ASICMINER Speculation Thread

[notme]

Velacreations has the right idea, and is even trying to teach you, forgoing his own advantage.

Believe what you want, but those who can do better math, and those who are better at trading will just benefit more.

You sound like MPOE-PR.

Despite her cold candor, default stubbornness, and abrasive approach, people could learn a lot from her.

The 5% mgmt fee on dividends does not directly devalue the share by 5%. The math is not as simple as that.

Share price and yield from dividend are not proportionally correlated. For example, it was not long ago that AM shares were half the price of today, and paying the same divs. Divs did not double, yet the price did.

Yes, there more plenty more factors affecting the share price difference than just the dividend difference. But in the conversation you were responding to, the difference of opinion wasn't about other complexities, it was about what difference the 5% reduced dividend should make to the share price, and Velacreations was mistaken on that point.

The point is that taking 5% off of the share price as a means of factoring the mgmt fee, is incorrect.

If I take 5% off the top, I have to take 5% off the bottom to have the same dividend yield.

[1713535754]

1713535754

[1713535754]

1713535754

[1713535754]

1713535754

[1713535754]

1713535754

[freedomno1]

The dividend is good but it is no surprise. I would not expect a huge rise.

I expect it to stay around 4.4 until the weekend, unless we have some news from FC before then.

Agree should have speculated that was bang on well not to the satoshi haha but the general estimate in my head

Price differential also depends on the growth rate estimate calculation
Do your terminal value calculations to get a proper estimate valuation on the share price
http://www.investopedia.com/terms/t/terminalvalue.asp

The whole section on dcf will come in handy for those who want to do some math
http://www.investopedia.com/university/dcf/

http://www.investopedia.com/university/dcf/dcf4.asp

Caution note: Wait on the Friedcat Financials for the real math I know I will although I have rough estimates ^^

Addition other ways to measure
There are several tried and true approaches to discounted cash flow analysis, including the dividend discount model (DDM) approach and the cash flow to firm approach. In this tutorial, we will use the free cash flow to equity approach commonly used by Wall Street analysts to determine the "fair value" of companies
http://www.investopedia.com/terms/d/ddm.asp

http://www.investopedia.com/terms/f/freecashflowtoequity.asp
Calculated as: FCFE = Net Income - Net Capital Expenditure - Change in Net Working Capital + New Debt - Debt Repayment

[TsuyokuNaritai]

Velacreations has the right idea, and is even trying to teach you, forgoing his own advantage.

Believe what you want, but those who can do better math, and those who are better at trading will just benefit more.

You sound like MPOE-PR.

Despite her cold candor, default stubbornness, and abrasive approach, people could learn a lot from her.

The 5% mgmt fee on dividends does not directly devalue the share by 5%. The math is not as simple as that.

Share price and yield from dividend are not proportionally correlated. For example, it was not long ago that AM shares were half the price of today, and paying the same divs. Divs did not double, yet the price did.

Yes, there more plenty more factors affecting the share price difference than just the dividend difference. But in the conversation you were responding to, the difference of opinion wasn't about other complexities, it was about what difference the 5% reduced dividend should make to the share price, and Velacreations was mistaken on that point.

The point is that taking 5% off of the share price as a means of factoring the mgmt fee, is incorrect.

For the record, I agree with both these points.

[velacreations]

Yes, there more plenty more factors affecting the share price difference than just the dividend difference. But in the conversation you were responding to, the difference of opinion wasn't about other complexities, it was about what difference the 5% reduced dividend should make to the share price, and Velacreations was mistaken on that point.

I don't think I am mistaken, actually, mainly because with higher volume, you don't see that gap between the 2, so obviously the market doesn't value the 5% fee in the same way you do.  I think the discrepancy has to do with time scale and smaller investment levels.  Also, we are ignoring the fact that when AM-PT pays out dividends, the prices balance (people use TAT to reinvest remainders)

Let's say, I wanted to own AM for a month.  During this month, I expect dividends to be .025-.035, let's say an average of .03 per week. I have 5 btc to spend. Let's assume share price remains stable during this time.

I can buy 1 AM1 shares @ 4.44699 btc right now.
I can buy 104 AM100 shares @0.042765 btc/each right now, for the same amount of btc

At the end of the 4 weeks, I've made the following profits:
AM1 - .03 x 4 = .12 btc
AM100 - .0003 x 4 x .95 x 104 = .11856

that's a 1.2% difference in profit (advantage AM1), and assumes the price gap remains (historically hasn't been this bg).  If the gap closes a bit, advantage goes to AM100, as your overall value will increase, despite the 5% fee.

If you go the route of thinking "what would make the most of my 5 btc?", then TAT is the obvious winner, and even with the fee, you would earn more btc for the same time period because you can buy more shares (116 vs 1).

IMO, 4% gap is too big, and is not supported by the share history or time scales most small BTC investors are looking at.

tl;dr - I'm right, when you consider shorter time scales and small amounts of btc

[notme]

I don't think I am mistaken, actually, mainly because with higher volume, you don't see that gap between the 2, so obviously the market doesn't value the 5% fee in the same way you do.

Highest Bid for AM100: 0.04130000
Lowest Ask for AM1: 4.55000000

Sure, you might be able to get lucky with limit orders, but right now you're looking at AM100 being worth less than 91% of AM1.  If you actually want enough volume to move an entire AM share, you would take AM100 down to 0.04080001.  If you want to move multiple shares, you are SOL.

[ThickAsThieves]

I don't think I am mistaken, actually, mainly because with higher volume, you don't see that gap between the 2, so obviously the market doesn't value the 5% fee in the same way you do.

Highest Bid for AM100: 0.04130000
Lowest Ask for AM1: 4.55000000

Sure, you might be able to get lucky with limit orders, but right now you're looking at AM100 being worth less than 91% of AM1.  If you actually want enough volume to move an entire AM share, you would take AM100 down to 0.04080001.  If you want to move multiple shares, you are SOL.

AM1 is too new to use as a price reference. It only has 525 shares currently, as it grows, it will get closer to the other whole-share sources.

[notme]

I don't think I am mistaken, actually, mainly because with higher volume, you don't see that gap between the 2, so obviously the market doesn't value the 5% fee in the same way you do.

Highest Bid for AM100: 0.04130000
Lowest Ask for AM1: 4.55000000

Sure, you might be able to get lucky with limit orders, but right now you're looking at AM100 being worth less than 91% of AM1.  If you actually want enough volume to move an entire AM share, you would take AM100 down to 0.04080001.  If you want to move multiple shares, you are SOL.

AM1 is too new to use as a price reference. It only has 525 shares currently, as it grows, it will get closer to the other whole-share sources.

My point was a counterargument to velacreations "obviously the market doesn't value the 5% fee in the same way you do" statement.  I'm not claiming it is liquid enough to make a valid comparison.  Just that the comparison he is attempting to make doesn't hold.

What do you have to say about this:

If I take 5% off the top, I have to take 5% off the bottom to have the same dividend yield.

[freedomno1]

Why are you guys measuring per year values when you can just trade between the two
http://www.investopedia.com/terms/d/ddm.asp


Prove your point with math  
MATH BATTLE !
Never get to say that  

[notme]

Why are you guys measuring per year values when you can just trade between the two
http://www.investopedia.com/terms/d/ddm.asp


Prove your point with math 
MATH BATTLE !
Never get to say that 

Because your math requires numbers we don't have access to.

[velacreations]

I don't think I am mistaken, actually, mainly because with higher volume, you don't see that gap between the 2, so obviously the market doesn't value the 5% fee in the same way you do.

Highest Bid for AM100: 0.04130000
Lowest Ask for AM1: 4.55000000

Sure, you might be able to get lucky with limit orders, but right now you're looking at AM100 being worth less than 91% of AM1.  If you actually want enough volume to move an entire AM share, you would take AM100 down to 0.04080001.  If you want to move multiple shares, you are SOL.

yeah, sorry, I was calling the BTCT securities AM1 and AM100, I wasn't meaning the havelock ones. 

AM-PT lowest ask: 4.446989
TAT.AM highest bid: 0.042600

You could move 5 btc easily on BTCT without moving the price much at all.

[ThickAsThieves]

What do you have to say about this:

If I take 5% off the top, I have to take 5% off the bottom to have the same dividend yield.

If AM decided to retain dividends for 6mos to do a massive expansion, are the shares now worth 0? 50%? What?

Dividends are not the only driver of price, thus dividend yield is an incomplete way to factor it. 5% mgmt fee on divs cannot be directly converted into a 5% less valuable share.

It ignores so many factors. How long do you intend to hold the shares? What will the price be when you sell? How much will you have collected in dividends by then? None of those things are absolute, nor is the yield %.

You would need to hold the shares for a considerable amount of time to realize a 5% loss in gains (respective to share price) from the mgmt fee.

Maybe an extreme example will help. If AM shares go up to 100btc each, but the dividends stay at about .025 per week. Is a 5% mgmt fee still going to justify TAT.AM selling for 95btc? Of course not.

[velacreations]

What do you have to say about this:

If I take 5% off the top, I have to take 5% off the bottom to have the same dividend yield.

my answer to that is that most of us are not investing on an annual timescale.  We are investing on a monthly timescale, so that equation doesn't necessarily hold.

I gave you an example for a 1 month holding period with the 5% fee, and the overall value difference was 1.2%, if the gap didn't close and prices remained stable.  If the gap closes (past performance), and you have a limited amount of BTC, then the TAT security will outperform the full AM-PT.

[freedomno1]

Why are you guys measuring per year values when you can just trade between the two
http://www.investopedia.com/terms/d/ddm.asp


Prove your point with math  
MATH BATTLE !
Never get to say that  

Because your math requires numbers we don't have access to.

Just make some rough estimate till we get financials with AM monthly or weekly scales are where it's at as bitcoin itself fluctuates and as investors we need to calculate currency risk as well into all our valuations as it impacts the stock price

[binaryFate]

What do you have to say about this:

If I take 5% off the top, I have to take 5% off the bottom to have the same dividend yield.

my answer to that is that most of us are not investing on an annual timescale.  We are investing on a monthly timescale, so that equation doesn't necessarily hold.

I gave you an example for a 1 month holding period with the 5% fee, and the overall value difference was 1.2%, if the gap didn't close and prices remained stable.  If the gap closes (past performance), and you have a limited amount of BTC, then the TAT security will outperform the full AM-PT.

Interesting hypothesis. But here I'll speak for myself: usually the TAT price follows the full share price pretty close. Even if I'd be interesting to look at one month period, I'm pretty sure the TAT price will catch up with the other one in this period. So without any consideration for dividends, I'd buy them now. They will rise at least to catch the other... I just did a bit actually, with what I could afford.

[notme]

What do you have to say about this:

If I take 5% off the top, I have to take 5% off the bottom to have the same dividend yield.

If AM decided to retain dividends for 6mos to do a massive expansion, are the shares now worth 0? 50%? What?

Dividends are not the only driver of price, thus dividend yield is an incomplete way to factor it. 5% mgmt fee on divs cannot be directly converted into a 5% less valuable share.

It ignores so many factors. How long do you intend to hold the shares? What will the price be when you sell? How much will you have collected in dividends by then? None of those things are absolute, nor is the yield %.

You would need to hold the shares for a considerable amount of time to realize a 5% loss in gains (respective to share price) from the mgmt fee.

Maybe an extreme example will help. If AM shares go up to 100btc each, but the dividends stay at about .025 per week. Is a 5% mgmt fee still going to justify TAT.AM selling for 95btc? Of course not.

I agree that current dividends are not the only driver of price, but people wouldn't buy if they didn't expect future dividends.  For my investment I use a combination of current dividend yield and future growth potential, but I'm more of a long term investor than a trader like many here seem to be.  Seeing as how it is the same company, growth potential is the same (unless I don't trust you, but that would cause me to value AM1 even more highly since I can convert those to direct shares).  Current dividend yield is equal at 95% AM1 price for AM100.

If AM shares go to 100BTC with a dividend yield of 1.3%, they had better have a good story to back it up.  But ultimately, if I was comfortable enough with the story to accept the temporarily low yield, I still would discount it 5% because I am valuing the future dividends that the price implies.  If I don't value them so highly, I will sell out.

[notme]

Why are you guys measuring per year values when you can just trade between the two
http://www.investopedia.com/terms/d/ddm.asp


Prove your point with math  
MATH BATTLE !
Never get to say that  

Because your math requires numbers we don't have access to.

Just make some rough estimate till we get financials with AM monthly or weekly scales are where it's at as bitcoin itself fluctuates and as investors we need to calculate currency risk as well into all our valuations as it impacts the stock price

That's a good way to calculate nonsense.

[velacreations]

Interesting hypothesis. But here I'll speak for myself: usually the TAT price follows the full share price pretty close. Even if I'd be interesting to look at one month period, I'm pretty sure the TAT price will catch up with the other one in this period. So without any consideration for dividends, I'd buy them now. They will rise at least to catch the other... I just did a bit actually, with what I could afford.

well, I have a bit of both, and I've been watching both for some time.  And yes, the share prices tend to be a lot closer than this, that is why I mentioned it.

And you'll see why in a bit, as soon as the AM-PT pays out the dividend...

People have a limited supply of btc, and they want to invest the whole amount of BTC, not just whole shares.  They are not looking at an annual timescale, for the most part.  So, with those 2 things combined, the share prices tend to stay a lot closer, and when the gap widens, there is opportunity for profits.

Now, you cant really arbitrage in the true sense, because you can't trade TAT shares for AM-PT shares.  But, you can still earn profits from a gap like this.

[Pierre]

Maybe an extreme example will help. If AM shares go up to 100btc each, but the dividends stay at about .025 per week. Is a 5% mgmt fee still going to justify TAT.AM selling for 95btc? Of course not.

I agree with everything you said except this. YES a 5% management fee means TAT.AM is 95 BTC when AM is 100 BTC. Why not?

Think about it this way: Eventually all stocks go to zero, no company lasts forever. If you buy and hold AM for 100BTC you'll make X BTC in dividends over the life of the company. If you buy and hold TAT.AM for 100 BTC you will make 0.95 X over the life of the company.

Therefore TAT.AM is worth 95% of the regular AM shares.

[notme]

People have a limited supply of btc, and they want to invest the whole amount of BTC, not just whole shares.

This is the strongest point I've seen so far, but IMO is balanced by convertibility of whole shares.

[ThickAsThieves]

Maybe an extreme example will help. If AM shares go up to 100btc each, but the dividends stay at about .025 per week. Is a 5% mgmt fee still going to justify TAT.AM selling for 95btc? Of course not.

I agree with everything you said except this. YES a 5% management fee means TAT.AM is 95 BTC when AM is 100 BTC. Why not?

Think about it this way: Eventually all stocks go to zero, no company lasts forever. If you buy and hold AM for 100BTC you'll make X BTC in dividends over the life of the company. If you buy and hold TAT.AM for 100 BTC you will make 0.95 X over the life of the company.

Therefore TAT.AM is worth 95% of the regular AM shares.

So basically you'll ignore every other point you agree with in order to make one of the points untrue? Your explanation shows a disregard in accepted logic in order to leap to your conclusion. It also implies that TAT.AM can be worth less than zero, which is obviously impossible.

You are welcome to disagree or use your own valuation models, but the fact that you choose to do so, does not make your method absolutely better, or more accurate.