[LTC-GLOBAL] LTC-ATF

[Deprived]

LTC taking a bit of a dive vs BTC at the moment.  Down to about .0071 right now.

I didn't expect it to fall quite so much - and the fund got to 100% LTC when the price was about .0073.  So if the exchange-rate drops lower we won't be getting any significant increase in unit value.  Conversely, if the price does a big bounce back up (which often happens) we're nicely positioned to sell out at the peak.

Exchange-rate ~ .0071 (big gap above that - as noone's following the price down other than a few bots : hence high chance of a fast bump back up).

Adjusted NAV/U : 9.233006

Bid at 9.1
Ask at 9.35

The value is pretty stable as we're 100% in LTC (other than the odds and ends of shares tuck on GLBSE).  e.g. even if rate shot up to .008 we'd still be ahead of where we started the day (and if it fell to .006 we wouldn't gain much from it).  It's a shame to be missing out on profit if it falls further - but we've been regaining value decently so no need to start gambling on big exchange-swings.

The fall wasn't one big dump - a fair bit of it would have been traders correcting for a mismatch between the LTC/BTC and LTC/USD books (did a few cycles of correction myself but the profit was way too small to be worth the effort of doing it manually).  And the rest likely the sheeple seeing price fall so following blindly.

[Deprived]

Exchange-rate : .00746

Adjusted NAV/U : 9.26092
Bid at 9.1
Ask at 9.45

Leaving a fairly wide-spread overnight as we have a fair chunk in BTC at the moment, so price a bit more volatile with currency moves than last few days.  As can be seen, we grew a lottle bit today even though ltc raised 3% or so vs BTC - that was because we were largely unaffected by the currency rise due to already being totally in LTC (as noted in previous post).

Will tighten spread a bit when I get online tomorrow.  If anyone wants to buy in or out would suggest you put up asks at around 9.2 or bids at around 9.35 rather than buy from my overnight spread and I'll fill them when I get up unless they've moved out of range due to either currency moves or profit from trades transacted whlst I was offline.

[Deprived]

Exchange-rate : 0.00744

Adjusted NAV/U : 9.31197

Bid at 9.19
Ask at 9.46

Holding mainly LTC again, so have tightened spread a bit.

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UPDATE AND REPORT



We're now back over our initial IPO NAV/U of 10 - having dropped to 7.5 when LTC jumped vs BTC whilst we had BTC denominated assets stuck on GLBSE.

The final surge was down to one series of trades.  I don't usually give details of trades but as this last jump was 10% in one go I'll explain how it happened. 

LITECOINRS-PT WAS a pass-through to a stock on GLBSE.  A few weeks back its owner decided that, rather than close it, he'd inject a bit of cash and convert it into an investment fund here.  That was accompanied by offering to buyback all shares at IPO - so existing investors had nothing to complain about.  At that point it was apparent that the NAV/U of current investments were WAY over the buyback price - so our fund bought in pretty heavily then relisted our purchases at decent markup - but still largely below the current NAV/U.

For the last few weeks those have pretty much just sat there - with noone seeming to notice how heavily underpriced they were (we sold a few but also bought more at steep discount).  Finally today someone actually looked at the stock and bought in - getting sharest hemselves at 1/2-2/3 NAV/U and realising profit for us.

We bought in at 1.0-1.1.  Our sales today were:

100 @ 1.5,  100 @1.75, 200 @2.0

It's easy enough to work out we made 300+ LTC on that.  A fair NAV/U for the share is definitely over 3 - so the buyer got a good deal.  Why did we sell so cheap then?  For two reasons:

1.  General - our mandate is to day-trade.  We buy stuff with the intent/expectation of selling pretty quickly at a profit.  In a liquid market it's fine to try to buy below value and sell slightly above value.  In an illiquid market I prefer to try to buy WELL below fair value and sell below value as well.  Usually I wouldn't sell this far below value though.

2.  Specific - at peak we had over 20% of our fund invested in this one share.  Whilst I'm fine with having that much in one share briefly I don't like to have us so exposed on one asset for any great length of time.  In general I try to keep holdings below 10% in any single asset.  So I was fine with selling off SOME of this stock cheaply and "only" taking a 40-80% profit on it.

Until the sales today this share had been valued on our books at what we paid for it - as is my usual policy.  I've now marked the remaining ones up slightly - but we'll still make some more nice profit when the remainder sell.

After posting this I'll be taking my management fee which is 6 units this week (rounded down from 6.13).

At present we have quite a bit in BTC on BTC-E, so for now Bid will be at 10.05.  Should be able to raise that a little once I get us back into LTC.

For now there's no units up for sale from the fund.  Two reasons for this:

1.  Until some more shares get sold to us (or bought by me) we don't actually need more cash.  No point selling new units if all it does is dilute the profits for existing investors.

2.  There's every chance more of the LITECOINSRS-PT shares will sell shortly - if so, I don't want someone buying units cheap before I've had a chance to adjust my Ask upwards.

If our cash on hand reduces (either by security purchase or by selling back of units to the fund) then I'll put more units up for sale.  Until then anyone who wants in needs to find a current investor willing to sell.

[Deprived]

Bad timing - whilst I was posting the report, the LTC price did the drop I was expecting.  As I wasn't paying attention to it, didn't make the profit I should have.  Anyway, we're now back in LTC and up slightly from when I typed the report - so raising my bid up to 10.15.

[Deprived]

Exchange-rate : .0071
Adj NAV/U : 10.30075

Bid at 10.18

[Deprived]

Exchange-rate .00712
Adj NAV/U : 10.340024

Bid at 10.23

For now I'm keeping us totally in LTC (other than the odds and ends stuck on GLBSE) so exchange-rate changes have a negligible impact on fund value and I can continue to offer a decent buy-back rate.

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Exchange-rate 0.00692
Adjusted NAV/U : 10.452992

Bid at 10.34

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Exchange-rate : .00691

Adjusted NAV/U : 10.538823
Bid at 10.4

Making slow but steady profit.  Not having much luck picking up assets cheaply at moment, just selling off ones we've held for a while for a profit.  So still no plans to issue more units as we still have plenty of cash on hand.

[Deprived]

Exchange-rate : 0.00689

Adjusted NAV/U : 10.565177

Bid at 10.43

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UPDATE AND REPORT



Trade picked up this week - in conjunction with LTC falling vs BTC.  That's actually a pretty common pattern - when LTC is strong investors sell shares to get LTC, when LTC weakens investors buy more shares as they see it as a way to protect against LTC falling in value.  That's not actually as irrational as it may sound - as many shares' value (either capital or revenue) is effectively denominated in fiat so rises (in LTC) when LTC falls.

We've been solidly in LTC all week - so, unfortunately, haven't gained from holding BTC in the way we would have before GLBSE shut down.

You may have noticed a new section in the bottom right of the spread-sheet - this shows the calculation adjusting my management fee for currency fluctuation (only applies when LTC weakens).  The calculation done there is actually slightly different to that prescribed in the contract - when convering recalculated profit from BTC to LTC I used the OLD rather than the NEW exchange-rate.  Had I used the old rate (as per contract) it would actually have increased my management fee.  The method in the ocntract was devised on the basis that most of our portfolio would be in BTC - as such it's actually pretty irrelevant now we're almost entirely in LTC.  Just about all profits are from trading (just a tiny amount from appreciation of the assets stuck on GLBSE).  In fact the fairest calculation would use the mid-point between old and new rates - to reflect that (typically) profits were made throughout the week as the exchange-rate moved rather than all at either the beginning or the end.

I'm not proposing to update the contract in respect of this calculation - as I hope that, before too long, some decent market for BTC-denominated securities will emerge and we'll be back to having a chunk of assets in BTC and the calculation will become relevant again.  For now I'll just use the least favourable (to me - most favourable to investors) of the formula detailed in the contract and what I consider a common-sense/logical calculation.

I expect our position to remain largely cash until LTC next rises.  There's absolutely no reason to panic buy - I try to only buy when I'm confident I can sell for a profit and would far rather hold cash (LTC) than securities I bought at a fair price.  So, for now at least, I won't be putting more units up for sale - that can, of course, change very rapidly if market conditions change and/or a significant number of our orders get filled.

HWM will be updated and 2 units transferred to my personal account as this week's management fee.

Bid at : 10.7

[Deprived]

Seems to be a glitch on litecoinglobal and its reporting the 7 day average as 0.0 

Not a glitch - just none have been traded in the last 7 days.  I'm not selling new units at the moment and seems noone wants to sell theirs back to me (or to other  bidders who have put buys up at just over NAV/U, overbidding my buyback).  Haven't seen an Ask up that's within 20% of NAV/U - so seems like existing investors don't want to sell and new ones can't get in at a reasonable price, hence no trades.

Would suggest you just manually value LTC-ATF shares at my quoted NAV/U - most of our holdings are usually in cash (as you can see in the report) and the shares we hold are all valued at or below their 7-day average, so my official NAV/U is a slightly pessimistic one compared to most valuations.  As I've mentioned before, other than investments I expect to take a while to sell (due to pricing typically) I generally value everything at what I paid for them until I sell them.  As volume's so low, 7-day average for most securities jumps around all over the place - so if I used that, my NAV/U would jump all over the place without reflecting any real change in the value of our assets. 

Exchange-rate : .0064
Adjusted NAV/U : 11.0238
Bid up at 10.87

We've remained solidly holding LTC - so haven't gained or lost anything significant from LTC dropping below .006 then rebounding back up to where it now is.

[Deprived]

Note that the above quote is from our thread in the Litecoin forums - if you click it here it'll take you to some entirely unrelated post.  If there's a query on one thread which I respond to in any length then I tend to cross-post on both to give context to my comments and save me having to answer the same question again later.

[Deprived]

Exchange-rate : 0.0064
Adjusted NAV/U : 11.37739
Bid at : 11.23

Seems like there's some active buyers around at moment - at the rate our assets have been selling so far today we'll be entirely in cash by the end of it (if that happened, NAV/U would be at around 12 at a guess).  Every single asset on LTC-GLOBAL is either up or unchanged - definitely some buying happening (which makes it harder to get more assets cheaply, but great for realising profits - have relisted some of our last stuff at higher prices).

I've posted (a rather hefty) proposal in the litecoin forums:

http://forum.litecoin.net/index.php/topic,857.0.html

If you're reading this post on BTC forums (I post all my updates to both forums) then sorry for only posting it on the other forum - but I'd prefer all discussion (if anyone actually reads it all) in one place.  Here's the CN for the thread - so you can decide if it's of interest before visiting:

SUMMARY (CN)

I am proposing that when LTC-ATF begins trading on BTC-GLOBAL, we raise funds for it by issuing bonds paying a fixed-rate of interest rather by issuing more units.  This would greatly reduce NAV/U volatility caused by exchange-rate fluctuations and would keep the bulk of profits for existing unit-holders rather than giving them to new investors.  This comes with the risk that if we make a loss trading we lose more than we would do if additional capital was raised by issuing more units.[/b]

[Deprived]

Exchange-rate : 0.00545

Adjusted NAV/U : 11.79257
Bid at : 11.6

Have had a few decent trades last few days.  In the meantime LTC keeps falling vs BTC - if we'd still had significant BTC-denominated assets we'd be up a whole ton more.

[Deprived]

UPDATE AND REPORT



It's been a good week for trading - pretty steady throughout then very busy last few days.  There's definitely some new investors into LTC-GLOBAL, at least one of whom is buying up whole chunks of assets at stupidly high prices.

Although we're, as usual, mainly cash that definitely hasn't been consistently the case last few days.  To give some idea, we currently hold ~1000 LTC worth of (non-cash) assets.  My last 30 trades (which is all that's easily viewable) were all in the last 10 hours and have a total value over 3200 LTC.  If half of those were buys and half sells (which is about right - cash was around same 10 hours ago) then we've turned over 1600 LTC worth of securities in that period: or over 25% of total fund value.

LTC dived heavily this week - but is now showing first signs of recovering (though the upward movement is small it's actually against arbitrage pressure).

Management fee due is 6.6 0 recalced at 6.2 to exclude the small impact our GLBSE assets have from exchange-range change.  That gets rounded down to 6 - which units will be transferred to my personal account (and HWM updated) after posting this.

Earlier in the week I made a post here : http://forum.litecoin.net/index.php/topic,857.0.html

This explained a proposal to issue BTC-denominated bonds to raise new capital rather than selling more units.  Feedback on it was pretty much zero (which was expected tbh).  I will NOT be creating a bond asset on BTCTC in the near future to issue bonds - I can't justify the 5 BTC listing fee when initially we'd only be looking to sell 5-10 BTC worth of bonds anyway.  I still like the idea of removing currency risk and leveraging our capital - so may consider private bond sales (i.e. just handled through a forum thread rather than on a trading platform) in the short-term.  Will probably put up a motion authorising this later in the week - so I can move on it when securities to trade in actually get listed on BTCTC.

Bid at : 12.2 for now.  Might be able to move it up slightly after I've had a proper look at the BTC-E currency markets.

[Liquid]

Just bought 60 Shares 

[Deprived]

Just bought 60 Shares 

Heh, well it's gonna take a while for the price to rise to what you paid for the last of them.  But welcome aboard.

You weren't buying direct from the fund - but from sellers by the way.  Only new units in last few weeks have been the ones I've taken for management fee.  Can't see any new units being sold by the fund for quite a while - so at least you don't have to worry about me selling new ones for less than you just paid.

[Liquid]

I see well i had a few from a while back so they must have been from the fund,

Thanks i guess its a long term investment, but i dont mind i can see how much work you put into it so i thought id like to help you out if it did in any way 

[Deprived]

Exchange-rate 0.0053

Current Adjusted NAV/U : 13.0082307
Bid at : 12.85

Overnight we temporarily went to a position of holding zero securities (other than the handful locked on GLBSE) - i.e. we were entirely holding cash.  Pretty sure that's the first time we've been that in position since launch (when we started we already a few shares that I transferred in - and had bought more before those were sold).  We're no longer all cash now (just mostly).

There's various pretty crude attempts at price maniluplation occurring at moment on LTC-GLOBAL - essentially someone buys up most of the Asks for a share, places a high bid themselves then hopes others will overbid them.  Right now the obvious two are esecurity.sa2 and ltc-gaming.

Esecurity.sa2 is interesting - as yesterday the actual asset issuer was manipulating the price.  Basically he was putting up bids himself at 5.2, then selling NEW shares to anyone who overbid him.  Obviously once I spotted this pattern I made us some profit off it (would guess about 3% gain before weekly results and another 3% after) - by bidding just over 5.2, waiting until he did next dump (KNEW it was him as outstanding shares would rise after each dump) then selling them back off at 5.4-5.9 via Asks.  A LOT of the massive volume last few days in esecurity.sa2 was through this - with a pretty big chunk of it having me on one side or the other of trades (I was happy to take smaller profits on larger volume - as the asset-issuer, through his market manipulation, was setting a floor for me so risk was low).

I don't agree with asset issuers manipulating their own share price - sales policy should be transparent.  The last statement from the asset issuer was that he wasn't selling more shares (this was because LTC/USD rate had risen to the extent he could no longer sell without undercutting previous sales).  Now, unannounced, he's selling back onto the market - and doing so whilst attempting to manipulate the price.

Now someone bought all the way up to 10+ - and there's an Ask at 6.0 which is almost certainly going to be whoever's trying to mess with the price.  I've no evidence to suggest this is still the asset issuer - could well be someone who saw the massive traded volume last few days and thought they could push the price up and resell for a big profit.  If so, they're in for a pretty epic fail - as a whole lot of that volume didn't represent demand at all (for starters, volume is pretty much doubled by me picking them up cheap and reselling for modest markup - and my belief is a lot more of the volume is false as wel for a slightly different reason).

Same thing (attempted price raise) is happening on LTC-GAMING.  Someone's bought the market out - and now there's an isolated big Bid up.  I'm even less clear on what's happening here.  Esecurity.sa2 at least pays good dividends and has a defined, credible, model by which those profits are being delivered - so if you believe they're doing what they say they are they offer good value as an investment.  LTC-GAMING, on the other hand, was set up as a website to develop games yet appears to have completely failed to develop anything of note - but has kept ticking over due to its policy of paying out miniscule dividends every day (which would amount to an annual return of 1-2% that isnt even profit as the site generates no revenue other than donations).

It's hard to see how this price rise could be genuine given that the contract states:

"50000 shares will be issued at 1 LTC per share

Funds raised will be invested into the rapid and agile development of original
intellectual property and games."

Only 11000 shares have been sold so far, so to actually keep the price over 1 LTC you need to soak up the other 40,000.  And there's zero sign of any "rapid and agile" development going on - just a third--party solitaire game on the site which looks like it was written in an afternoon by someone as an exercise whilst they were learning to program.  Though there IS an announcement of unspecified major developments - so maybe it's someone speculating who didn't realise there are still 40,000 shares to be sold at 1 LTC each.

I post the above, as much as anything, to explain why - at times - we HAVE to sit on mainly cash for a while.  When a few securities are in artificial bubbles I have to stay clear of them until the bubble bursts - as it's not worth the risk of trading a security when you KNOW it's in a bubble that will collapse (probably sooner, rather than later).  And with only a small range of available investments in the first place, losing the ability to trade a few DOES restrict overall ability to trade.

 Note that whether I view a security as a good investment or not is pretty much totally irrelevant to WHETHER I trade it - I'll trade any old junk (NOT saying either of the 2 securities above IS junk) if I can make a profit doing so.  The quality of it (and, more importantly, how I perceive the market as perceiving it) just alter what % of funds I'll risk on it, how big the likely profit margin has to be to trade it and what degree of credibility I'll give to any apparent moves in its market value.