trading (I've since bought and sold more of those as well).  I did have some other junk shares (e.g. DMC which I only bought so I could state I was a shareholder in the thread) - those I liquidated and got a handful more ATF shares with the BTC from their sale.

[Deprived]

Meh - the spreadsheet screenshot will have to wait - will be doing 1st weekly report tomorrow anyway and posting one then.

[Bitcoin Oz]

I might get some of these since I do a bit of spread trading on glbse too 

[Deprived]

Current LTC/BTC exchange rate 0.00382.  Still not much volume around that price so it could change in either direction fairly quickly.

Adjusted NAV/U : 10.45434

Ask going up at 10.6,  Bid at 10.25

[matthewh3]

Subscribed

[Deprived]

OK, time for the first weekly report.

I'll post a screen-shot of the fund's spreadsheet - then explain what everything in it means.  Going to do the explanation in a second post - so I can make sure the image displays properly before explaining it.

[Deprived]

EXPLANATION OF SPREADSHEET

Most of the spreadsheet should be obvious - but in case not, here's what every item on it is.  Values in Black (other than percentages) were manually entered.  Values in green are calculated.

At the top is the current LTC/BTC exchange rate - as this fund is valued in LTC but mainly holds BTC-denominated assets, this exchange rate has a massive impact on the fund's value.

Next we have a list of what assets are currently held in currency (LTC or BTC).  For each item it is valued in both LTC and BTC.

The balances in LTC and BTC are given for the BTC-E exchange.  These will usually be zero (in fact there's some tiny amounts in there) - but there may be occasions where funds happen to be being moved between exchanges when the weekly report is prepared.

Next is the balance in BTC on GLBSE
Then the balance in LTC on LTC Global.

Do remember that this is primarily a day-trading operation.  That 58% of the fund is in BTC on GLBSE does NOT mean that the cash is sitting idle - in fact over 10 BTC of it is committed to buy orders at present.

After the currencies section, we have our GLBSE holdings.  Only long-term (i.e. intentionally being held for more than a day or two) securities are displayed here. You'll notice some hidden rows after ASICMINER - those contain the other securities we current hold (and some rows are for securities we've recently held but no longer do).  For long-term securities the general rule is that I use the 5-day average on GLBSE.  That valuei s currently lower than the 0.11 in my spreadsheet.  Why?  Because there are bid orders up into which I could sell the ASICMINER shares right now for .11 - so their value has to be at least that.

Next we have out LTC-GLOBAL holdings.  The comments about GLBSE apply here as well - other than that the 7-day average rather than 5-day one is used by default.  Again, the LTC-GLOBAL shares could be sold for 73.1 - so that is used as their value rather than the (slightly lower) 7-day average.

We then have the total for LTC and BTC denominated holdings and a grand total.

Now for the data below all that obvious stuff:

Units Authorised : This is the number of units I am authorised to sell to the public (an arbitrarily large number of units was created so that there'll never be a need to make more).  At present I am allowed to issue up to 2500 units in total.

Units Outstanding : This is the number of units held by investors (including my own personal account on LTC-GLOBAL).

NAV/UNIT (in LTC then BTC) : This is total value of the fund divided by the number of outstanding units - it represents what each unit is backed by in assets.

OLD HWM : This is the previous 'High Water Mark' - the value/unit above which management fees are payable.  The fund started off selling units at 10.0 - so that is the base from which profit is measured this week.

Adj NAV : This is the value per unit discounted by the management fee which would be taken at the end of the current week.  It represents what each unit would be worth to an investor if I took any fees due to me, sold all assets at their current valuation then shared out the proceeds (in fact this slightly underestimates the value - as we'll see later).

The columns below that showing various percentages of NAV or NAV/U are used by me in pricing my Bids and Asks so as to protect existing investors' equity without grossly overcharging new investors or allowing us to be too easily exploited if the exchange-rate suddenly swings.

Man fee (Units) calculates how many units I am entitled to as my fee for the current period's trading.  That value this week is 2.6.  According to the contract that gets rounded down - so my fee for this week is 2 units which will shortly be transferred from the asset's account to my personal one.

[Deprived]

WEEKLY RESULTS FOR THE TRADING PERIOD 26th Sep 2012 - 29th SEP 2012

Results are given in LTC (in which this fund is denominated) and also in BTC (for any investors who view BTC-value as more important than LTC value).

NAV/U (LTC) at start of period : 10.0
LTC/BTC exchange rate at start of period : .00356
NAV/U (BTC) at start of period : 0.0356

NAV/U (LTC) at end of period : 10.50186932
LTC/BTC exchange rate at end of period : .00383
NAV/U (BTC) at end of period : 0.04022216

Exchange-rate change during week : +7.58%

Trading Profit :

Change in NAV/U (LTC) : +5.087%
Change in NAV/U (BTC) : +12.98%

Management Fee taken : 2 units.

New High Watermark : 10.45168239

I'm satisfied with the results of the first few day's trading.  We made a reasonable profit -despite a large chunk of it (measured in LTC) being wiped out by the change in the exchange-rate.  I should point out at this stage that IF the exchange rate had reduced us into a loss (in LTC) for the week I would be entitled to reduce the HWM to the new NAV/U.  In fact it didn't take us into loss - though it did nicely eat up a chunk of the management fee I would otherwise have earned.

For reference, if the exchange rate had not changed during the week (i.e. it ended at .00356) then the ending adjusted NAV/U would have been 10.98 and we would have made 9.8% profit measured in both LTC and BTC.  I would also have been entiteld to 5 units (5.37 rounded down) as fee.  Such is life - no doubt there'll be weeks where the exchange rate drops (by less than 5%) and I get an extra unit or 2 fee.

IMPORTANT : do NOT make the mistake of thinking "we made 9.8% trading profit in half a week so we should make 15-20% each week".  That absolutely will not be the case.  Here's why:

1.  Some of the most profitable activites are only available on a very tiny scale - as the fund grows the profit from those has a decreasing effect on overall profits.
2.  So far I haven't made any typos, bought into a security just before the bottom fell out of it or got stuck with some useless junk that noone else is willing to buy.  The first of those (typos) will likely happen at some point.  The second (bad timing) is inevitable at some stage.  The third (getting junk noone else will buy) shouldn't happen - but is possible (for GLBSE shares I have very strict rules on how much I'll tie up in any security relative to their daily/5-day trade volumes).

I'm not going to attempt to guess what trading profit we'll make each week.  I'm confident we WILL make a trading profit - but really can't say how large/small it will be.  Remember, also that even if we make a trading profit it can be wiped out by LTC rising vs BTC.  Of course the converse also applies - that profit can be enhanced (or loss diminished) by LTC falling vs BTC.  Swap LTC/BTC in the previous sentence if you like to think of your units as being worth BTC.

Not many units have been sold so far.  That was entirely expected :

1.  I have no track record,
2.  I didn't even make a token effort to claim not to be a scammer (I believe such claims to be valueless - both scammers and non-scammers will say they aren't a scammer, so them saying it adds no information assisting anyone else to assess them).
3.  I'm not actively promoting the fund in the main securities forum or in my signature.
4.  I'm keeping details of what securities I trade hidden.  There's a good reason for it - but many investors (including me) are wary of black-box operations.
5.  I'm not paying dividends - many investors like these.  Personally I prefer growth - but to each his own.

A slow start, giving me time to explain things to investors, iron out any glitches in my systems etc makes perfect sense - so please don't panic if you're one of the few current investors but don't see anyone else investing.  All the time the fund stays tiny, your units should grow at a far better rate than when it gets larger.  Do bear in mind that from MY perspective growth (to a certain point) is good even if it diminishes the percentage returns to you - my fee is based on the amount of profit not the percentage of profit.  This divergency of interests is mitagted by my holding units myself - where if more units are issued I MUST make more profit or my fee stays the same and my earnings on my personal units decreases.

Thanks for investing (those who did).  Thanks for at least considering investing (those who didn't but read the thread).

I won't be doing a whole lot of trading tomorrow (got a busy day) - but will obviously have bids/asks out and check them a few times during the day.  Will be around a few hours now to answer any questions anyone has.

[Deprived]

Exchange rate at 0.00397

NAV/U : 10.4563912

Not been on long (as I said yesterday, I have a busy day today).  Some of my bids and asks went through whilst I was offline - the profits from those just about cancelled out the reduction in value (in LTC) from the exchange-rate change.

Also had our first sell-back of units to the fund today - which added a tiny bit to the NAV/U of everyone else.  Will be around on and off for rest of the evening - then trading as usual again tomorrow.