Author Topic: Trying to make sense of Foliofn discounts/markups  (Read 2108 times)

InvestorinCA

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Trying to make sense of Foliofn discounts/markups
« on: March 27, 2017, 01:33:58 AM »
Hello all,

I'm a new investor with LC learning all the tools. I get that you can sell notes on Foliofn and all that, what I can't make sense of is the markup/discount rates since they are all over the place.

I understand that some loans are more coveted, such as A & B grade notes with good scores, or D E F loans with good interest rates and some key factors. But for those of you that look to sell your grace period or late notes, is anyone able to share a range of what they normally discount their notes for? I don't want to over discount my notes and throw away money, but neither do I want to hold them since I'm asking too much and get a charge-off as a result.

Any advice that can be shared is appreciated.

dr.everett

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Re: Trying to make sense of Foliofn discounts/markups
« Reply #1 on: March 27, 2017, 11:49:54 AM »
I'll speak up on this as someone from the Automation crowd- I use Lending Robot to handle my sales. (If you'd like to use it I'll give you a referral code for an extra 5K managed for free.)

The short answer to your question is there are a lot of dependencies attached to how you sell a note and for what discount. I currently only sell my 31-120 notes, and I use LR to sell them at a range of discounts. That discount changes over a 5 day period, moving from a lesser discount to a higher discount at the end, the goal being the note sells at the lower end of the discount, for less loss.

Selling on Folio is generally a buyers market- you will likely lose some money in the fee (1%), or in the discount. Occasionally you will sell for a markup.

I would suggest starting at a 5% markdown, and work from there. Knowing that you are selling distressed notes don't be surprised when you have to go a larger discount- potentially up to 90%.

Hope that helps.

InvestorinCA

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Re: Trying to make sense of Foliofn discounts/markups
« Reply #2 on: March 27, 2017, 01:49:27 PM »
I'll speak up on this as someone from the Automation crowd- I use Lending Robot to handle my sales. (If you'd like to use it I'll give you a referral code for an extra 5K managed for free.)

The short answer to your question is there are a lot of dependencies attached to how you sell a note and for what discount. I currently only sell my 31-120 notes, and I use LR to sell them at a range of discounts. That discount changes over a 5 day period, moving from a lesser discount to a higher discount at the end, the goal being the note sells at the lower end of the discount, for less loss.

Selling on Folio is generally a buyers market- you will likely lose some money in the fee (1%), or in the discount. Occasionally you will sell for a markup.

I would suggest starting at a 5% markdown, and work from there. Knowing that you are selling distressed notes don't be surprised when you have to go a larger discount- potentially up to 90%.

Hope that helps.

It does, thank you. I also found that NSR Invest (which is what I use) added a selling automation tool that also offers a sliding scale like what you are using so I will try that.

I finally found a reputable source for the amount of loans that are charged off based on how late they are: https://www.lendingclub.com/info/demand-and-credit-profile.action. I'll use your advise and start at a 5% discount. But it seems like, if I'm reading this right, any discount less than 26% for those in grace period, or less than 59% will get me ahead.

Looks like charge-offs have really gotten worse over the last few years. No worries, as long as LC doesn't quit altogether I'm in this for the long haul and looking for better days ahead.

AnilG

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Re: Trying to make sense of Foliofn discounts/markups
« Reply #3 on: March 27, 2017, 04:27:40 PM »
Some of my blog posts about Folio that might interest you:

Selling Delinquent Notes on Lending Club Folio Secondary Market, Part 1: Loss Aversion https://www.peercube.com/blog/post/selling-delinquent-notes-on-lending-club-folio-secondary-market-part-1-loss-aversion
Trading Delinquent Notes, Part 2: Needle in the Haystack https://www.peercube.com/blog/post/trading-delinquent-notes-part-2-needle-in-the-haystack

Lending Club Secondary Market: Loan Vintage and Loan Status at Listing https://www.peercube.com/blog/post/lending-club-secondary-market-loan-vintage-and-loan-status-at-listing
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