From The Fund Manager
We are happy to post a strong weekly performance as we saw two big drops in major crypto-currencies, and we were able to capitalize on both drops. In fact, one of the dips had a few average down trades, making it the more profitable of the two dips. The other was in a hedge, so it was still profitable, but not as lucrative.
These are the big weeks that pull the average performance up in the long term and help make up for any negative growth weeks. We are quite fortunate to not have had one yet, but they could happen. One of the downsides of being updated on a weekly basis is that you will know about them. When updated quarterly, for example, they become a little invisible in the overall scheme of things.
We saw a lot of existing and new investors buying in this week as ETH price went down, making it a good time for CHT accumulation. With ETH being so cheap right now, I would not be surprised to see more accumulation in the coming week. To all our new investors: Welcome to the fund; we are delighted to have you on board!
Together with the usual running of the fund, we have also been working on our buyback policy which should be completed late next week. We realise the length of time that we are taking to finalize the buyback policy may have caused some frustration amongst our investors, but it is highly important for the fund to get this right.
Outlining what we want to achieve in our buyback policy – The buyback needs to be a feature of the fund so that we can control the fund size. However, we also want growth in fund size in the early stages to match our business projections for profitability and sustainability without increasing risk. In the long run, we also want to keep the fund from getting too big. The buyback feature will be in place for any investor to realize their investments profits, but at the same time, will be intended to be unappealing to traders (rather than investors), trying to cycle arb the fund. Operationally, we also want to reduce the number of times we have to freeze the fund to liquidate part of it to process buybacks. We aim to achieve a policy that is controlled and reliable to ensure fund longevity and sustainability.
Moving into next week, we hope to see more volatility in the ETH and BTC markets whether it would be further drops or a sharp bounce back – We just want movement!
In regards to our passive investment portion, we have been receiving plenty of pitches, ranging from ICOs to investment pools. These opportunities can't just be jumped into. We have to do our due diligence and research before deciding to participate. There will be updates when we have progress.
Again, that is all from me for now. Thank you for taking the time to peruse this report and let's push forward into another great week!
Market Activity Snapshot
Weighted Average: 0.001369771 ETH or USD$0.51 per CHT
Non-Weighted Average: 0.005649503 ETH or USD$2.08 per CHT
Valuation – Jae Jun Method
Fundamental value (sometimes referred to as intrinsic value) is a calculation to determine the actual value of a share, unit or in this case a token when looked at as an investment.
We have chosen the Jae Jun Intrinsic Value Formula. The main reason we like the Jae Jun is because it is one of the most conservative calculations there is.
Now we have kept to how this is traditionally used and that is to base it on a 10 year return, factoring in the yield reducing over time. We have also taken an extra step to be even more conservative on this calculation; Jae Jun reduced the ‘no growth PE ratio’ from 8.5 to 7 but due to the increased volatility in the crypto market we think it is more prudent to reduce this value all the way to 1 (this value operates as a multiplier in the calculation so reducing it to one is very significant in the results the formula we return).