[BTC-TC] BTC-Trading Pass-Through Fund (BTC-TRADING-PT) is closed

[JohnGalt]

Monthly Report
July 2013

August 6, 2013

Overview

The information below reflects the status of the fund on July 31, 2013. Changes since then are not included.

Asset Information
Assets: 100 shares of LTC-GLOBAL
Shares Outstanding: 1000
NAV (per share): 0.75149 (based on the LTC-GLOBAL 7 day average price of 272.28 LTC)

Dividend Information
Dividend (paid 2013-8-5): 4.91322 BTC
Dividend per share: .00491322 BTC
Monthly Yield (based on NAV): 0.65%
Annualized Yield: 7.85%

Management Fee
Normal Fee (0.08333% of asset value): 22.69 LTC
Waived: 0
Fee Paid: 22.69 LTC

Detailed information can be found here: https://docs.google.com/spreadsheet/ccc?key=0Am3m7aRNI-JbdElvTTc5Vmg3bUh2WDAwc2tsLU1JcEE

Commentary

BTC Trading Corp exchanges grew tremendously this month as demonstrated by the record dividend payment. It must be noted that despite now taking a back seat to its younger brother, the LTC-GLOBAL exchange continues to grow strongly, showing that LTC remains a viable currency (at least in the investing world). The 7-day average price of LTC-GLOBAL rose from 260.86  LTC to 272.28 LTC. Trading volumes of both LTC-GLOBAL and BTC-TRADING-PT are rising, but are still low. Liquidity remains a problem.

LTC-GLOBAL paid a record monthly dividend of 204.89 LTC, more than doubling last month's dividend. After subtracting the management fee and converting to BTC, the fund earned an income of 4.913222 BTC (0.004913222 BTC per share) that was distributed on August 5, 2013.

The assets of the fund remain at 100 shares of LTC-GLOBAL, but the portion of the fund not owned by John Galt has risen to about 80%.

Please note that the NAV is only an estimation of the value of the shares. The trading volumes of both LTC-GLOBAL and BTC-TRADING-PT are low and the bid-ask spreads are very high, so the actual price of a share can vary quite a bit.

Voting

Voting for approval of assets has been temporarily suspended due to lack of participation. Last month, I stated that I would take a poll to find out how many people would like to resume voting for asset approval. I have delayed that action because the number of shares owned by the public has until recently remained low.

Share Split

I intend to split BTC-TRADING-PT shares 100 to 1 in the near future. A share split reduces the value of the individual shares, but since the number of shares is increased proportionally, it does not change the value of your investment. Burnside intends to split LTC-GLOBAL 1000 to 1, and in order to reduce confusion, problems, and complications, we have decided to synchronize the splits of the two securities. Splitting LTC-GLOBAL requires paperwork and we are currently waiting for it to be processed. Stay tuned.

Other Important Information

As I mentioned last month, I act as a market-maker in BTC-TRADING-PT, and I have been pricing bids and asks aggressively, attempting to narrow the spread and increase liquidity of the shares. I have also been acting as a market-maker in LTC-GLOBAL shares, but to a lesser extent. I believe that both these activities have increased the trading volume for both securities and also have contributed to the rise in values of both securities. I plan to continue this activity for the foreseeable future.

[JohnGalt]

Update

20 shares of LTC-GLOBAL have been deposited into the fund in exchange for 200 shares of BTC-TRADING-PT. This has increased the size of the fund but does not change the value of the shares.

Anyone can exchange LTC-GLOBAL and BTC-TRADING-PT shares through the fund, but the benefits of doing so are limited at this point. See the first post in this thread for details.

[kokojie]

I wish you'd charge something like 3% of the dividend, instead of 1% of the entire asset as a fee.

[JohnGalt]

I wish you'd charge something like 3% of the dividend, instead of 1% of the entire asset as a fee.

Thanks for your input. Can you go into more detail?

I thought about how to structure fees when I set up the fund, and I felt that charging a fee based on the value of the assets is most appropriate. Effectively, I am managing your investment for you and it seems natural that the bigger the investment is, the more I should get paid. I don't think it is appropriate to charge based on the dividend because I have no control over the amount of the dividend and my performance is not not related to it. The fact that I get paid out of the dividend is really more of a convenience than anything else.

I would also like to point out that anyone that has held shares in this fund for more than a couple months has made a nice profit just on the rise in value. And anyone owning shares since the fund opened has made a killing. When I started the fund 9 months ago, the shares were worth 0.12 BTC (about $1.65) and now they are worth 6 times that, 0.75 BTC, and more than 40 times that in dollar terms. My point is that a 1% fee is insignificant compared to those gains.

[Peter Lambert]

I wish you'd charge something like 3% of the dividend, instead of 1% of the entire asset as a fee.

Thanks for your input. Can you go into more detail?

I thought about how to structure fees when I set up the fund, and I felt that charging a fee based on the value of the assets is most appropriate. Effectively, I am managing your investment for you and it seems natural that the bigger the investment is, the more I should get paid. I don't think it is appropriate to charge based on the dividend because I have no control over the amount of the dividend and my performance is not not related to it. The fact that I get paid out of the dividend is really more of a convenience than anything else.

I would also like to point out that anyone that has held shares in this fund for more than a couple months has made a nice profit just on the rise in value. And anyone owning shares since the fund opened has made a killing. When I started the fund 9 months ago, the shares were worth 0.12 BTC (about $1.65) and now they are worth 6 times that, 0.75 BTC, and more than 40 times that in dollar terms. My point is that a 1% fee is insignificant compared to those gains.

Charging a fee based on the actual dividend generated links the fee to an objective measure of the fund's success. Basing the fee on the price is open to manipulation, there could be no dividend and the price could be in a bubble.

[JohnGalt]

Charging a fee based on the actual dividend generated links the fee to an objective measure of the fund's success. Basing the fee on the price is open to manipulation, there could be no dividend and the price could be in a bubble.

This fund's success is not related to the dividend. Please don't confuse the success of the fund with the success of the its assets. The fund's success is measured by the advantage of owning the PT shares over owning the actual shares. There is no direct way to measure that success, but the next best way is by measuring the amount of money invested in the fund.

Also, consider a fund such as a gold fund, from which no dividends are paid. How do you measure the success of a fund that pays no dividends?

[Vexual]

I think the management fee is well designed for a pass through on this type of asset. Why do you calculate value by the 7 day average rather than the 30 day average?

[JohnGalt]

I think the management fee is well designed for a pass through on this type of asset. Why do you calculate value by the 7 day average rather than the 30 day average?

Great question.

I base the NAV on a moving average rather than the last sale price because trading volume is very low and the price is very volatile. I prefer the 7-day moving average because, compared to the 30-day moving average, it is more responsive to significant price fluctuations and there is less lag.

I base the fee on the NAV. I could base the fee on the 30-day moving average instead of the NAV, and that seems like a reasonable thing to do. I will consider it. It is probably a change that shareholders must vote on.

[stripykitteh]

I've been looking at BTC-Trading for a while. The yield (and lack of liquidity) has historically been quite low, which dissuaded me from buying. My analysis is that this is about to change, so I bought some BTC-TRADING-PTs today. Well, I suppose the yield could stay low, but only if the price moves up, so either way it's a win.

I feel that the company's competitive advantages (strong reputation, simple to use interface, network effects due to ease of trading between assets, volume of new assets being announced) mean that it has a bright future. It has joined AsicMiner as one of the stocks I think will be a long-term hold, but with more short-to-medium term upside.

[JohnGalt]

I plan to resume allowing shareholders to vote to approve or not approve securities on the LTC-GLOBAL and BTC-TC exchanges, but first I would like to determine the level of participation and interest in this feature.

You should have been notified of a new motion. This motion allows you to indicate how much you think that you will participate in voting and will help me structure the voting process. Please vote on the motion to indicate your level of interest.

This motion is important. If there is not enough participation in the motion, it will indicate that shareholders are not interested in voting on securities.

[JohnGalt]

30 shares of LTC-GLOBAL have been deposited into the fund in exchange for 300 shares of BTC-TRADING-PT. This has increased the size of the fund but does not change the value of the shares.

Anyone can exchange LTC-GLOBAL and BTC-TRADING-PT shares through the fund, but the benefits of doing so are limited at this point. See the first post in this thread for details.

[JohnGalt]

Update

Voting Poll

The results of the poll are in:

244 shares would actively vote on approval motions
20 shares would vote sometimes
9 (+ a few hundred that did not vote) are not interested in voting


Because 244 shares are only a little more than the 200 quorum, we will begin voting, but only on new and recent issues.

We will begin by voting on COG.F3 and CB.IDIFF-E. These shares are IPOs so they need to be voted on quickly. The vote will last 5 days.


Management Fee

Currently, the management fee is based on the 7-day moving average of the price of BTC-TRADING-PT, as reported by the BTC-TC exchange. Vexual suggested (I assume that it was a suggestion) that the fee be based on the 30-day moving average. That seems like a idea that is good enough to put to a vote. The long term effect is minimal. The short term effect is that as the price of the share goes up the fee will go be less than a 7-day average based feed.


Share Price Movement

There are some interesting dynamics right now that have been affecting the price of BTC-TRADING-PT shares. The price of LTC-GLOBAL has been rising quickly, but so has the value of BTC against LTC, and the result has been some unexpected movements in the price of BTC-TRADING-PT shares.

[Deprived]

Not seeing the votes up yet - if it's because you haven't yet put them up no problem.

I hold some shares of this pass-through (held personally, not for LTC-ATF) and intend to vote on motions whilst I hold them.  I'll post a brief summary of why I'm voting the way I am (or not bother if you'd prefer I don't).

When I see the motions I'd vote :

YES for CB.Diff - it's a useful option to have and has been run well in the past.  Issuer is reliable.
NO for COG.F3 - it's a rushed job (still a reference to COG.F2 in it) and he hasn't yet even raised a motion with Cognitive shareholders to approve it.   Vote would change to YES if/when those issues are fixed (whilst I intensely dislike his past use of sock-puppets it's not QUITE enough for me to outright vote NO on everything he does given he's been reliable otherwise).

[JohnGalt]

Update

Management Fee

Voting for the management fee calculation change has closed and the motion passed overwhelmingly, 428 - 0. The calculation of the fee based on the 30-day average will begin with the August dividend.

Voting on securities

The fund voted YES on CB.IDIFF-E and NO on COG.F3. Voting has opened for ICEDRILL.ASIC and PETA-MINE. Both are new issues and voting closes in 5 days.
Edit: Due to a math error, COG.F3 was originally reported as ABSTAIN. This has been corrected and the vote has been changed to NO.

Other

100 shares of BTC-TRADING-PT were redeemed for 10 shares of LTC-GLOBAL. The fund currently holds 140 shares of LTC-GLOBAL and has 1400 shares outstanding.

[OgonDark]

Update

Management Fee

Voting for the management fee calculation change has closed and the motion passed overwhelmingly, 428 - 0. The calculation of the fee based on the 30-day average will begin with the August dividend.

Voting on securities

The fund voted YES on CB.IDIFF-E and ABSTAIN on COG.F3. Voting has opened for ICEDRILL.ASIC and PETA-MINE. Both are new issues and voting closes in 5 days.

Other

100 shares of BTC-TRADING-PT were redeemed for 10 shares of LTC-GLOBAL. The fund currently holds 140 shares of LTC-GLOBAL and has 1400 shares outstanding.

John Bolton
John Galt Asset Management

Ummm.... COG.F3?

YES: 96 - NO: 288 - ABSTAIN: 24 - OUTSTANDING: 1500

At least 200 votes: Check

Margin of 100 votes: Check

Result....  Abstain?

I'd like to know how that is possible, please?

[JohnGalt]

YES: 96 - NO: 288 - ABSTAIN: 24 - OUTSTANDING: 1500

At least 200 votes: Check
Margin of 100 votes: Check
Result....  Abstain?
I'd like to know how that is possible, please?

I was about to tell you to "check your  math because 288 - 96 = ..." Thanks for catching that. I will fix it everywhere.

[JohnGalt]

Voting Update

There are several new securities up for voting. Please take the time to look at the securities and vote.

Name	Exchange	Deadline	Forum
ICEDRILL.ASIC	BTC-TC	2013-09-02
PETA-MINE	BTC-TC	2013-09-02
RENT1SPB	LTC-GLOBAL	2013-09-05	https://forum.litecoin.net/index.php/topic,4738.0.html
S.OPENRIGS	LTC-GLOBAL	2013-09-05	https://forum.litecoin.net/index.php/topic,5576.0.html

I understand that there is a problem with voting for securities on the Litecoin Global exchange. In order to see the information you have to log into the exchange, but many shareholders do not have an account on that exchange. I'll see what I can do. Suggestions are welcome.

[Deprived]

Voting Update

There are several new securities up for voting. Please take the time to look at the securities and vote.

Name	Exchange	Deadline	Forum
ICEDRILL.ASIC	BTC-TC	2013-09-02
PETA-MINE	BTC-TC	2013-09-02
RENT1SPB	LTC-GLOBAL	2013-09-05	https://forum.litecoin.net/index.php/topic,4738.0.html
S.OPENRIGS	LTC-GLOBAL	2013-09-05	https://forum.litecoin.net/index.php/topic,5576.0.html

I understand that there is a problem with voting for securities on the Litecoin Global exchange. In order to see the information you have to log into the exchange, but many shareholders do not have an account on that exchange. I'll see what I can do. Suggestions are welcome.




John Bolton
John Galt Asset Management

My votes (with brief reasons) on these are :

ICEDRILL - NO.  Contract isn't up to date (it refers to a fixed 50 million shares for one thing which is no longer the case) and in any event this is a pass-through so the contract should be a simple pass-through one referring to the contract on the underlying asset.
PETA-MINE - NO.  No explanation of what happens with IPO funds - don't even know whether the need is to raise X USD or X BTC per share or what happens to extra if exchange-rate changes.  It looks like a PMB - but if so, why the shares allocated to management?
RENT1SPB - NO.  the contract looks nothing like a contract.  It's not clear what (if anything) investors actually own and are entitled to - and the accounts are opaque.
OPENRIGS - YES.  Some areas of the contract could do with improvement but the basics are there and if the website and full documents are looked at (along with comments from those dealing with him) this is a real venture and the entitlements of investors are fairly clear.  It's a slightly begrudging yes vote (as it's one of those horrible not-quite-a-share, not-quite-a-PMB things) but a yes vote nonetheless.

[JohnGalt]

Monthly Report
August 2013

September 7, 2013

Overview

The information below reflects the status of the fund on August 31, 2013. Changes since then are not included.

Asset Information
Assets: 140 shares of LTC-GLOBAL
Shares Outstanding: 1400
NAV (per share): 0.94779 (based on the LTC-GLOBAL 7 day average price of 499.10 LTC)

Dividend Information
Dividend: 0 BTC. No dividend was paid this month
Dividend per share: 0 BTC
Monthly Yield (based on NAV): 0%
Annualized Yield: 0%

Management Fee
Normal Fee (0.08333% of asset value): 39.93 LTC
Waived: 39.93 LTC
Fee Paid: 0 LTC

Detailed information can be found here: https://docs.google.com/spreadsheet/ccc?key=0Am3m7aRNI-JbdElvTTc5Vmg3bUh2WDAwc2tsLU1JcEE

Commentary

The BTC Trading Corp exchanges again grew tremendously during the previous month. Transaction volume and the number of new assets continued to increase rapidly on both exchanges. The 7-day average price of LTC-GLOBAL nearly doubled from 272.28  LTC to 499.10 LTC. Trading volumes of both LTC-GLOBAL and BTC-TRADING-PT are rising, but are still low. Liquidity remains a problem.

burnside decided to use all of the operating income to fund a retainer for legal services. While revenue grew about 40% from the previous month, there was no profit this month and no dividend.

The assets of the fund increased to 140 shares of LTC-GLOBAL and the number of shares increased to 1400.

Please note that the NAV is only an estimation of the value of the shares. The trading volumes of both LTC-GLOBAL and BTC-TRADING-PT are low and the bid-ask spreads are very high, so the actual price of a share can vary quite a bit.

Voting

Motions must pass by a margin of 100 shares to be approved (a YES vote), or fail by a margin of 100 shares to not be approved (a NO vote). Votes with a margin of less than 100 shares receive an ABSTAIN vote. The results of motions that receive less than 200 votes will not be considered valid. At this time, voting for approval is only done for IPOs due to the lack of shares publicly held. Please vote. It is very important for the success of the exchanges and for the value of your shares.

Please note the early deadlines for IPOs. The voting period for IPOs is short because trading on a security cannot begin until the security is approved.

Ticker	Exchange	Result
COG.F3	BTC-TC	Not approved 288-96
CB.IDIFF-E	BTC-TC	Approved 407-0
ICE.DRILL	BTC-TC	Not approved 289-63
PETA-MINE	BTC-TC	Not approved 290-65
RENT1SPB	LTC-GLOBAL	Abstained
S.OPENRIGS	LTC-GLOBAL	Not approved 241-133

Share Split

I intend to split BTC-TRADING-PT shares 100 to 1 in the near future. We are still waiting on BTC Trading Corp. Stay tuned.

Other Important Information

I continue act as a market-maker in both BTC-TRADING-PT and LTC-GLOBAL, and I have been pricing bids and asks aggressively, attempting to narrow the spread and increase liquidity of the shares. I believe that both these activities have increased the trading volume for both securities and also have contributed to the rise in values of both securities. I plan to continue this activity for the foreseeable future.

[bryant.coleman]

"Trading is currently frozen on this security."

Could you explain?