As for the recent posting drought here, I was pretty much out of action during the month of April, due to some health issues. But that doesn’t explain the lack of posts in March or up until now in May. Part of the reason is that when I have the urge to share a link to the something, where I might have written a blog post about it in the past, usually now I just share the link via Twitter.

I tweet all of my Seeking Alpha articles and guest blog posts on hedging via the @PortfolioArmor Twitter account. Most of those articles are geared toward those who are unfamiliar with Portfolio Armor, and might seem redundant to those who have read this blog. The ones I think might be of slightly more general interest, I retweet via my @dpinsen Twitter account. For example, I retweeted these two recently:

Guest post on @SlopeOfHope: “@PortfolioArmor: Hedging Update: Social Media Stocks — stks.co/3nYR $P $LNKD $ZNGA $FB $SOCL $QQQ”

— David Pinsen (@dpinsen) May 12, 2012

Quotes @johngapper & @fredwilson. RT @PortfolioArmor: Hedging Biotechs As R&D Investment Declines stks.co/3lt0 $AMLN $CELG $GILD

— David Pinsen (@dpinsen) May 10, 2012

When I can’t get my point across about something in 140 characters, then I’ll write a blog post here (if anyone reading this has something they’d be interested in me writing about, feel free to suggest it in the comments below). If you’re interested in my thoughts in between my blog posts here, in addition to following me on Twitter, you can view my comments on other blogs via Disqus.

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The road ahead (The GWB heading toward the mainland. Taken today).

Spook Country

I finished reading William Gibson’s Spook Country this week. Took a while to get into it, but the second half of the book had me hooked. Not a whole lot happens in Spook Country, though, as (spoiler alert) this negative commenter on the Powell’s Books site notes. Something else that commenter mentioned was that Gibson had to write the book due to some contractual obligation. Spook Country isn’t Gibson’s best work, which, in a way, makes his achievement more impressive: Gibson grinding it out is still pretty good.

Anti-Buzz again

The bit about anti-buzz in the book made me think of the press Portfolio Armor got this year (none). I corresponded with and spoke by phone with a reporter at a major business newspaper, who may write about it next year. Or not. I responded to some relevant HARO queries too. Nothing. But that’s cool. I really haven’t played the game well. And I stopped playing altogether a few months ago. I’ve been spending more time working on adding capabilities to PA than hyping it. Looking forward to unveiling some new stuff in 1st half.

Happy New Year.

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I noted that warning for investors in Sears (SHLD) in this tweet on December 18th:

Looks like a red flag for $SHLD longs. MT @portfolioarmor Hedging Bruce Berkowitz stks.co/1avF $AIG $BAC $C $BAM $CIT $BRK.B $JOE

— David Pinsen (@dpinsen) December 18, 2011

And then on Tuesday of this week, SHLD fell out of bed, dropping 27% in one day on news that the company was closing 100+ stores following awful Christmas season sales.

The left side of this chart reminds me of the rock in Close Encounters

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“Tell me about Node, she suggested. “It doesn’t seem to be generating much in the way of industry gossip.”
“No?”
“No.”
He lowered his finger-steeple. “Anti-buzz,” he said. “Definition by absence.”
She waited to see if he’d indicate that he was joking. He didn’t. “That’s ridiculous”.
The smile unshuttered, gleamed, shuttered, and then their drinks arrived, in disposable plastic that protected the hotel against barefoot poolside litigations.

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A booth at the Skylark Diner

In a post this fall (“New Features and Things to Come”), I mentioned a few projects that were in the works for Portfolio Armor:

Things to come

A quant on the Portfolio Armor team, a post doctoral fellow at Princeton University, is conducting R&D on the first two features below now. I hope to have them added by the end of this quarter, and the third feature sometime in the first quarter of next year.

• Optimal call options to hedge short positions.
• Optimal collars to hedge long positions, while offsetting the cost of protective puts.
• Dynamic, optimized when-to-sell alerts for call and put options.

All of those features will be as easy to use as the rest of Portfolio Armor, with all the calculations kept in the background, as usual. But if you like math, and you want a sneak peak at the thinking behind the third feature, here’s an excerpt from our Princeton quant’s e-mail about his epiphany about this.

It turned out that our quant ran into a couple of conceptual stumbling blocks while conducting R&D on the second one of those features, optimal collars. After exchanging a series of emails on it, I suggested we meet for lunch at the Skylark Diner, which we did yesterday. Using some non-academic pragmatism, I helped him surmount the conceptual stumbling blocks. He left with a blueprint for how to tackle the problem sketched out over a few legal pad pages.

Meeting in person: still the most effective social medium.

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I blew $145 on useless Tapjoy ads and all I got was this lousy ecard

The Trouble with Tapjoy

Here’s the tl;dr version: if you have a paid app, and are thinking of using Tapjoy’s pay-per-install program to advertise it, don’t. You can get the same result more quickly by taking cash out of your wallet and setting it on fire. The two screen captures below offer an illustration of this.

My Tapjoy sales report for December 10th

This shows 10 paid downloads of the Portfolio Armor iOS app, for which Tapjoy charged me $145. That’s $14.50, or 50% of the sale price of the app, per paid download. If these had been legit sales, my cut would have been $57, or $5.70 per app: $28.99 – $14.50 – $8.70 (Apple’s 30% cut) = $5.70.

My Apple iTunes ales report for December 10th.

Actually, this shows there was no sales report available for December 10th, because, according to Apple, there were no paid downloads of Portfolio Armor that day. So, instead of paying $145 to Tapjoy for $203 in revenues from Apple iTunes [70% of ($28.99 x 10) = $203], for a net gain of $57, I ended up paying $145 to Tapjoy for $0 revenues from Apple, for a net loss of $145. Note, too, that I capped the number of paid downloads at 10 on Tapjoy that day. Had I not done that, who knows how many illegal/phantom downloads Tapjoy would have charged me for.

Tapjoy’s position on this

This was the second time I tried advertising on Tapjoy. The first time, Tapjoy showed 14 paid downloads during a period where Apple iTunes showed 10; when I pointed out the discrepancy to them, Tapjoy agreed to refund me for the 4 illegitimate downloads as a one-time courtesy. They claimed the other 4 downloads were pirated ones (FWIW, my iOS developer doubts that the app has been pirated, and suggests there is another cause for this discrepancy). I figured a ~35% slippage rate might have been a fluke, so I tried one more time, and got the results you’ve seen above.

Before I advertised with Tapjoy, their rep told me that as long as I set my bid (Tapjoy’s cut, which it shares with the app owners in its network that hosted ads for my app) at their minimum level (50% of the sales price), my ROI would be positive (since that would leave 20% for me, after Apple’s 30% cut, and 20% of any positive number is positive). After I advertised with them the first time, they said that their model might not work for higher-priced apps such as Portfolio Armor.

When I pressed them on this, asking what price I should drop Portfolio Armor to so it wouldn’t lead to illegal or phantom downloads, they essentially conceded that their pay-per-install program isn’t viable for any paid app that generates all of its revenue through paid downloads.

Update: A senior software engineer from Tapjoy saw this and responded, first via Twitter and then via email. I’ve asked his permission to share his email here.

Second Update: Below is his email.

Hi – this is [name redacted at Tapjoy's request] from Twitter. I’m a senior software engineer at Tapjoy, working on the advertising platform and the new Tapjoy.com. Developers do get the support emails, but because of the sheer volume that we get, we can only really look at specific ones pointed out by account managers. In this case, I actually do recall having a brief conversation with [the two Tapjoy employees I had spoken with] recently (outside of email) about an high-priced app getting fraudulent charges from Asian countries – it’s likely they were talking about Portfolio Armor.

As I’ve mentioned on Twitter, we have some simple checks built in to the SDKs that checks if an app is jailbroken. Fraud detection is definitely something we take seriously and strive to improve here at Tapjoy – we were the first PPI platform to have jailbreak checks implemented in SDKs. Traditionally these have been good enough to catch most of the fraudulent cases in the past, but we may need to dig a little further, as jailbreaking methods/technology keeps changing. In the case of your particular app, since you told us that there should have been 0 conversions, I’ve banned these devices while I look into this further.

Again, I apologize for your experience with Tapjoy.

Third Update: TapJoy refunded the $145 charge.

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