.

[MrTeal]

There are expenses and sometimes amounts that need to be stored in the insurance fund that week in order to "top it off" to the proper value. 

There are fees associated with creating each asset, there are GLBSE fees associated with each sale, there were fees associated with the sale of the PPT stock for the insurance fund, etc.  All of these expenses were paid from income as they happened.

In order to maximize the dividends we do deposit all proceeds (minus expenses and earnings that need to be retained in the insurance fund for that week) and we do compound the interest.

The dividends are the exact net income taking all this into account.  I call them "estimated" since I may make a mistake I have to correct later and the dividend payout system introduces rounding error of its own.

So far I have been pretty darn close.  For example for the first two dividends the numbers were:

Code:

PPT.A  Estimated Dividend Published   142.89848614   0.01587761
       Actual Dividend Paid           142.89840000   0.01587760
PPT.B  Estimated Dividend Published   260.34919275   0.02892769
       Actual Dividend Paid           260.34921000   0.02892769

The dividend should normally end up being somewhere between the two numbers you calculated.

Out of curiosity, how did you get 260.35 for the first issue of PPT.B? According to the numbers in your spreadsheet, you sold 2000 shares for an average price of 1.0812 and a total value of 2162.443. If you started with 162.443 from the issue, how did you get 260 for the dividend?

[1714121478]

1714121478

[PatrickHarnett]

Take 2162 coins, deduct fees (8 BTC for the asset issue - would have to check trade/transfer fees).
Stick it into BS&T and compound for four weeks.
Remove 2820 (approx) from BS&T
Pay out 2000 * 1.28 = 2560
Pay dividend out of 260 (approx 3%/week return for that week)

[MrTeal]

I was looking over the contracts and threads for PPT.DIV and PPT, and I didn't see the answer to a question I had. If for whatever reason Pirate decides to wrap up his operation and return deposits without defaulting (or PPT decides they don't want to operate anymore for whatever reason), there should still be money left in the in the insurance fund after paying out the face value of the bonds at the scheduled time. If that happens, does the excess BTC in the fund get distributed to PPT.DIV shareholders, or to PPT shareholders? I would assume the former, but I want to make sure.

[MrTeal]

I was looking over the contracts and threads for PPT.DIV and PPT, and I didn't see the answer to a question I had. If for whatever reason Pirate decides to wrap up his operation and return deposits without defaulting (or PPT decides they don't want to operate anymore for whatever reason), there should still be money left in the in the insurance fund after paying out the face value of the bonds at the scheduled time. If that happens, does the excess BTC in the fund get distributed to PPT.DIV shareholders, or to PPT shareholders? I would assume the former, but I want to make sure.

From the OP above:

Guarantee of future value:

Should there be a PPT trust money claim due to BTCS&T default or some other liquidation event resulting in the wind up of the company, first priority will be the repayment of the PPT insurance funds.  Because PPT pays 100% of profits and carries no reserves or retained earnings, PPT.DIV will be considered to have zero value.

Does the bolded part refer to repayment to the PPT.X bondholders for their 0.32BTC/bond, or the PPT shareholders?

[kronosvl]

On first page I asked the same question and didn't receive a straight answer. So I guess he doesn't want to answer.

[MrTeal]

On first page I asked the same question and didn't receive a straight answer. So I guess he doesn't want to answer.

So you did. Patrick's answer sounds like they're payed out to the PPT shares, not to the PPT.DIV shares. That's what I was hoping to hear.

[filharvey]

I was looking over the contracts and threads for PPT.DIV and PPT, and I didn't see the answer to a question I had. If for whatever reason Pirate decides to wrap up his operation and return deposits without defaulting (or PPT decides they don't want to operate anymore for whatever reason), there should still be money left in the in the insurance fund after paying out the face value of the bonds at the scheduled time. If that happens, does the excess BTC in the fund get distributed to PPT.DIV shareholders, or to PPT shareholders? I would assume the former, but I want to make sure.

I would assume, if Pirate returned all the funds without a default, Firstly the current bonds would have to be paid out (and that would be the full 1.28). Then any funds remaining would be used to buy the PPT.DIV shares back (which would be at about 0.4 max), before the orginal PPT shareholders got any funds back. As the original shareholders sold the PPT.DIV shares to cash in their holdings originally.

Phil

[R-]

Question: how did you get a referral?

[PatrickHarnett]

On first page I asked the same question and didn't receive a straight answer. So I guess he doesn't want to answer.

So you did. Patrick's answer sounds like they're payed out to the PPT shares, not to the PPT.DIV shares. That's what I was hoping to hear.

Sorry, thought the language in the contract and original posts was sufficiently clear.  This was a point we looked at carefully at the beginning.  To re-state:

1: PPT.DIV shares get the profits.
2: The insurance funds are not profits.

Filharvey has almost set out the steps for a wind-up without a default (ie, BS&T shutting up shop).
1: Pay out all bond holders the 1.28
2: Pay out any profit from the bonds to the PPT.DIV shareholders.  That's a final payment.
3: The PPT holders are refunded the deposits used to create the insurance fund.

The value in the PPT.DIV shares relates to two key metrics and your assessment of them.  First the level of dividend each week currently running around 5%, and second the length of time the PPT bond continues to run.

At a simple 5%/week, that gives a 20 week payback and is actually one of the highest paying assets on GLBSE.  However, unlike those other assets, people are worried about default and how long it will all last, so that is the unknown.  I have a personal view about the value of the shares and that's why I've been buying extra.

[MrTeal]

On first page I asked the same question and didn't receive a straight answer. So I guess he doesn't want to answer.

So you did. Patrick's answer sounds like they're payed out to the PPT shares, not to the PPT.DIV shares. That's what I was hoping to hear.

Sorry, thought the language in the contract and original posts was sufficiently clear.  This was a point we looked at carefully at the beginning.  To re-state:

1: PPT.DIV shares get the profits.
2: The insurance funds are not profits.

Filharvey has almost set out the steps for a wind-up without a default (ie, BS&T shutting up shop).
1: Pay out all bond holders the 1.28
2: Pay out any profit from the bonds to the PPT.DIV shareholders.  That's a final payment.
3: The PPT holders are refunded the deposits used to create the insurance fund.

The value in the PPT.DIV shares relates to two key metrics and your assessment of them.  First the level of dividend each week currently running around 5%, and second the length of time the PPT bond continues to run.

At a simple 5%/week, that gives a 20 week payback and is actually one of the highest paying assets on GLBSE.  However, unlike those other assets, people are worried about default and how long it will all last, so that is the unknown.  I have a personal view about the value of the shares and that's why I've been buying extra.

Do you feel that will continue? The 5% is heavily influenced by the great dividends on PPT.E when 6000 shares were sold on accident, but since all the other PPT options came out the dividends have been (estimated) to be 0.0246 and ~0.037, and even then Friday's B sale would have been ~0.027 if that 250@1.3 had been entered as 1.03 and the 250 bonds had sold at 1.038 along with the rest of them. That's less than half the returns you can get through the uninsured Pirate passthroughs or the PPT.X shares themselves, but with more risk. My quick back of the napkin calculation shows that to make a consistent 0.05BTC dividend on 3000 shares would take an average sale price of almost 1.1BTC/bond, and I just don't see that happening anymore.

[PatrickHarnett]

Do you feel that will continue? The 5% is heavily influenced by the great dividends on PPT.E when 6000 shares were sold on accident, but since all the other PPT options came out the dividends have been (estimated) to be 0.0246 and ~0.037, and even then Friday's B sale would have been ~0.027 if that 250@1.3 had been entered as 1.03 and the 250 bonds had sold at 1.038 along with the rest of them. That's less than half the returns you can get through the uninsured Pirate passthroughs or the PPT.X shares themselves, but with more risk. My quick back of the napkin calculation shows that to make a consistent 0.05BTC dividend on 3000 shares would take an average sale price of almost 1.1BTC/bond, and I just don't see that happening anymore.

That's a completely fair assessment, and why everyone has to make their own valuation. 

Without the PPT.E sale and a few other things that happened, including some opportunistic bidding and competing products, we still had between 6k and 8k of bids (not sure of the exact number).  Longer term I expect returns will settle down into the 0.05 to 0.07 dividend each week, and even if it was only 0.04 I'd be happy.

Do I think it is going to continue to provide good returns, yes and as a result I have been buying (about 500 this week).

[MrTeal]

Code:

PPT.DIV dividends paid and estimated future dividends:

 Div Date     Est. Income   Per Share  Actual Paid
 --------  --------------  ----------  -----------
5/21/2012    142.89848614  0.01587761   0.01587760
5/28/2012    260.34919275  0.02892769   0.02892769
6/04/2012    239.38183569  0.02659798   0.02659798
6/11/2012    383.01255970  0.04255695
6/18/2012  1,065.56858659  0.11839651
6/25/2012    221.33933184  0.02459326
7/02/2012    331.92765318  0.03688085
7/09/2012    253.75925152  0.02819547

Estimated Average Dividend 0.05201653 per share per week

Can you explain how you got that number?
Edit: NVM, it's the average of the last 4 sales.

[filharvey]

Just wondering what time the dividends are due to be paid today.

Phil

[PatrickHarnett]

For explanation, the 1.04 was arrived at by a fairly simple mechanism. 

The interest rate available for PPT will probably be 6%/week and previously it was 7% for four weeks.  4 * 6% is 24%, but the mechanics of the contract is tied to the 1.28 payout so it was easier to set 1.04 rather than lowering the payout to 1.24 to give effect to the interest rate change.

[lomax]

We discussed several option from closing down PPT to increasing the insurance fund to increasing the number of bonds sold per week to 6,000.

In the end we decided that instead of simply closing down we would propose an experiment for the next few weeks to determine if there is a market for insured bonds at a price that is profitable to us.

To that end all current owners of PPT.DIV stock are invited to vote on the following motion:

Shall the minimum selling price for all future PPT bonds be raised from 1.00 BTC per bond to 1.04 BTC per bond?  This reduces the maximum yield from 28% to (1.28-1.04)/1.04 = 23% for the 27 day 22 hour bond period.

Voting on the motion will be closed in about 24 hours and the results of the vote will be discussed here.

As always if you have any questions or comments let us know.

Can we conclude that a failure of this motion results in the PPT closing down? What I take from the contract is that this basically renders PPT.DIV shares worthless, seems like an easy decision?

[PatrickHarnett]

Can we conclude that a failure of this motion results in the PPT closing down? What I take from the contract is that this basically renders PPT.DIV shares worthless, seems like an easy decision?

Actually no, that doesn't happen so easily.  The way the business is set up doesn't allow it to be shut down like that, and it's not an "easy" decision.  However, we also need to protect the value of the business and return acceptable returns to the PPT.DIV holders.  Obviously making a perpetual loss renders the DIV shares worthless, but we're aiming not to incur losses with the change in payable interest rates.  This was well signalled even as early as the very first PPT.A issue - if the rates change, so do the payoffs.  Because we have voting shares with PPT.DIV, the motion is required to be put.

[lomax]

Can we conclude that a failure of this motion results in the PPT closing down? What I take from the contract is that this basically renders PPT.DIV shares worthless, seems like an easy decision?

Actually no, that doesn't happen so easily.  The way the business is set up doesn't allow it to be shut down like that, and it's not an "easy" decision.  However, we also need to protect the value of the business and return acceptable returns to the PPT.DIV holders.  Obviously making a perpetual loss renders the DIV shares worthless, but we're aiming not to incur losses with the change in payable interest rates.  This was well signalled even as early as the very first PPT.A issue - if the rates change, so do the payoffs.  Because we have voting shares with PPT.DIV, the motion is required to be put.

Thanks, I generally support the motion but am a little concerned that increasing the price could see the market look elsewhere.

[PatrickHarnett]

Can we conclude that a failure of this motion results in the PPT closing down? What I take from the contract is that this basically renders PPT.DIV shares worthless, seems like an easy decision?

Actually no, that doesn't happen so easily.  The way the business is set up doesn't allow it to be shut down like that, and it's not an "easy" decision.  However, we also need to protect the value of the business and return acceptable returns to the PPT.DIV holders.  Obviously making a perpetual loss renders the DIV shares worthless, but we're aiming not to incur losses with the change in payable interest rates.  This was well signalled even as early as the very first PPT.A issue - if the rates change, so do the payoffs.  Because we have voting shares with PPT.DIV, the motion is required to be put.

Thanks, I generally support the motion but am a little concerned that increasing the price could see the market look elsewhere.

I've just answered a pm and then saw the post and thought it might be worth repeating the bulk of the contents here, particularly because of the comment about the "market looking elsewhere" and certainly we have been watching the progress, success or otherwise of this venture keenly with each passing bond auction, and the growth in competitors.


_______________________________________________________________________________ ______________________________


The notion of just shutting up shop (ceasing) is not so straight forward because we have a duty to protect the interests of PPT.DIV holders and that includes those of us that have/are/do hold those shares.  Also, the current case is not one where we actually have an option to simply stop trading.  Pirate has not defaulted, and BS&T is continuing.  The only way we see that would be possible is if all of the outstanding shares were held by someone wishing to cancel them (say, if I held all 9000 DIV shares).

It was anticipated some months ago that the interest rate might change.  The choices in that circumstance would be to wind everything up (undesirable as people have invested in PPT.DIV for the profit share, and the underlying premise/operation can continue), or reset the payment based on the new interest rates (which we have determined is the best course of action at this time - pending some other other we had not thought of).

If the motion were to fail, the PPT offer would still take place.  For this week it would have around 3.5 weeks of 7% interest and one week of 5% or 6% depending on the size of the BS&T deposit (maybe 7% but less likely).  For the following week it would be 2.5 to 1.5 and buy the time we get to August it would all be on the new rates.  Leaving the current floor of 1.00 and paying 1.28 on maturity when income is 0.24 (say) would incur a loss and the PPT.DIV dividends would, of course, fall to zero.

The other big change in the PPT.x space has been the large group of copy-cat offers where people can buy large quantities of pass-through bonds.  That linked to the very large availability consumed by those offerings took a lot of value out of our business.  Having seen todays reaction, that looks set to continue.  Also, people do not appear to value the insurance - it has been derided as a gimmick by some, but fundamentally it seems people are all in on the BS&T risk, or invest somewhere else.  Back in late April and early May, the market was more concentrated, since then, bidding has been around 1.02, and that is not a profitable level going forward, so we have to do something now.  Certainly the auction this week should clearly indicate how buyers of the PPT.x bonds assess and value the changes.

Overall, Burt had a brilliant idea back in April and we (the six of us) collectively put in a lot of work to make something that did work, and put around 4000BTC at risk.  We had a lot of requests to make a share of the profits available and the best option was to segment the profits from the underlying capital and operations - and we did that.  There was potential for the whole thing to blow up (pirate default) and there still is, but it looks like BS&T is running a while longer yet.  However, competition has also come along with people prepared to run pass-throughs for virtually no margin.  In hindsight, we would have collectively been better off leaving 4k in BS&T.  But for now, PPT.x offerings are set to continue as there isn't an event that would cause or allow a winding up of the company.

[farfiman]

The average selling price was close to 1.04 anyway.  It will probably stay close to that , maybe a bit higher.

[zefir]

I've just answered a pm and then saw the post and thought it might be worth repeating the bulk of the contents here

[... long technical explanation ...]

Ok, I'm the one you answered PM and I must admit that my skills are not sufficient to fully follow your answer you also posted here.

I invested heavily in PPT.DIV assuming the issuers are passing the risk for putting their money into the insurance fund to the shareholder. This would include the right to receive parts of the profits of PPT operation, but also an equivalent portion of the coins put into PPT insurance fund. My bad I was not reading the contract carefully enough but instead assumed what was obvious to me. Now I got that PPT.DIV is only limited to the first part (getting part of the profit as long it goes), but not for the second.

Being confused I was asking you a simple question: what happens to PPT.DIV shares if your cartel decides to stop operation next week, but not because Pirate defaults but (let's say) you all had better things to do? Right now it seems that shares are getting worthless, while you cartel members can grab your coins back from the risk fund and profit from the shares you all sold to the public.

I hoped for something easy to understand, like: Yes/no, if we stop, you are/aren't fu**ed. Instead, you responded long, but missed to clarify.

You wrote

The notion of just shutting up shop (ceasing) is not so straight forward because we have a duty to protect the interests of PPT.DIV holders...

but nowhere in the contract it is written that you have to. Not implying this is what you planned to do, but as soon as all 9000 shares are sold to the public (or say 8100), what prevents you to cease PPT operation, start PPT2, and issue PPT2.DIV? Other than we all know you are just nice guys

It's always a bad idea to first buy and then think, but in this case I feel that the risk/chance distribution between issuer and holder is quite unbalanced.


If I got it wrong, sorry for yelling. And thanks for taking your time.