Author Topic: Quick Overview of Folio Strategies?  (Read 2186 times)

avid investor

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Quick Overview of Folio Strategies?
« on: October 19, 2015, 01:35:24 PM »
Hi all.  I have never traded on the Folio platform.  Frankly, I'm not sure of the typical expectation for selling notes on that platform.

Hi understand selling under-performing notes.  Buyers willing to buy them are going to discount their current value in hopes that the borrower will pay them off and the investor will get a large payday. 

For well-performing notes, what is a reasonable expectation for the sale price?  For example, if you have a $100 original note at 16% with a $90 balance, no late pmts, etc., what would a fair price typically be for this note that has 4 years to go?

Any help understanding the typical "sell" strategy would be appreciated.

Thanks!

Fred

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Re: Quick Overview of Folio Strategies?
« Reply #1 on: October 20, 2015, 02:29:42 AM »
My Folio strategy for both buy and sell is to price the notes at or near the minimum markup.

I have been archiving Folio notes for more than 1 year now.  Here is the historical minimum and average markup for Current and A+B grades notes:



Not a pretty picture, unfortunately. ;-)

avid investor

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Re: Quick Overview of Folio Strategies?
« Reply #2 on: October 20, 2015, 11:43:21 AM »
Thanks Fred.  Can you give explain how the markup works?  In other words, can you show me the math with a sample note?  I'm thinking that it must start with the remaining balance of the note, right?  Total newbie on this.  FYI, I am looking at selling.
« Last Edit: October 20, 2015, 11:51:29 AM by avid investor »

AnilG

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Re: Quick Overview of Folio Strategies?
« Reply #3 on: October 20, 2015, 03:10:08 PM »
For well-performing notes, what is a reasonable expectation for the sale price?  For example, if you have a $100 original note at 16% with a $90 balance, no late pmts, etc., what would a fair price typically be for this note that has 4 years to go?

I wouldn't pay you more than PAR for well-performing notes at 15+% that made between 6 and 9 payments on-time, never late on payments, and rising FICO Score. They are the prime candidate for refinance by Lending Club or competition.

You might find some of my blog posts on secondary market useful.

Lending Club Secondary Market: Profitability of Trade and Recovery Rate with Loan Status at Listing
https://www.peercube.com/blog/post/lending-club-secondary-market-profitability-of-trade-and-recovery-rate-with-loan-status-at-listing

Lending Club FOLIOfn Secondary Market: Distribution of Available Attributes for Listed Notes
https://www.peercube.com/blog/post/lending-club-foliofn-secondary-market-distribution-of-available-attributes-for-listed-notes

Lending Club FOLIOfn Secondary Market: Penny Note Strategy based on Lowest Ask Price
https://www.peercube.com/blog/post/lending-club-foliofn-secondary-market-penny-note-strategy-based-on-lowest-ask-price
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Anil Gupta
PeerCube Thoughts blog https://www.peercube.com/blog
PeerCube https://www.peercube.com

avid investor

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Re: Quick Overview of Folio Strategies?
« Reply #4 on: October 20, 2015, 03:59:49 PM »
I get it Anil, thank you.  Basically, you are starting at outstanding principle value and going down from there based on the current perceived value of the ROI.  Makes sense.

Fred

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Re: Quick Overview of Folio Strategies?
« Reply #5 on: October 21, 2015, 01:46:39 AM »
Thanks Fred.  Can you give explain how the markup works?  In other words, can you show me the math with a sample note?  I'm thinking that it must start with the remaining balance of the note, right?  Total newbie on this.  FYI, I am looking at selling.

Yes, in principle:

        markup = sale_price/(outstanding_balance + accrued_interest) - 1

If you download the Folio full inventory (https://resources.lendingclub.com/SecondaryMarketAllNotes.csv), you'll see the markup in column H.
« Last Edit: October 21, 2015, 01:50:41 AM by Fred »