Market Discussions

Sobek Capital IPO

Link to Previous Post- https://forums.eveonline.com/default.aspx?g=posts&m=6829830#post6829830

"Updated"
Basic Info:   
Shares Available for Purchase: 150
Price Per Share: 3  Million Isk
Average Corporation Profit per Month: 11%-30%
Estimated Monthly Dividend: 25%-50%

About me
For those of you who didn’t catch the previous post. Sobek Capital is a corp comprised of my alts with the express purpose of generating as much isk as possible. If you have more questions about me or why I want to start this venture. I highly suggest you click the link at the top. Which will take you to my original topic where I explain most of that. If you still have questions about me after reading the other topic. Feel free to post them below and I will be more than happy to answer them.

How I generate Isk
Below you will find the ways I generate isk and my philosophy concerning each one . If you find yourself with any questions, again feel free to post them below and I will do my best to answer.

Hi-sec Manufacturing/Research
Recently I have made a decision to move further away from manufacturing and focus more on researching and selling BPOs. The reason behind this is because research overall provides a more stable long term source of income that requires far less management and daily interaction on my part. As far as manufacturing goes I plan to only use it as a supplement to my trading for the time being. For example if I’m predicting a spike in price for a low volume item. Instead of placing market orders all over the place for the item in an attempt to build up stock. I might simply make a manufacturing run on the item to avoid potentially tying up those market slots for a considerable amount of time.

Trading
Currently I have found a great deal of profit to made in what I call mid-term trading. Basically what this means is, I don’t spend countless hours searching the market for items that have decent enough margins and trade in high enough volume to be worth investing in, only to have the margins change an hour later. Instead I search through price histories of all the major trade hubs and find items that are sitting anywhere between a 1 to 6 month low. After I find these items I try to determine why the price dropped and when and if the price will go back up. If it looks like I can turn a profit in a reasonable time frame then I invest in the item. In addition to mid-term trading I also engage in trading between hubs. While browsing through price histories, I often find items that have taken a hit or substantial rise in price at only one station. Which allows my the opportunity to buy the item and immediately transport and sell the item for a profit. Although this concept may sound a little bit flaky do to various reasons. It can actually be a great source of consistent income due to the fact that so many traders are unwilling to ever leave station and that based on the hit in opportunity cost you take to your margins by paying someone else to move it. There are just better options out there for these people, leaving the market lacking in competitors.

Hauling
While trading between stations if I have extra room in whatever ship I’m using to haul I will sometimes pick up misc. hauling contracts as an additional source of income.

Misc.
In the future I would like the corp to begin offering collateralized loans as well as to potentially invest in other business ventures. Currently I’m looking into offering buy back programs for corps who either can’t afford them or don’t have the time or willingness to setup the logistics for one.

Additional Info
If you would like to purchase shares simply post below with the amount you wish to purchase and then send the isk to me in game, I will then assign you the shares ingame. After the completion of this investment round any additional investments rounds that require a creation of  shares will require a 2/3rds passing vote by the shareholders. In addition the corporation cannot pursue any additional income sources not considered to be in the categories of Trading/Manufacturing/Research/Hauling/Mining without a 2/3rds passing vote from the shareholders. Once you have purchased your shares you are free to sell or trade them to whoever you wish. Around the first of every month I will publish an estimated share value along with a breakdown of company assets. Within 3 days of publication any shareholder may elect to sell their shares back to the company for the published share price. At which time the acting CEO has the right to either allow the corporation as a whole to retain ownership of such shares or sell those shares on behalf of the corporation without requiring a vote from the shareholders. If the time ever comes that the corporation closes. All assets will be liquidated and the isk will be divided up between shareholders based on percent ownership.  


Like I said before if anyone has any questions please feel free to ask and I will do my best to answer them.

V/R
Garen Sobek

450 out of 1000 shares, Also I see no issue with the dividends being paid to all shares.

Except that also means you're advertising false dividend rates in a fashion. Is that 2-5% dividend rate what you're paying out specifically to the 450 shares (increasing the dividend payment to account for the corp retaining 55% of it)? Or to ALL of the shares, reducing the actual payouts to .9% - 2.3%?

Assuming all shares sold, that's 1.35b in assets to grow. Max projected growth would yield 148.5m profit in the first month. Dividends would be a maximum total payout of 7.425m to:
- A) 450 shares (total per share = 16,500isk , total actual paid out = 16.5m) or,
- B) 1000 shares (total per share = 7,425 isk).

A is what people would generally be expecting, as it pays out the actual dividends you're promising to shareholders, disregarding the remaining 550 shares as negligible/irrelevant without a "corporate buy-in." B is what you're saying you plan on doing in reality. It's something you really should clarify, as it's a (imo) rather important point of contention that people may hedge away from.

So I'll go ahead and start things off by saying that you brought up some excellent points that forced me to go back and re-do all my math. During this I realized that my monthly profit out look was flawed because I didn't take into account the compounding effect the profit from each individual trade had on the overall monthly percentage. I also didn't take into account my trade volume. In addition I have also decided to restructure the dividends. I will attempt to explain all this as well as address and correct some of the points you made.

1. First of all the corporation does not own the remaining 550 shares, I do. Now originally this is not advertising false dividends a percentage is a percentage. This merely changes the worth of that percentage. That being said I can 100% see how people might think I was being deceptive since I did not disclose this information. That is an oversight on my part because I figured most people would expect me to own shares in my own company. Never the less I apologize to anyone I might have mislead. Lastly like I stated above I'm going to restructure the dividends which I will have more information on below.

2. "Assuming all shares sold, that's 1.35b in assets to grow" Actually it's closer to 4.5B in assets to grow, this is because the company currently holds just over 3B in assets. Hence why the share price is 3M per share when there is 1000 total shares.

Now with those things cleared up I'll go ahead and discuss the dividends. After recalculating my expected profit margins we are looking at anywhere between 11%-30% monthly profit. Now I know some of you out there are pointing and saying "how did he just possibly triple his monthly profits?" So let me explain, when it comes to trades/manufacturing I seek to make at least 10% profit on every item. Therefore not using the better half of my brain I simply figured around a 10% monthly profit margin. That being said this doesn't account for trade volume or compounding reinvested profit from previous trades. Once these things are figured in it gives a healthy bump to the companies profits. In addition the original figure didn't take into account the profits from my researching operation that usually boast somewhere in the area of a 75-125%% profit margin, but I can only cash out these profits every couple of months.

With all that stated it has come to my attention since EvE does not have a stock market, potential investors would most likely be more interested in a higher monthly dividend rather than re-investing a larger portion of profits into the company thereby raising their overall share value. So with that in mind I would propose taking 50% of the monthly profits and re-investing them into the company and taking the other 50% and paying it out in dividends. Below I'll try and draw a picture of what that looks like.

If all shares sell the company would be holding about 4.5B in assets. From that amount I would expect to make about 1B isk within the first month. Dividing that number equally between re-investing it into the company and paying it out in dividends, it would raise the total company assets to approximately 5B. This would mean come May the value of your shares would rise to 5M each and you would also receive a dividend payment of 500K per share.

Again if anyone has any additional questions, please free to ask!

V/R
Garen Sobek

So you made a couple of excellent points here I would like to address.

So first off you are absolutely correct that I am slightly underselling. This is one of many things I am hoping helps better the risk assessment on the part of the investor.

Now as for the point you raised about a buy back option, in my first post I outlined that the corporation will offer a 3 day buyback window every month. Also the buy back price will indeed be based off of the value of our assets. My plan would be to then try and turn around and resell those shares at the same exact evaluation. This would be the only time the companies evaluation would exceed its net assets. As far buying up all the shares and then immediately trying to opt for a buy back, your first opportunity for a buyback wouldn't be until May. And although yes at that point you could opt for a buyback netting almost 1b in profit if we hit out projections. I'm ok with this because the company should actually still net a small profit on this. For anyone who might not quite understand this I will illustrate my math. If my projections are correct and we clear 1B in profit, then after taking out the money to pay the dividend the companies value based on its assets would be 5B(Note dividends will not be paid until after the buy back window has closed). If you then opted to sell all your shares back to the company you would receive 2,250,000,000 Isk. Which would mean the companies asset value would be 2,750,000,000 isk. Now after this window has closed the company would basically receive a dividend payment from its self valued at 225,000,000 isk raising it's net asset value to 2,975,000,000. At this point I would attempt to resell those shares on behalf of the company at that same 5B isk evaluation. Ideally I would be successful in selling these shares and that would raise the companies assets up to 5,225,000,000 basically allowing the company to pocket your share of the dividends. Now with all this being said there are some definite downsides to this plan. The major one being that I always want to keep the value of the shares directly related to the total value of assets and in this scenario I would have to sell those shares at a x1.6 evaluation to make it work. The other option like you say would be to offer no corporation buyback program and force investors to only sell their shares to other players. The problem with this is it leaves players with no guaranteed way out which I assume most players just wouldn't find palatable.

Now as far as the dividend goes, this is they way it is to make the investment more appealing to investors. To an investor in EvE where we don't have an established stock exchange or brokers, the idea that you will have to sell your ownership in a company to actually see your profits could be a major turnoff. On the other hand however, the idea that you can turn a profit simply by collecting your dividend payments and then at the end of the day still have the ability to sell off your ownership for a substantial gain is a lot more palatable of a choice.

In regards to your last question of whether or not I will be happy with investors owning 45% of my company. This is a question ever business owner in the real world has to take very seriously. Fortunately for me however, I have no mortgage to pay on my Gallente Freighter that I would need to worry about. I also have no virtual kids that I need to save isk for in order to put them through EvE university. No the fact is isk in this game is just a means to an end for me which is to have fun. And as long as I'm having fun and enjoying myself in game I would will be quite content sharing the wealth with my investors.


With all this stated you do seem to have some excellent insight that could very well hold a high value. If you think you might have better solutions to the problems then the ones I came up with. I wouldn't mind maybe paying you an advisory fee to hear them.

V/R
Garen Sobek

Great questions and I'll to do my best to answer them to your satisfaction.

So when it comes to my personal history with this game I began playing in 2011 and played up until 2013 when I had to leave the game do to real life obligations. I returned to the game in 2014 and played up until mid 2016. During my play time up until this point I had mainly focused on activities such as exploration, mission running, a small bit of pvp and I even worked as a hauler for push x for a short period of time(this was how I got interested in Indy, seeing some of the convos that went on in the haulers channel). Mid way through 2016 I had to step away from the game once again due to the fact that I switched jobs, moved from the UK back to the U.S. and my daughter being born.

During my time away I came up with a goal that I wanted to do something big within the game. And after giving it some thought I decided I wanted to try and create a large player owned and publicly traded cooperation. When I came back to the game I extracted most of the SP off my old characters and used the Sp to build up a few characters to give me the foundation on which to run an Indy operation.

With all that stated I have not profited 3B since returning to the game. I started my operation with about 2B in assets and have grown it to 3b over that time. All the while learning a lot about what works and what doesn't work as well as taking a few losses here and there due to mistakes that I made and learned from along the way. I hope this gives you the insight you were looking for.

As for an audit this is probably going to be much harder to give you an answer that you find acceptable. As a whole I have no problems allowing for someone to audit the holdings that are in the corp.(which was about 2B last I checked before I left for work). The problem is that not all assets are currently being held by the corp. This is because in order to avoid war decs(Especially since I've now made my operation public). I have to utilize out of corp characters and even other corps to handle my hauling, manufacturing and researching. Which means that in order to perform a full audit I would either have to cancel all my manufacturing and research jobs costing me a decent amount of ISk and causing a major disruption is operation in order to move those assets back over to the corporate for a short period of time. Or Id have to find someone that I would trust completely and give them all API keys related to the operation, which is something I would have trouble with.

FYI I'll be at work for the rest of the day so won't be able to respond to any questions for awhile. Also posted this from my phone so sorry for any grammar mistakes.

V/R
Garen Sobek

While this would be ideal, I believe the only way this investment works currently is if investors have a guaranteed way out. With out that I think the risk for most would just be to high.



Your question is whether or not selling off 45% of the corporation is worth it in my opinion. To me the answer is yes and here is why. Although 1.35B may not seem like a ton of cash, an import factor to take into account is how this money would affect the rate of growth. As an example, the corporation currently has just over 1B isk in its trading fund(not liquid). If I can manage a profit of 20% a month, then after figuring for compounding growth after twelve months our trading fund should have an estimated value of 8,670,504,589 Isk.. Alternatively, if I were to take all the capital raised and dump in into our trading fund then after 12 months the fund would be worth conservatively(rounding down some numbers) around 17,341,009,017 isk. Being that I still retain 55% of the company, that would mean that my share of these assets would be 9,537,554,959 isk. Almost a full billion isk more than if I would have gone at it completely solo. As time goes on the amount of additional money I would stand to gain continually grows right along side the expedited growth of the company. So if you are concerned that I merely want to take this company public for the sole reason of being able to "Roleplay" as a CEO, you can be rest assured that this is not the case. Now with that stated however, I have said in the past and will say again that I do think this will be something fun to do. And that the fun to be had{Because the main reason to play games is for fun) is one of the things I am most interested in.

I hope you find these answers satisfactory and I very much appreciate all the input you have given. If anyone has any further questions feel free to keep them rolling.

V/R
Garen Sobek

There is no current limit on the amount of shares a potential share holder may purchase. Once your payment has been received I will go ahead and transfer you the shares.

Also, welcome aboard!

V/R
Garen Sobek

I will take the last 150 shares, isk sent.

Isk received, shares sent. Welcome aboard!

V/R
Garen Sobek