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blankseplocked [BOND] Freighter Factory, 2bn, 2mths, 3% secured / 5% unsecured (FULL)
 
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Atima
Minmatar
House of Marbles
Posted - 2011.08.10 11:40:00 - [31]
 

Originally by: Lauren Hellfury
Originally by: Atima
Edited by: Atima on 10/08/2011 11:19:22
I'm questioning the validity of the bond as I suspect that he may struggle to make a 5% return which in turn makes this bond a loss making activity for him.



I understand that, but how does the calculation you requested help to demonstrate this in any way? He gave a per freighter profit of circa 140m when compared with build cost. He has also given a total BPO value of circa 10b. Now, granted the profit figure is a little high and was probably the result of a favourable market at the time of purchase/sale. But 140m as a percentage of 10b (1.4%) doesn't really seem to offer anything in the way of measuring profitability.

With the offer as it stands he is liable for a little under 100m in one month and then a little under 2.1b at the end of the second month. So anything over 100m profit per month he'll keep.

I'm sorry to hijack the thread like this but I'm just trying to understand how your question/request relates to demonstrating any issues over the validity of the bond or the ability to pay based on size/interest.


My questions were not to help with investors but to have him question his own actions. I suspect freighters make less than 5% per month, probably less than 3% when everything is taken into consideration. When you look at his initial investment and the oppertunity cost of it you can see freighters are an exceptionally inefficient investment for your ISK. I would suggest he considers selling his BPOs and putting his money elsewhere.

For what its worth, I'm not trying to ruin his bond, Just trying to help him out before he makes similar mistakes as I did.

Lauren Hellfury
Full Pocket Aggro
Posted - 2011.08.10 11:47:00 - [32]
 

Ah gotcha. I knew I was being dense in some way. So it's about the overall return that you receive for the isk that you have tied up in it rather than being to do with the return offered to investors compared with the isk created as profit.

Today will not be a complete waste as I have learnt stuffs.

Atima
Minmatar
House of Marbles
Posted - 2011.08.10 12:29:00 - [33]
 

Originally by: Lauren Hellfury
Ah gotcha. I knew I was being dense in some way. So it's about the overall return that you receive for the isk that you have tied up in it rather than being to do with the return offered to investors compared with the isk created as profit.

Today will not be a complete waste as I have learnt stuffs.


Yep he has tied up 8bn of his own isk which he will use to make a profit that will barely cover this 2bn bond. in return for this minimal profit he will make he is tieing up his buildslots and alot of his time - time which I think he underestimates.

It has been atleast 1 year since I updated my capital construction spreadsheets but I was making 4-8% on building carriers with a highly efficient BPO collection - It was over 50bn in BPOs just to make it possible. Freighters were even less profitable. I suspect the margins have become even worse since then however that is just speculation on my behalf

RAW23
Posted - 2011.08.10 13:09:00 - [34]
 

Originally by: Atima
Originally by: Lauren Hellfury
Ah gotcha. I knew I was being dense in some way. So it's about the overall return that you receive for the isk that you have tied up in it rather than being to do with the return offered to investors compared with the isk created as profit.

Today will not be a complete waste as I have learnt stuffs.


Yep he has tied up 8bn of his own isk which he will use to make a profit that will barely cover this 2bn bond. in return for this minimal profit he will make he is tieing up his buildslots and alot of his time - time which I think he underestimates.

It has been atleast 1 year since I updated my capital construction spreadsheets but I was making 4-8% on building carriers with a highly efficient BPO collection - It was over 50bn in BPOs just to make it possible. Freighters were even less profitable. I suspect the margins have become even worse since then however that is just speculation on my behalf


I think you're overstating the issues here. The interest on the bond will only be something like 75mil per month so there is little question of the bond sucking in all his profits from the 10bil+ total. My understanding is that returns are in the realm of 4% per month (and I think BSAC was aiming for 5% in their freighter construction IPO). If the whole things was being financed at a cost of 4% that would certainly be a problem but the vast majority of the isk is coming from his own pocket and he will see the returns from that (low as they are).

Atima
Minmatar
House of Marbles
Posted - 2011.08.10 13:44:00 - [35]
 

Originally by: RAW23
Originally by: Atima
Originally by: Lauren Hellfury
Ah gotcha. I knew I was being dense in some way. So it's about the overall return that you receive for the isk that you have tied up in it rather than being to do with the return offered to investors compared with the isk created as profit.

Today will not be a complete waste as I have learnt stuffs.


Yep he has tied up 8bn of his own isk which he will use to make a profit that will barely cover this 2bn bond. in return for this minimal profit he will make he is tieing up his buildslots and alot of his time - time which I think he underestimates.

It has been atleast 1 year since I updated my capital construction spreadsheets but I was making 4-8% on building carriers with a highly efficient BPO collection - It was over 50bn in BPOs just to make it possible. Freighters were even less profitable. I suspect the margins have become even worse since then however that is just speculation on my behalf


I think you're overstating the issues here. The interest on the bond will only be something like 75mil per month so there is little question of the bond sucking in all his profits from the 10bil+ total. My understanding is that returns are in the realm of 4% per month (and I think BSAC was aiming for 5% in their freighter construction IPO). If the whole things was being financed at a cost of 4% that would certainly be a problem but the vast majority of the isk is coming from his own pocket and he will see the returns from that (low as they are).


I don't question his ability to meet the interest on this, I question his resolve to do so - It is going to be alot of effort for minimal reward on his part. I also question his business plan and his desire to expand it when it is fairly ineffective. I'm only speaking from my own experiences and mistakes.

He is borrowing isk at a greater cost than his expected returns from this venture. This whole venture reduces his current profits and increases his workload.

Tekota
The Freighter Factory
Posted - 2011.08.10 14:17:00 - [36]
 

As experience grew further I realised that freighter production was a terrible end goal as the isk per slot per day is abysmal.

That's the fourth sentence :o)

Buried within wall-o-text is also: As noted above my profit on this venture is really quite bad and as such I can't offer particularly good rates.

Thanks for this folks it has been illuminating. The initial and instant result of this discussion had me scurrying away to double check my maths as I feared I'd gotten something horribly wrong. Something that makes one do that is always a good thing :o) I'm confident now in my maths and I think (correct me if I'm wrong) we're all pretty much on the same page regarding the maths and what is left is a discussion of calculating profits against loaned amount versus against the total venture, whether the interest on the loan will take too big a chunk of the profits realised from it and whether there are infinitely better things I can do with my isk.

Percentage return across total venture versus loaned amount is where the 20% versus 3-5% profit discussion comes from and whilst I hadn't considered the 3-5% angle directly I had done so in terms of a total payback / break even point calculations so was aware of this angle and happy with it before launching. I think I'm correct in saying that my break even calcs correlate with the 3-5% return on total venture illustration; again please do say if I've missed something.

The interest on the loan taking too big a chunk of profit realised is again something I think I've shown I had considered and worked out in advance, weighed things up and decided that for a couple of months it was worth it to avoid having stagnent production lines if I could obtain low interest rates (and grateful to Raw for his consideration of this matter also).

That there are better things I could be doing with my isk and my slots I don't contest for a second. I have done many of them. Freighter production at best, with 10 slots utilised in NPC stations is going to run, as I've already stated, at a pessemistic average of 3m per slot per day. As mentioned, plain regular T1 production (in fact several of the ship prints currently with Raw) can turn 10m per slot per day with a favourable wind and they require substantially less isk tied up in expensive cap prints. The reason I want to stop doing those things and move to freighters is not because I think they'll make more money, I know and have already demonstrated that they'll make less than a third of what I was previously doing with far greater isk tied up. The reason I want to move is that margins are so thin (margin as a straight up cost of mins versus sale cost of end product) are so thin that a couple of percent swing in mineral baskets can move a product from profit to break even - this then necessitates short production runs of no more than a couple of days in order to be able to track mineral prices more accurately.

Now undoubtedly there are things I can do that have the same once every ten or so days clicking combined with far better isk making. In three years I've yet to find these, that undoubtedly says something about my skills but unless you'd like to share :o)

Atima
Minmatar
House of Marbles
Posted - 2011.08.10 16:36:00 - [37]
 

Edited by: Atima on 10/08/2011 16:38:53
Originally by: Tekota
As experience grew further I realised that freighter production was a terrible end goal as the isk per slot per day is abysmal.

That's the fourth sentence :o)

Buried within wall-o-text is also: As noted above my profit on this venture is really quite bad and as such I can't offer particularly good rates.

Thanks for this folks it has been illuminating. The initial and instant result of this discussion had me scurrying away to double check my maths as I feared I'd gotten something horribly wrong. Something that makes one do that is always a good thing :o) I'm confident now in my maths and I think (correct me if I'm wrong) we're all pretty much on the same page regarding the maths and what is left is a discussion of calculating profits against loaned amount versus against the total venture, whether the interest on the loan will take too big a chunk of the profits realised from it and whether there are infinitely better things I can do with my isk.

Percentage return across total venture versus loaned amount is where the 20% versus 3-5% profit discussion comes from and whilst I hadn't considered the 3-5% angle directly I had done so in terms of a total payback / break even point calculations so was aware of this angle and happy with it before launching. I think I'm correct in saying that my break even calcs correlate with the 3-5% return on total venture illustration; again please do say if I've missed something.

The interest on the loan taking too big a chunk of profit realised is again something I think I've shown I had considered and worked out in advance, weighed things up and decided that for a couple of months it was worth it to avoid having stagnent production lines if I could obtain low interest rates (and grateful to Raw for his consideration of this matter also).

That there are better things I could be doing with my isk and my slots I don't contest for a second. I have done many of them. Freighter production at best, with 10 slots utilised in NPC stations is going to run, as I've already stated, at a pessemistic average of 3m per slot per day. As mentioned, plain regular T1 production (in fact several of the ship prints currently with Raw) can turn 10m per slot per day with a favourable wind and they require substantially less isk tied up in expensive cap prints. The reason I want to stop doing those things and move to freighters is not because I think they'll make more money, I know and have already demonstrated that they'll make less than a third of what I was previously doing with far greater isk tied up. The reason I want to move is that margins are so thin (margin as a straight up cost of mins versus sale cost of end product) are so thin that a couple of percent swing in mineral baskets can move a product from profit to break even - this then necessitates short production runs of no more than a couple of days in order to be able to track mineral prices more accurately.

Now undoubtedly there are things I can do that have the same once every ten or so days clicking combined with far better isk making. In three years I've yet to find these, that undoubtedly says something about my skills but unless you'd like to share :o)


Trade comodities.

Otherwise best of luck with the freighters - It is not such a bad thing if you have large ammounts of capital free. I just don't see capital production as the best thing to do at your current stage, otherwise I do not doubt your ability to run it and also I believe you have set the bond in an ideal way.

IceFyre S18
Zulu Labs
Zulu People
Posted - 2011.08.10 16:47:00 - [38]
 

Please run the numbers on this:

I have 4xCharon and 3xObelisk ME13+ PE3+, 10+ various part bpo's also at very high ME/PE levels and a large tovers 1 jump from Jita I don't use.

If you think it would make a difference, will work together something about.

Tekota
The Freighter Factory
Posted - 2011.08.11 08:31:00 - [39]
 

Levija Saplina feel free to send at your convenience, will start bond running upon receipt.

IceFyre, let me close out this bond properly first, I'm always wary of operations which expand and rollover quickly so I'd like to run this as described first, if anything it will at least let me know if the work involved is as anticipated.

What the above discussion has illuminated very well is that the break even point or ROI on total investment (rather than just that part that is publically funded) is always going to be very low so any major expansion would involve some increasingly unattractive sums.

Tekota
The Freighter Factory
Posted - 2011.08.13 15:30:00 - [40]
 

Levija Saplina if you could let me know if you still intend to invest I'd be appreciative. Looking to get this rolling by the end of this weekend if possible.

Tekota
The Freighter Factory
Posted - 2011.08.15 18:09:00 - [41]
 

Just received word from Levija that real life has taken over in a rather wonderful way so this offering is open once again.

If anyone is interested or has further questions please pipe up, if you're looking to invest then please say and I'll add you to the reservations. Note however that I'd like to get this running now as soon as possible (my lines stop in the next few hours) so I'd ask that only folks able to send within the next 24 hours reserve places.

Should this not have filled and be running by then I'll be aborting the bond and seeking other avenues to raise emergency liquidity funds.

Angsty Teenager
Posted - 2011.08.15 19:22:00 - [42]
 

I pledge -20bil.

-jury duty purpriidge faniboii.

flakeys
The Great cornholio's
Paper Tiger Coalition
Posted - 2011.08.15 19:58:00 - [43]
 

Edited by: flakeys on 15/08/2011 20:00:44
I will take the full 2 B .



2 B send

Tekota
The Freighter Factory
Posted - 2011.08.15 20:04:00 - [44]
 

Confirming receipt from Flakeys of 2bn.

Therefore be paying on the:
15th Sept 39m as 3% on 1.3b and 35m as 5% on 700m for a total of 74m.
15th Oct 74m interest as above plus 2b principal.

Thanks once again :o)

Tekota
The Freighter Factory
Posted - 2011.09.06 11:29:00 - [45]
 

Sorry for the otherwise unnecessary bump but in anticipation of these forums being potentially set read only during the course of this bond, new thread is at the new forums: https://forums.eveonline.com/default.aspx?g=posts&t=6388

(oh, and for the record, all going fine, expect first month interest in a little over a week's time as promised)


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