Topic: ASICMINER Speculation Thread - page 181. (Read 808757 times)

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.

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

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  

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:

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.

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.

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

For the record, I agree with both these points.

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

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

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


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

You can't really arb it as they are not equivalent and you don't have 'capital mobility'.  You can only convert from normal share to 100th share.  However, one can argue it's wiser to buy the 100th shares if it's below 95% of the whole shares.

You sound like MPOE-PR.

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.

There are big companies that dont pay dividents for years and their stock price isnt zero or close to it

the spread is not normally this large.  During times of higher volume, TAT share value can actually be higher, because it is more liquid.  So, I guess someone just hasn't closed the gap with arbitrage, yet.

notme you speak of correlation between absolute values of prices and dividends.
TAT you speak of correlation between the evolution of the values of prices and dividends.
Hope that helps.

http://www.investopedia.com/terms/d/dividendyield.asp



By definition annual dividend yield is inversely proportional to share price.

Now if you want to claim that annual dividends is not proportional to share price, then sure.

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

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

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

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.

Guys are ignored that not everyone willing or afford to pay for a full PT, thus demand of TAT.ASICMINER should offseting its difference in Dividend.

Only the last sentence is correct.

5% price difference is what you should expect on a 5% dividend fee.

Every time you get paid, you get 5% less.