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

[JohnGalt]

Monthly Report
April 2013

May 3, 2013

Overview

Asset Information
Assets: 100 shares of LTC-GLOBAL
Shares Outstanding: 1000
NAV: 0.215 (based on the LTC-GLOBAL 7 day average price of 67.80 LTC)

Dividend Information
Dividend (paid 2013-5-2): 0.30927 BTC
Dividend per share: .00030927 BTC
Monthly Yield (based on NAV): 0.14%
Annualized Yield: 1.72%

Management Fee
Normal Fee (0.08333% of asset value): 5.65 LTC
Waived: 0
Fee Paid: 5.65 LTC

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

Commentary

The price of LTC-GLOBAL shares fell sharply again last month, probably again due to the rise of the value of LTC in both BTC and dollar terms. The 7-day average price stands 67.80 LTC. Despite the fall in prices, the value of LTC-GLOBAL has risen in terms of both BTC and dollars because of the rise in the value of LTC. By the end of the month the NAV rose to 0.215 BTC (+41%).

LTC-GLOBAL paid a monthly dividend of 15.06 LTC. After subtracting the management fee and converting to BTC, the fund earned an income of 0.30927 BTC (0.00030927 BTC per share) that was distributed on May 2, 2013. Trading on both the BTC and LTC exchanges slowed considerably during the month,  probably due to the incredible spike and crash in both BTC and LTC prices (in dollar terms).

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 earlier deadlines for IPOs. Voting on IPOs ends sooner than established securities because trading on a security cannot begin until the security is approved.

Ticker	Exchange	Deadline	Notes
ASICMINER-100PT	BTC-TC	2013-05-08	IPO
TAT.ASICMINER	BTC-TC	2013-05-08	IPO
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[dexX7]

I'd really wish there would be more volume and action. Investing in the plattform itself should be a good thing.

[JohnGalt]

I'd really wish there would be more volume and action. Investing in the plattform itself should be a good thing.

The fund has done very well in BTC and spectacularly in dollars. The original NAV on December 12, 2013 was 0.120 BTC (or about $1.60). In just 6 months, it has doubled in BTC and increased by 20x in dollars.

[JohnGalt]

Monthly Report
May 2013

June 5, 2013

Overview

Asset Information
Assets: 100 shares of LTC-GLOBAL
Shares Outstanding: 1000
NAV: 0.357 (based on the LTC-GLOBAL 7 day average price of 155.81 LTC)

Dividend Information
Dividend (paid 2013-6-4): 1.68399 BTC
Dividend per share: .00168399 BTC
Monthly Yield (based on NAV): 0.47%
Annualized Yield: 5.64%

Management Fee
Normal Fee (0.08333% of asset value): 12.98 LTC
Waived: 0
Fee Paid: 12.98 LTC

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

Commentary

After falling sharply over the last couple months, the price of LTC-GLOBAL shares has recovered somewhat as the BTC-TC exchange has grown quite a bit. The 7-day average price stands at 155.81 LTC. Last month, the increase in the value of LTC in terms of BTC compensated for fall in the price of LTC-GLOBAL. This month, the stabilization of the LTC/BTC market and recovery of the price of LTC-GLOBAL has resulted in a dramatic increase in the NAV. By the end of the month the NAV rose to 0.357 BTC (+166%). Trading volumes of both LTC-GLOBAL and BTC-TRADING-PT continue to be very low.

LTC-GLOBAL paid a monthly dividend of 86.67 LTC. After subtracting the management fee and converting to BTC, the fund earned an income of 1.68399 BTC (0.00168399 BTC per share) that was distributed on June 4, 2013.

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 earlier deadlines for IPOs. Voting on IPOs ends sooner than established securities because trading on a security cannot begin until the security is approved.

Voting for approval of assets has been temporarily suspended due to lack of participation.

[JohnGalt]

In my opinion, trading volumes in LTC-GLOBAL on the LTC-GLOBAL exchange and BTC-TRADING-PT on the BTC-TC exchange are too low. I believe the primary reason is an excessive bid/ask spread. In a large part, this spread is due to the lack of volume-- in other words, the problem is self-perpetuating.

It is in the best interest of the fund to increase liquidity, so I (the manager of the BTC-TRADING-PT) act as a market-maker, providing a constant supply of shares to buy and sell. Normally, I set my bid and ask prices on BTC-TRADING-PT to be the same as the current bid and ask on LTC-GLOBAL. The idea is to avoid competition between the two securities and between myself and fund's shareholders, and also to limit arbitrage opportunities against my positions. However, now I am going to try something new.

I am going to price my bids and asks more aggressively and lower the spread on BTC-TRADING-PT compared to LTC-GLOBAL. I hope this will increase the trading volume. I believe that this move will also reduce the spread on LTC-GLOBAL to some extent due to competition and arbitrage.

The downside is that I will be competing against traders more than before. Traders will have to raise their bids and reduce their asks in order to get ahead of my large positions if they hope to trade. On the other hand, I feel that traders that place their positions up against mine are missing out on opportunities to trade as a result of their misguided attempt to maximize their spread. If they lowered their spread, they would trade more and make more money in the end. I am effectively forcing them to lower their spreads.

I believe that this move will be beneficial to everyone in the long run, and I hope that everyone agrees with me. If it has no effect or it causes problems, then I will return to the normal policy.

[Lohoris]

In my opinion, trading volumes in LTC-GLOBAL on the LTC-GLOBAL exchange and BTC-TRADING-PT on the BTC-TC exchange are too low. I believe the primary reason is an excessive bid/ask spread. In a large part, this spread is due to the lack of volume-- in other words, the problem is self-perpetuating.

In my very humble opinion, which is certainly less informed than yours (no sarcasm), I think there are two problems much larger than that, which are actually its causes.

1.
The dividend is way too low.
Even if this month's dividend is a record, it's still 7.37% per year.
Now, if not for the dividend someone might buy it for the voting power, but obtaining a seat costs too much (~2400€).

2.
While the site has a very nice and handy theme, it still has so many bugs and quirks which may make people unconfortable, especially developers who may fear something might break badly.

Don't misunderstand me, btct.co is a really great platform and I'm very happy to be able to use it, still these are the reasons I guess why not many people are interested into buying it.

[Peter Lambert]

In my opinion, trading volumes in LTC-GLOBAL on the LTC-GLOBAL exchange and BTC-TRADING-PT on the BTC-TC exchange are too low. I believe the primary reason is an excessive bid/ask spread. In a large part, this spread is due to the lack of volume-- in other words, the problem is self-perpetuating.

In my very humble opinion, which is certainly less informed than yours (no sarcasm), I think there are two problems much larger than that, which are actually its causes.

1.
The dividend is way too low.
Even if this month's dividend is a record, it's still 7.37% per year.
Now, if not for the dividend someone might buy it for the voting power, but obtaining a seat costs too much (~2400€).

The alternate way of saying the same thing: the price is too high. The people who do not own shares do not agree with what the people who do own shares are asking.

[kokojie]

In my opinion, trading volumes in LTC-GLOBAL on the LTC-GLOBAL exchange and BTC-TRADING-PT on the BTC-TC exchange are too low. I believe the primary reason is an excessive bid/ask spread. In a large part, this spread is due to the lack of volume-- in other words, the problem is self-perpetuating.

In my very humble opinion, which is certainly less informed than yours (no sarcasm), I think there are two problems much larger than that, which are actually its causes.

1.
The dividend is way too low.
Even if this month's dividend is a record, it's still 7.37% per year.
Now, if not for the dividend someone might buy it for the voting power, but obtaining a seat costs too much (~2400€).

2.
While the site has a very nice and handy theme, it still has so many bugs and quirks which may make people unconfortable, especially developers who may fear something might break badly.

Don't misunderstand me, btct.co is a really great platform and I'm very happy to be able to use it, still these are the reasons I guess why not many people are interested into buying it.

7% is not low, it's pretty good for a non growing company. BUT btct is apparently growing tremendously, and long term shareholders will be rewarded by increasing dividends, and share price.

[JohnGalt]

In my opinion, trading volumes in LTC-GLOBAL on the LTC-GLOBAL exchange and BTC-TRADING-PT on the BTC-TC exchange are too low. I believe the primary reason is an excessive bid/ask spread. In a large part, this spread is due to the lack of volume-- in other words, the problem is self-perpetuating.

In my very humble opinion, which is certainly less informed than yours (no sarcasm), I think there are two problems much larger than that, which are actually its causes.

1.
The dividend is way too low.
Even if this month's dividend is a record, it's still 7.37% per year.
Now, if not for the dividend someone might buy it for the voting power, but obtaining a seat costs too much (~2400€).

2.
While the site has a very nice and handy theme, it still has so many bugs and quirks which may make people unconfortable, especially developers who may fear something might break badly.

Don't misunderstand me, btct.co is a really great platform and I'm very happy to be able to use it, still these are the reasons I guess why not many people are interested into buying it.

If the price of the shares were just too high, then people would sell and bring the price down. The problem is that the price is too high for buyers and too low for sellers. That is the problem I am trying to solve. If I can narrow the spread and increase the liquidity, then perhaps the price to buyers would fall to a level that you feel is appropriate, and the price to sellers would rise to a level that they feel is fair.

[JohnGalt]

In my opinion, trading volumes in LTC-GLOBAL on the LTC-GLOBAL exchange and BTC-TRADING-PT on the BTC-TC exchange are too low. I believe the primary reason is an excessive bid/ask spread. In a large part, this spread is due to the lack of volume-- in other words, the problem is self-perpetuating.

...

I am going to price my bids and asks more aggressively and lower the spread on BTC-TRADING-PT compared to LTC-GLOBAL. I hope this will increase the trading volume. I believe that this move will also reduce the spread on LTC-GLOBAL to some extent due to competition and arbitrage.

...

It is now one week later. Here are the results:

Not only did I actively narrow the spread on BTC-TRADING-PT, but I also used the fund to provide support for also actively narrowing the spread on LTC-GLOBAL. The results seem good; however, my program started a few days after dividends were paid, so it is not clear how much it contributed to the increased volume in both securities.

LTC-GLOBAL on LTC-GLOBAL
Burnside's 150 share ask at 149 LTC helped me a lot. It made it easier and less risky for me to narrow the spread. I was able to get the spread down to about 10 LTC (about 8%), which was much better than before, but still too high. Unfortunately, when Burnside's ask was removed, that was the end of my market-making with LTC-GLOBAL shares because the spread became too wide for me to affect with my relatively meager number of shares.

BTC-TRADING-PT on BTC-TC
Volume of BTC-TRADING-PT on BTC_TC is still better than before. My program to narrow its spread remains active (it is about 25%), and I have decided to become even more aggressive. This will probably open up some arbitrage opportunities (at my expense), but I'm going to go ahead and see what happens.

[JohnGalt]

In a continuing effort to increase the liquidity (and decrease the spread) of BTC-TRADING-PT shares. I am considering a 10-for-1 stock split. I would like to get some feedback on the idea.

Basically, a stock split would work like this: for every share a person owns, they would receive 9 additional shares. They would now own 10 times as many shares, so each share would be worth 1/10th as much. In addition, each share would receive proportionally less dividends. In the end, there would be no change in the value to shareholders. It would be like holding 10 dimes instead of 1 dollar.

Currently, the value of a share is about $30 (up from $1.80 in December, woo hoo!), so buying or selling shares must be done in $30 increments, which is too high for many people. A 10-for-1 stock split would reduce the increment to about $3, making it easier to buy and sell.

The stock split would not affect fees because fees are based on total value rather than number of shares.

Any opinions?

[Peter Lambert]

Splitting the stock would not change the yield, so I do not think it would have a great impact on the asset. People who think it is too expensive will still think it is too expensive.

[Deprived]

Splitting the stock would not change the yield, so I do not think it would have a great impact on the asset. People who think it is too expensive will still think it is too expensive.

There's two different meanings for 'expensive' in this context - and I think you're talking about a different one to him.

You mean too expensive in the sense of "It's being sold for $10 but I don't think it's worth more than $9".
He means too expensive in the sense of "It's being sold for $10 and it's worth it but I only have $2".

His goal is to reduce the price per unit so more people can afford it - not to change people's perception of what it's worth.  A split also allows those holding a small number of units to sell off a small percentage of them.  Someone holding 2 units can't sell 10% of thier holding at the moment - they can only sell 0%, 50% or 100%.

[Peter Lambert]

Splitting the stock would not change the yield, so I do not think it would have a great impact on the asset. People who think it is too expensive will still think it is too expensive.

There's two different meanings for 'expensive' in this context - and I think you're talking about a different one to him.

You mean too expensive in the sense of "It's being sold for $10 but I don't think it's worth more than $9".
He means too expensive in the sense of "It's being sold for $10 and it's worth it but I only have $2".

His goal is to reduce the price per unit so more people can afford it - not to change people's perception of what it's worth.  A split also allows those holding a small number of units to sell off a small percentage of them.  Someone holding 2 units can't sell 10% of thier holding at the moment - they can only sell 0%, 50% or 100%.

Ok, I see what you mean now. It would make it more flexible for small investors, and increase the liquidity somewhat.

I am assuming that if this happens, the orderbook would be cleared out, otherwise people would suddenly find their 0.3 btc offers filled with shares only worth 0.03 btc.

[Lohoris]

I am assuming that if this happens, the orderbook would be cleared out, otherwise people would suddenly find their 0.3 btc offers filled with shares only worth 0.03 btc.

Obviously all the offers would be multiplied as well.

[burnside]

I am assuming that if this happens, the orderbook would be cleared out, otherwise people would suddenly find their 0.3 btc offers filled with shares only worth 0.03 btc.

Obviously all the offers would be multiplied as well.

We would lock the security, clear the book, multiply everyone's shares, then post a notification via the site and email to all shareholders.  Should be smooth and painless.

Cheers.

[greatscott]

Casting my "vote" that I think a split would be a good thing. It's a cool fund and would be nice for the shares to be more accessible + easier to re-invest in from other dividend sources.

[elefter]

Casting my "vote" that I think a split would be a good thing. It's a cool fund and would be nice for the shares to be more accessible + easier to re-invest in from other dividend sources.

I agree

[gambitv]

I agree too.

[dexX7]

+1 for split. While the volume is that low, flexibility really is the keyword. Funny enough, this stock has the highest volume on LTC-Global.

I assume both 100x walls are from you. May I ask, why?