Your2ndPlace

I just wanted to re-post this Ginko forum post that explains a bit about where Ginko's in world investments are located for anyone that had interest.

Dear customers,

Very often I have been asked to disclose more details regarding Ginko Financial's investment activities. As I have explained in the past, with the exception of the failed Paris sims, we have focused our investments off-world for most of our existance. This has changed with the establishment of capital markets in SL, starting with the WSE (www.wselive.com). I am still uncomfortable disclosing anything regarding the off-world side of things, but as the in-world investments have grown in importance, and as they are already relatively public, I think it's reasonable that I better inform you on them.

First, the overview. Our current stock portfolio, excluding halted companies (MPR) and subsidiaries (GCS and VME), consists of the
following:

- 10,818,978 shares in BNT (Brautigan & Tuck Holdings) which has a 30-day average value of L$10,494,408.66.

- 6,773,393 shares in HCL (Hope Capital Ltd) which has a 30-day average value of L$19,846,041.49.

- 1,329,132 shares in LOT (Lotto Networks Unlimited) which has a 30-day average value of L$1,143,053.52.

- 624,570 shares in KCG (Kavai Conglomerate Group) which has a 30-day average value of L$6,913,989.9.

- 473,350 shares in EFM (Empire Fund Mutual) which has a 30-day average value of L$421,281.5.

- 55,395 shares in AIC (Allenvest Investment Capital). I am unsure
what the average is, but it has a market value between L$55,395 and
L$110,790.

This puts the total value of the in-world stock portfolio at around L$38,901,867.57, or around 23% of depositor liabilities. If GCS is
included, the value jumps to the L$70,000,000 range, or around 42% of depositor liabilities, with the addition of VME boosting the number by L$1,000,001 and somewhat more than 0.5% of depositor liabilities.

Of particular importance to report here is the mistake I made with MPR, which has cost us about L$2,000,000. The founder of MPR seems to have disappeared from SL, with bills unpaid. Ginko Financial invested heavily into MPRs IPO, at one time owning over 3,000,000 shares. This has strenghtened our resolve to shift our investment strategy, which we'll comment more on later.

You may have noticed that we have an investment in AIC, which owns a competing stock exchange to HCL, our main holding. As I looked into AVIX I was somewhat impressed by their system and decided to make a small trial investment. Our investment is and will remain small as we learn more about them and their CEO. As far as I can tell however, he seems like an honest, well intentioned and competent person. It's important to remember however that this is only my superficial impression, it should not be taken as charachter refference. Further investments into AIC are not high on the list of priorities, but the option has not been discarded.

I have no doubt that SL is capable of supporting more than one exchange and that the existance of several does nothing but good to the industry as a whole. It is important to consider that the penetration rate for financial services in SL is relatively low. Multiple exchanges increase both the number of people that are actively aware of their existance and, due to competition between them, their quality and attractiveness to the public.

With BNT we seek a close, long-term relationship. They will be building and managing all of Ginko Financial's estate investments,
starting with the Von Mises estate. In the near future, they will also be building the Ginko Financial Center.

Speaking of the Von Mises estate, I would like to expand on our strategy with regards to estate investments. The idea is fairly simple, we pay for the purchase and development of a simulator, then sell half our stake in it on an IPO in order to recoup the investment made. It's a variation of the standard sim owner practice of reselling land to buy new simulators, while keeping an income from tier management. There were delays in ordering the Von Mises estate, which I imagine have played a part in VMEs slow IPO progress. We are also still refining our strategy, and as it is a first people are understandably cautious about investing in it. As the building is completed and the simulator opens for business, investor interest should pick up as shares in it may
return considerably more than our savings accounts or bonds, or even GCS.

Our position in GCS we intend to sell down to 50% +1, no more. The lock on founder selling of stocks will be lifted on June 9th, after
which we intend to let go of shares at between L$3 and L$4. This block does not apply to the 100k shares we re-acquired from GIF, which we are already selling off.

Our position with regards to LOT, KCG and EFM is neutral. The companies seem well managed (though investor relations could improve), with good potential prospects, but the risks involved do not warrant bulishness at current price levels. We have no reason to liquidate them on a firesale, but have no particular interest in holding as they do not currently form part of our overall strategic plan and the capital could be used for companies that do. As such, we are willing to sell them at L$1 for LOT, L$13 for KCG and L$1 for EFM. You can see the sell orders on the market. I have been told to use smaller orders, but I do not believe managing the sale of tiny chuncks of stock is a productive use of my time. If nobody wishes to buy at these prices, we'll do just fine keeping them.

I believe in the investment maxim that it is better to make one good investment than ten bad ones. I also believe that there is no
direct link between risk and reward, only between risk and knowledge. Making an investment is not the same as going to a casino, there are no fixed odds. As such, given SL economic conditions, our interest is investing large sums in a handful of large companies rather than in many small ones.

We intend to expand our offering of bonds in june, through the GPBs (Ginko Perpetual Bonds), but the price and amount has not yet been determined. The thing I like about the GPBs, a big part of the reason I created them, is that they show the pure market interest rate. I say "pure", because they are the purest that can be, but it is clear that things such as market friction (the fees for trading the bonds) have a large impact on their ability to behave as accurate indicators of market interest rates in Second Life and particularly the market interest rate for Ginko Financial borrowing.

I believe this covers everything I wanted to say for now.

Regards,

Nicholas Portocarrero

Technorati Tags: Banks Business SecondLife Stock Exchange SecondLife Second Life Ginko Disclosure