Topic: [BTC-TC] BMF -- ALERT: BTC-TC SHUTDOWN - page 3. (Read 14046 times)

Sorry to clarify. Can you explain the dividend history being queud and cancelled and only a few being payed out and small ammounts on the same day. I am an investor and am curious.

Further to the index idea, I've created a list of every single mining issue on BitFunder, BTC-TC, and Havelock.

I've calculated market cap for each company, which amounts to the total amount of money the community has invested into mining at any given time.

I will work on calculating BTC/mHash for each company and creating a weighted index for that as well.

For now, here is the MINING MARKET CAP INDEX, courtesy of BMF:

August 5th, 2013
AllCaps   BMF.MMI   4,407.16
LargeCap   BMF.MML   3,619.45
MidCap   BMF.MMM   667.89 (Note; MidCap is approx. 2,000 to 20,000 BTC market cap)
SmallCap   BMF.MMS   119.81

I'm particularly open to changing the delineation of what a mid cap miner is. Do you think it would be more appropriate to separate issues which are deterministic vs. non-determistic, vs. those who are startups?

I really like that idea, but it turns out to be a lot of work -- much more so than it seemed at first glance.

For example, ASICMINER exists in the form of at least five separate pass-through vehicles, with different weights (ex. AM1 vs AM100) and all pay a slightly different rate. Their market cap together is about 180,000 BTC. That underlines the first problem I encountered, a the wide disparity in market caps. For example, PAJKA.BOND, B.YAMBC, COGNITIVE and DMS.PURCHASE aren't even worth 1,000 BTC put together. So any meaningful index would have to be weighted subjectively, perhaps in the way someone might tend to invest in that company. Say, equal weighting. But already we have created what amounts to a meaningless statistic, because it is obvious by the market caps of the securities that people do not invest equally in these securities. In that sense, a fund like BMF which invests in many securities is already a kind of index, although probably not a very useful one, certainly not one which could fulfill our goal of rating our relative performance.

I think the most meaningful kind of comparison you can do is comparing one security to another, one by one or in groups, and sorting them based on one or more statistics that interest you. For example avg price or (recnt price) over the last 30 days. On July 3rd, BMF had 200 volume at 0.0356. On August 3rd and 4th I recorded a significant volume of trades between 0.04 and 0.043. This represents a gain of about 10%. On the other hand, DMS.MINING was trading at 0.02 in early July (1st to 3rd) and is now trading at about 0.0085 -- a loss of more than 50%. COGNITIVE on the other hand, was trading at around 0.35 on July 1st, and has now reached 0.045 today -- a gain of about 30%. Then again, they had been trading in the high 0.90's just two weeks ago. So how much did COGNITIVE gain? How much did DMS lose? It's not always so easy to tell from just one number.

I've gathered that that the situation we find ourselves in as investors is nothing if not chaotic. It's difficult to find a stable place to invest, and I have a feeling that an index would not be very useful in and of itself. Lending is also exceedingly risky, I won't invest with CoinLenders because I just don't have the stomach for that level of default risk. For all these reasons I created BMF. I wanted a stable place to invest where the average investor could put their bitcoins and at least not have to worry about losing everything in a flash crash. A really great example is the recent ASICMINER crash from about 4.8 to 4.1. BMF didn't lose any value when ASICMINER dropped all those points, we were able to stand our ground.

Anyways I did have a go at creating an index, and although I don't think it works as we well as it could, it seems to say that buying one form of ASICMINER is better than any other:

issue            : relative value
TAT.ASICMINER      : 4.2347
AM1            : 4.190
AM100         : 4.1684
ASICMINER-PT      : 4.1317
G-ASICMINER-PT      : 4.0740
Weighted Average   : 4.1056

I'll look into some indexing strategies and will try to come up with something better later on.

Thanks again for the suggestion,

@Usagi,

There is an inherent risk associated with allowing others to manage your BTC-denominated investments for you. Therefore, the reward of using a managed investment fund must far outperform what an average investor could achieve with 15-30 minutes a day. What I would like to see from your fund (as well as others) are performance metrics which compare the fund's performance to other investments:

• #1. ASICMINER: It's risky to place all your eggs in one basket, but how does your investment vehicle compare to simply holding ASICMINER-PT?
• #2. CoinLenders' CD: It is also inherently risky to place your coins with an individual (even if they are reputable; pirateat40 was, after all, reputable until he wasn't)
• #3. Market CAP adjusted holding of all mining stocks (excluding  PMBs): This is the true performance metric. Your fund must at least perform as well as a market-cap adjusted holding of all available mining securities (ASICMINER, BASIC, COGNITIVE, ActM, NastyFans, LABCOIN, BTCGARDEN, etc.)

 

#1 and #2 are incredibly risky sole investment strategies, but as an investor I would like to see funds that approach their returns while securing against that risk. I have excluded PMBs from the calculus of #3 this because they will decline in value over time, but perhaps with active management they are worthwhile, and this, at least, may be one way in which a fund might outperform #3 and keep pace with #1 & #2.

I know smidge has tried to create an index (DCX), but I would like to see other fund managers attempt to create objective performance metrics for their investments as well.

I look forward to your response.

Ok, after discussions with a few other investors/asset issuers on IRC I think I have a solution which is fair to all. Proposal:

BMF offers investors a chance to participate in a purchase warrant program. For each share sold back to the company at fair market value, the investor will receive two purchase warrants with a strike price equal to the fair market value of the company at the time of sale. These warrants operate like calls. It would be done manually so investors would have to contact me manually, either in email or here (via PM).

What this does is allow investors a very special, unique opportunity which provides:

 i) a financial incentive to sell;
 ii) without damaging the financial position of BMF.

What's the incentive? Simple. Should the price of BMF fall, investors will have made the right decision to sell and can walk away with more money than they would have had if they held on. Yet should the price of BMF rise, investors will have the ability to leverage back into BMF using their purchase warrants. In short, the purchase warrants allow the investor the option to reverse their sale at any time, but, should it be to their advantage, buy more shares of the company at that price.

From the standpoint of BMF this is also a good thing. One, there's no harm in buying or selling shares at NAV. If we sell 100 shares at NAV, buy 100 shares at NAV, or whatever, it does not affect the NAV and won't affect existing investors. Secondly, because we issue two purchase warrants per share, we have the prospect of raising capital for the company. Since this is done at NAV, it won't affect the value of the shares, but it will intangibly increase the value of BMF as a whole because the total net cashflow will have been increased. This makes managing the fund easier because we will have more purchase options. A stronger cashflow makes repurchasing shares out of income even more attractive for the company as well.

In short this looks like a win-win proposition. And the best part is, investors can choose whether or not they want to participate. If someone feels it's not to their advantage, they can choose not to sell their shares back to the company and the value of their shares and the income they receive will not be affected.

If there are no objections I am considering posting an official announcement mid next-week. I will run a motion if anyone (shareholder or not) thinks this could be a bad idea for the company. This discussion time and question and answer period is the time to raise your voice if you feel this is a bad idea, it will be too late after I post the announcement.

Do the numbers sound right? I was also considering doing one and one-half purchase warrants per share, but 2 seems like a better number. I might go as high as three depending on any comments I receive.

Request for Discussion: Company Policy

BMF's share repurchase program is not going well, in the sense that very few investors want to sell shares back to the company. When we decided to offer a buyback program and repurchase a limited number of shares, we were attempting to give investors an incentive to sell their shares back to the company. Instead, it seems that the opposite has happened. Investors have taken the buyback offer as a sign of strength and have been placing bids above the company's repurchase bids. This was likely done in the hopes that the company would buy back the shares at a price higher than the already inflated price they bought their shares for.

While we can justify buying back a limited number of shares at a slightly higher price than our NAV as a promotional event, we cannot justify a price beyond that suggested by our cashflow. In fact, due to comments from investors last month, we have decided to limit the buyback program's bonus further, to just 5% over NAV.

I am looking for additional suggestions. We would like to encourage investors to sell their shares back to the company however there seems to be no way to encourage investors to do this. What ideas do you have for an incentive or bonus we can offer to investors choosing to sell shares back to the company? Do you feel a 5% bonus is justified? If not, what other deals or offers could we propose?

I'm unwilling to let the company languish, and growth is indeed a policy of the company. So on the surface an investor would want to hold BMF. The main issue is not to damage the company by placing too great a price on the repurchase of shares. All that is required is a fair deal, an exchange that wouldn't leave BMF worse for wear but would allow some investors to satisfy their goals with BMF in a fair and equitable manner. Please discuss. If your proposal is chosen, BMF will be pleased to offer you a consultancy fee of 10 shares for help discussing your plan and implementing it.

Thanks and good luck!

Interim Update:

The sale of hotwallet.ca, all code and intellectual property has been completed. I've also been hired on a short term basis to modify the site. The payment for this work will not be very much, probably about the same as was paid for the site.

I have donated the proceeds from this sale to BMF. The NAV has increased by approximately 1.1%.

When the modification work has been completed I will post another update here.

Happy investing!

BMF Letter to Shareholders
August 1st, 2013


1. July Results and Guidance for August 2013
Our market cap as of today is 146.23 BTC. Our records indicate an expected monthly income of 7.62 BTC based on current holdings. This represents a return on investment of 5.2%.

As a result, we are increasing dividends by 6.7% this month, to 0.00048/share over 30 days. These payments have been scheduled in advance. The total is 1.15 BTC, which will leave us approximately 6.47 BTC to reinvest.

Our book value is currently 0.3107. We have experienced a decline recently due to negative performance in ActiveMining; over the course of a week it has gone from 0.0025 to 0.0095, to 0.0038 and back up. Our investment in ActiveMining is currently 9.16% of the fund, so it may continue to have a significant impact on our book value going forward.


2. Management Fees
The management fees of 5% (0.381 BTC) have been donated back to the company in order to strengthen the share price. Management doesn't feel that it is appropriate to take management fees until our book value is above our IPO price of 0.036.


3. Investment Targets
We believe that there are no legitimate investments with a predictable ROI greater than the 5.2% which we currently enjoy.

There is also the complication of our deprecating and wildly volatile mining assets. TAT.VIRTUALMINE and DMS.MINING have fallen by over 60% since our IPO on June 13th, and our recent investment into ACTIVEMINING has been shown to be a short-term mistake. This has had a significant negative impact on our share price (we have fallen from 0.036 on June 13th, 2013 to 0.031 today).

Due to these issues we will continue to reinvest in face-value assets (preferably mining-related, such as FIMB) during August. Most importantly, we will pursue a share repurchase program.


4. Share Repurchase Program
Today BMF faces several challenges on the road to success. Management speculates these challenges have led investors to undervalue BMF by a significant margin. In order to turn this situation to our advantage, Management has decided to repurchase a limited number of company shares in August. It goes without saying that as a result, no new shares will be sold into the market for the duration of August.

To implement this buyback program we have placed bids at (and slightly above) our NAV in order to defend the share price and show our committment to investors. I had originally intended to offer a repurchase at up to 20% of NAV, but after some investors showed concern on our discussion thread I will limit bids to 5% above NAV for now. Based on an expected income of 6.5 BTC per month, we will attempt to repurchase between 100 and 200 shares in this way. We feel this will have several positive effects:

o Shareholders will be protected from panic-selling;
   -- if someone panics and sells, they will get a fair price
   -- if someone needs to sell for other reasons, they will not be forced to sell at a loss
o LTC-GLOBAL moderators will have more evidence we are "trustworthy".
   -- We're not sure why so many of them voted "no" or are abstaining, but actions like this should help them realize they should have voted YES a lot sooner.
o Other investors will take this as a sign of strength.
   -- investors may be willing to pay more for BMF if they think it's a stronger company.
o We expect to gain value on a per-share basis by reducing the number of outstanding shares.
   -- we will attempt to maintain the market cap at or above 150 BTC.


5. Response to LTC-GLOBAL moderators' NO and ABSTAIN votes.
Two of the LTC-GLOBAL moderators who had voted YES to get us listed have changed their votes to ABSTAIN without any explanation. There are now five ABSTAIN votes for BMF, and three NO votes.

We remind the LTC-GLOBAL moderators that it is no longer their job to approve or disapprove of our listing on BTC-TC. It is their job to offer guidance on how well are keeping the Asset Issuer Terms of Service, in particular how well we live up to our a fiduciary responsibility to the shareholders. In that respect, negative votes which do not offer constructive criticism are not just useless, they're negligent. If you are a LTC-GLOBAL moderator, please recognize your responsibility and take the time to do your job properly. BMF places a huge value on comments from our shareholders and from LTC-GLOBAL moderators, and it's very frustrating to see the people who are our gatekeepers act this way. You've voted YES to this company and this contract -- now it's time to work together to make BTC-TC a better place. If there's some deficiency in how we are fulfilling our contract, it is your responsibility to point it out so that we may fix the problem.


6. Upcoming Interviews & Analysis
BadBitcoin (James Sutton) has not returned his interview yet. We have therefore scheduled interviews with three other companies which we hope to complete this month.
During the time where we are not preparing interviews, we will take the time to perform detailed analysis of various companies on BitFunder BTC-TC, and we will post these to our disclosure page (http://tsukino.ca/bmf).


7. Usagi's health problems
For those of you who did not know, I was admitted to the hospital for surgery on July 13th and was discharged on the 18th.

This is related to my prior hospitalization in October 2012 for several weeks after GLBSE closed -- it's my kidney stones. I feel weak and a bit loopy due to the medication. I will continue the medication until approximately August 6th. I apologize for not being my usual self and for taking a bit longer to get things done. I don't believe the fund has suffered as a result of this problem, but for the record I don't anticipate any further problems of this nature. To health and long life!


8. Request for Comments
Are you a shareholder? Do you like how we've been doing so far? Do you have a suggestion?

Tell us!

Our shareholders are very important to us. Please e-mail comments and questions to usagi at [email protected]. Yes, your voice counts. We respond to all shareholder inquiries and often take serious steps to change things based on shareholder requests. For example, just recently we completely re-did our Holdings & NAV spreadsheet to use a script that automatically pulls values and balances from BTC-TC. This was done because of a chat we had on IRC with one of our shareholders.

Good communication is important. One thing a BMF invetsor will never tell you is that it was difficult to contact management with an issue or to resolve a complaint. So if you have any problems with BMF please let us know so we can take steps to solve your problem, We are here to serve you!

Happy investing!

I am the fund manager, I am making the call, and I am willing to accept responsibility for my decisions. I'm willing to explain to you why I am doing what I am doing. I'm even willing to listen to a valid argument or a better solution if you have one.

But all I am getting from you here is that you are oblivious to what's going on. You said "If you want to do things fair... they should get LESS money now than they would get later..." but I've already said that's what we will do. I said, "I've calculated what I believe is a fair P/E ratio for my company and I am buying back shares at or below that ratio." This goes all the way back to the post where I gave the examples featuring Company A. When you keep raising issues like this it looks like you haven't even read what I wrote. It's actually a little disrespectful. You should put some effort into it before accusing me or assuming I haven't thought things through properly.

Then you have to think harder. If you want to do things fair, then it is fine that you are buying the shares so those people get the money now instead of later. But they should get LESS money now than they would get later, the shareholders who wait it out should have MORE because other people decided to cash out early. It is nice for those people who sell the shares, but it is at the expense of the other shareholders who get shafted because their money is used over a longer time and has a lower yield.

I'm not. In the example, the company had 1000 BTC, made 100, and spent 110. The market cap was then 990 BTC, as stated above (1000+100-110 = 990).

How are you purchasing 100 shares at 1.1 BTC/share with 100 BTC?

I don't see a problem with that though.

Continuing with the previous example, if the company never reinvests it's 20 BTC a month income, that income will start to become worth less and less on a percentage basis. The first month 2%, the next 1.96%. Then 1.92%. After just five months we're already down to 1.82% -- lower than the payment made in the first month of a repurchase program. So clearly it's bad management to simply hold the BTC. This thought experiment shows us we need to reinvest at least some of the money if we would like to maintain a stable NAV and dividend payment program. The question is, invest where? If we can't find anything that pays a stable 2% per month, there's no shame in repurchasing company shares. Doing the math again, after 5 months let's say the company has made 100 BTC and repurchased 100 shares at 1.1 BTC/share. They would have 990 BTC market cap and 900 shares. This would be a gain of 10% per share. The best part however is that the 20 BTC is no longer a 2% gain but something slightly more. In this case it's clear that reinvesting into the company is very much better than just sitting on the money.

Of course I'm not suggesting the best strategy is always to repurchase company shares. In BMF's case in particular, if I could find an investment that pays more than what we make it would be wise to invest in that instead of repurchasing shares. And I do in fact invest in a wide variety of assets -- most recently I picked up a few more shares of B.YABMC, and another few hundred shares of ACTIVEMINING. We've also bought some LTC in order to get more LTC.MINER and support our friends in the Litecoin community. So we invest in other assets all the time; I just happen to feel that the market has undervalued BMF and that buying a few "shares of opportunity" here and there will increase the long-term profitability of the fund. Again I will point out that there are plenty of market participants who are willing to place bids above what I have placed from the company. I'd actually prefer people sold into my bids but they're not doing that.

No, there isn't, you misread what I wrote and are assuming that company B bought back shares before they received income (presumably by selling some BOND-X). Please see the highlighted sections in my response to Peter (above); your mistake is similar to his. The point of Company B was that they were buying shares back after they had received income from their investments. The point of company C was that they had bought back shares out of cash on hand expecting to receive those payments.

"After the interest payment, there are 990 B shares, and 999.799 BTC in assets (989.9 BOND-X assets plus 9.899 BTC in interest).  The remaining B shares are worth 1.0099 BTC when they could have been worth 1.01 BTC."

Company B was described as buying back shares "at their new nav" (1.01 BTC). So at the end of the month there would be 990 shares and 1010 - 10.1 (999.9 BTC) market cap. The remaining B shares would therefore be worth 1.01 BTC. That was the original math which should be clear. In short, if you buy back shares for NAV you do not change the NAV of the company. The point of the "psychological impact" comment was that investors may not realize the value of Company B (or C) was 1.01 BTC -- and may feel that by buying shares "above nav" was unsustainable. The point of comparing companies B and C was to show precisely where and when investors were most likely to make that mistake; to show that the NAV does not suddenly jump from 1 to 1.01 BTC; but that there is some intangible value which must be assigned to the expected income of an asset. And further, that if this income was not accounted for it would lead to an undervaluation of the company.

Anyways thanks for your comment, I think after reviewing what you and Peter have said the examples needed to be simplified to get the spirit of my point across. I've gone back and done that, please let me know if there are any further issues with the math

You are missing something very important here. When company B earned the dividend their NAV rose to 1010/1000 = 1.01 BTC/share. So if they buy some shares back at 1.01 they are only paying 100% of NAV, not 101%. To buy back at 101% they would have to pay 1.0201 BTC/share.

Not at all. In theory, yes, if we were to attempt to buy back every single share of the company right away, we would not be able to do it. But that's not what I am planning to do. I've calculated what I believe is a fair P/E ratio for my company and I am buying back shares at or below that ratio. As a simple example, let's say we plan to make 20% on our assets, and we buy company shares back out of free cash for 110% of NAV. It may look like we're giving money away but we're not. The assets will still make 20% of the old market cap of the company, but now that income will be spread across fewer shares.

Example; company A, worth 1 BTC per share. Market cap goes from 1000 to 1020 BTC (a 2% increase). Before this happens the company buys back 20 shares for 22 BTC (110% of NAV). While it looks like the company is overpaying for it's shares, the result at the end of the month is 980 shares outstanding and a 998 BTC market cap -- a per-share gain of 1.84%.

The following month, assuming the results are the same, the company would have 960 shares outstanding and have a market cap of 996. Let's fast forward one year and see how this ends up. After 12 months, the company would have bought back 240 shares and have a market cap of 976. At this time, one share would be worth 1.284 and one month's income (20 BTC) would represent a gain of 2.05%. Over time it is clear that this strategy will outperform simple reinvestment into the company.

So while for the average investor it seems like BMF is throwing money away, what we are really doing is implementing a long-term strategy to increase our value. The value of the shares will increase, and our distribution payments will increase as well. I believe that our investors can appreciate this strategy both in the short term and in the long term. The reality of the situation is, people have shown themselves more than willing to place bids above the company buyback bids. But what is even more interesting is that no one seems to be taking the bait -- no one is selling into the bid, even at +20% NAV.

How can you buy back at over NAV? Wouldn't that just mean that 80% of the shareholders get all the money, leaving 20% with worthless shares?!?

BMF Share Buyback Program
July 27th, 2013

In addition to increasing value by investing in the mining sector and carefully trading our holdings when appropriate, I have decided to give our loyal shareholders a perk in the form of a buyback program. During the month of August:

1. The company will not sell new shares of BMF into the market.
2. Bids will be placed for a limited number of shares between 100% and 120% of the company's NAV.
(You can see all our assets on our holdings and NAV page.)

I cannot give you advice on whether to buy or sell BMF but I can guarantee that this offer represents a significant premium to the value of our holdings.

A big thanks to everyone who helped us get this far!

  Actually I would not mind at all if that's where the divs were coming from. But we only hold 130 BTC-BOND right now. At this stage I would prefer to hold about 1,500 (10%-15%) of the fund in BTC-BOND, but we will have to move there slowly.

Some facts; BMF pays 0.03567 total dividends per day over 2378 shares. This is just under 0.25 btc/week. Backing this are the following income streams:

1. DMS.MINING: 0.36184492
2. DMS.PURCHASE: 0.17039073
3. PAJKA.BOND: 0.08674834
4. ESECURITYSABC: 0.0716
5. YABMC: 0.06325615
6. BASIC MINING: 0.01128653
7. BTC-BOND: 0.000576
8. LTC-ATF.B2: 0.00035
9. TAT.ASICMINER: 0.00048198
(actual income received into the BMF account over the last 7 days except in the case of ESECURITYSABC which is an estimate).

Income: 0.76653465
Distributions: 0.24969
Reinvestments: 0.51684465 btc / week

This works out to around 0.5%/week, just with what we have invested on BTC-TC. I don't expect mining income to remain so high for very long which is why I am slow to pay out more; although I am a little torn over that. Looking at these figures afresh for the first time in weeks I think I might be able to pay out a little more than we are now.