The dividend

The dividend is the part of profit that a company delivers to its shareholders, usually paid in cash.

In a virtual atmosphere, like that one of SL, with a virtual stock market exchange (WSE), in which the rules are not so good, a company that periodically distributes a dividend is positively “reliable” (if one can talk about reliability in SL).

Currently, there are 45 companies quoted on the WSE and approximately 15-20 of them have already distributed some dividend.

Of course, we will see how regular this companies will be able to be as far as dividend delivery is concerned.

In the evaluation of a company, the Pb Asset Management filters the companies with a low price/dividend ratio, determining in this way which titles are more convenient to invest/trade/play.

Ps: The frequency of distribution of dividends is somehow arbitrary: there are companies which distributes their dividends monthly or even weekly.
The Pb Asset Management, for the its own investments, considers the price/dividend ratio on a monthly base.

Pasha Boucher
Translation by Mr Jo Bleac

Panic selling on Hope Capital Ltd (HCL)

Written on April 13, 2007

Hard market day for HCL group, that has burned 50% of his market value. Only yesterday the HCL title quoted 3L$ per stock, but in the last 24h the title has touched the value of placement that is 1L$ per stock, as one month ago.

Everythings started yesterday in the evening when 4 million stocks appeared on the book sell side, every stock divided in orders of 200.000/300.000 pieces at prices included between 2.90 and 3.50 L$.

Now, if we consider that the HCL consists of 25 millions shares, it was very disappointing for the investors to see such a selling pressure on the stock. This high pressure started the panic selling: everybody started selling! A high selling volume with 1.3 million stocks exchanged at a price included between 1 and 3.29 L$ per stock.

But, who is HCL group?
The prospect is clear: they are the WSE owner, at 100% since few weeks ago, furthermore they have other activities such as Our Bank LTD., a second life bank.

Let's try to evaluate HCL group: we have said that the company consists of 25 millions shares, and if we consider price swinging in the last 24h(min 1L$, max 3.29L$) we can obtain a capitalization included between 25 and 82 million L$.

The WSE take 3% of commission on the total value of each contract, and if we consider that in the first month (as reported on their site) a total market value of 129 milion of L$ was registered, we obtain 3.8 million L$ per month revenue. If we project this revenue on an annual base we have 46 million L$; add the positive increase of the market, as the economy of SL grows up at a 10-15% monthly.

Unluckily, we do not have much info about the other activities of HCL group and about the mothly costs. Nevertheless, we can make an annual projection with capitalization/return statement included between 0.54 and 1.78.

Each of us draw her own conclusions!

Pasha Boucher
Translation Mr Paky Mariani

Fundamental Analysis

Ever since my first day in SL I asked myself how I could valuate companies quoted on WSE, in order to choose which company I would invest into.

A company annual balance sheet in RL is what you need to estimate a company value, or else it is enough to visit any specialized web site to read the major indexes and compare them with other companies in the same segment.

In SL, expecially as we are talking about WSE which is a young market, there is no such thing. Only available info consists of the companies own statements and there is no real control office. In any case some numbers are there to be found: look at the "research" section on the WSE web site. For each company you can find there a synthetic report, all the company statements, and the history of dividends (some companies have started distributing dividends as often as weekly.)

During the first days I read many reports, but I could not find any news about dividends, which in my opinion is the only way to find out whether a company can be trusted. After that I decided that the only way was to invest on a variety of companies, choosing in the first place those companies which could sport a decent capitalization to asset ratio ... and I could not find many of these.

Just to show one example, the first company in the section research is named A.M. Sports Bets (AMS). On the synthetic report it is stated that there are 50 million stocks (Outstanding Shares: 50,000,000)and the company owns assets for L$ 1.216 millions. The stock was quoted at L$ 1 per share at launch, then with an initial capitalization about 50 millions lindens!!!!You've got it wright: 50 millions L$, that is around 140 thousand EURO! (Is there any one still thinking tha SL be just a game?? :) ). Capitalization/asset ratio =50/1,216=41. I have sorted the companies on the base of this ratio, preferring those with a lower value.

This is the first parameter that I looked For the next one, don't miss my following posting ;)

Pasha Boucher

Translation by Mr Jo Bleac

Welcome!

Welcome to the first italian blog about the stock market exchange in Second Life.

SL is a virtual world 3D created by Linden Lab, today there are more than 5 million subscribed members, with a strong economic growth around 10/15% per month. The stock market exchange is open since March 5 and today there are 40 companies.

In SL my name is Pasha Boucher and in RL I follow financial stock exchanges every day. On March 7 I have created a close private equity fund (asset 350000 L$) managed by Pb asset management. This company belongs to SL and I have founded it.

The blog is meant to inform and update the reader, and to analyze what is happening on the stock market in SL. I will also report on my own operativity on the WSE market.

This is going to be a mean to share my passion in Second Life and my passion in financial markets, to offer thoughtful insights on several aspects of the market, for example on rules and on fundamental analysis. It is aimed to become a reference for investors/traders/players.

Pasha Boucher
Translation by Mr Jo Bleac