Lend Academy Network Forum

Lending Club Discussion => Investors - LC => Topic started by: Fred93 on December 27, 2014, 07:54:50 PM

Title: LC - end of Quarter effect
Post by: Fred93 on December 27, 2014, 07:54:50 PM
Long time investors in LC have noticed that the supply of loans moves between abundance and scarcity.  At the end of September loans were very scarce, so I did some analysis from historical data.  The history file had become quarterly by that time, so the most recent data I could look at stopped 6/30/2014.

(https://forum.lendacademy.com/proxy.php?request=http%3A%2F%2Ffred93.com%2Ffbi%2Flc-loans-per-day-2014-12-26.png&hash=19990bfd757b29f49678991d9ea6a050)

Son of a gun.  On this chart, each dot represents the number of loans issued on a particular day.  There is a big weekly effect because no loans are issued on Saturday and Sunday.  To help visually ignore that, I added the red line, a 7-day moving average.   Looking at the red line, you can clearly see a month-end effect, and you can see that it was really a big deal in June!  June was heavily front-loaded, and then tapered off to almost nothing during the last week.  This doesn't look like a natural ebb-and-flow.  It looks sorta like an intentional clampdown.

I knew, simply because I had been in the market, that things bounced back in the beginning of July.  I also knew that the end of September saw a similar slowdown, which seemed to me to be even more severe, but I didn't have the data yet, so I anxiously awaited the history file update which would contain data thru September. 

Well, as we all know, when the September files arrived, they had been censored.  LC had removed all the day-of-month information.  That seemed to put an end to this sort of analysis, and I moved on to other things.  When December rolled around, investors were faced with another big dip in availability of loans, so I started to think about this again.  I asked LC about it, and they told me "Its a seasonally weak time of year."  Hmm.  Back to the history files, I realized that while with the new censored history file I can't visualize things like those last two weeks in June, I might be able to see something.  Here's a plot of loan volume by month.  Look at the gray curve first.  Its all the loans, independent of the market to which they are allocated.

(https://forum.lendacademy.com/proxy.php?request=http%3A%2F%2Ffred93.com%2Ffbi%2Flc-frac-vs-whole-markets+2014-12-27.png&hash=c724ea84106119c88eefd87786883c23)

The first thing we notice is that the gray curve has climbed steadily (very steady and smooth) for several years.  April and May are above trend, and then June (which we know had that last week almost shut down) is below trend.  Ok.  Not a big deal.  But then look what happens during the next three months!  July is huge at $433M.  August pulls back, and then September is way way down, as I had previously noticed.  These aren't natural variations in supply.  You can see three years of history in this chart, and such instability simply has never occurred before.  Interesting.

Those of you in the market know that the same thing happened in December 2014.  I don't know why this occurs, but like all humans, I can speculate.   June, September, December.  Those are end-of-quarter months.   The once smooth-as-glass curve now has giant quarterly gyrations.  Could it be that someone is trying to make the numbers come out nice and smooth for quarterly reports?   Why would they need to do this?  Didn't need to do it in prior years.

Lets look at quarterly loan volume...

(https://forum.lendacademy.com/proxy.php?request=http%3A%2F%2Ffred93.com%2Ffbi%2Flc-quarterly-volume-2014-12-27.png&hash=e8ab0c2f4a9c9d255d6d22fc269d6543)

Son of a gun.  In spite of the vicious gyrations, quarterly numbers come out smooth as can be.  Based on this, I can refine my speculation.  Perhaps early in the quarter they make investments, increase staff, initiate new sourcing projects, without a careful throttle on volume.  The goal of such an undertaking would be to learn what a particular marketing technique (joint ventures, advertising, etc) can do.  They do this knowing that they can always reel things in later in the quarter.

All speculation.  Its a story that fits the available data.  Its my theory and I'm stickin' to it. 

What does this mean for investors?  Presuming recent behavior continues, I think we should expect that loans will be abundant at the beginning of each quarter and scarce at the end of the quarter.  Maybe we just have to get used to it.

[soapbox on]
Now there's probably somebody at LC sayin' "Get a life!  Don't these people have better things to do?"  Well, I'll tell you why we care.  We're out here trying to invest, and suddenly we can't.  And... we don't know why.  We ask, and we get wallpaper  "Seasonally slow period" answers.  I'm a big fan of transparency.  This experience has been an example of LC's recent nontransparency.  Seems to me that some new management at LC must fear transparency.  As a result we recently see fields deleted from data, dates censored, and not-entirely-helpful answers to simple questions.  A great company like LC has nothing to fear from transparency.  I suggest you embrace it, as you did in your youth.  Its one of the things that made you special.  More difficult for a larger company of course, but should still be your guide.
[soapbox off]

Whew.  Ok, is there anything else we can observe in that data?  Yes.  Lets look at that monthly chart again, this time looking at the colored curves.

Until about 10/2013, the whole-loan market was small, and did not impact the size of the fractional loan market.  After that, the whole-loan market was allowed to grow so much that it compromised the fractional-loan market.  The size (not just the fraction, but the $ size) of the fractional market has fallen during all of 2014.  (not counting gyrations).  Fractional market investors of course fear crowding-out, and are always wondering to what degree this is occurring, and when the end will come.   Probably all overblown fears.  I for one have no idea what the correct relative sizing of these two markets should be, so if fractional is gonna be 1/3 maybe that's ok.

(https://forum.lendacademy.com/proxy.php?request=http%3A%2F%2Ffred93.com%2Ffbi%2Flc-frac-vs-whole-markets+2014-12-27.png&hash=c724ea84106119c88eefd87786883c23)

But look what happened during the forced slowdown in June 2014.  That came all out of the fractional market.  The whole-loan market was allowed to grow unhampered.  (ie blue curve down, while orange curve up)   In contrast, look at what happened in September 2014.  In this slowdown, the pain was shared.  Perhaps they corrected the earlier error.  That would be a good thing.  Of course many things are happening at once.  Institutional investors come and go, and try to invest in big lumps, so there's a lot we don't know. 

Will be interesting to see the numbers for December 2014.  This time the slowdown started earlier, around Thanksgiving, and also eased up earlier, just before Christmas.  I'm predicting January will be huge.
Title: LC - end of Quarter effect
Post by: BruiserB on December 27, 2014, 09:20:13 PM
I have tons of "not yet issued" loans now.....I expect a flood of issuances on Jan 2nd. I can appreciate them trying to manage their business, but this is getting ridiculous. It causes losses for us investors as our funds are tied up and it has to frustrate borrowers who are expecting their loans to issue.

LC may hide issuance dates now, but you can look at your own account history and see a dearth of issuances at the end of each quarter and a flood in the first few days of the next.


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Title: Re: LC - end of Quarter effect
Post by: Thatguybil on December 27, 2014, 11:53:11 PM
Thanks Fred!
Title: Re: LC - end of Quarter effect
Post by: gottodo1 on December 28, 2014, 02:11:38 AM
Fred they are the 10th largest bank in the U.S.A they don't need to be transparent anymore. Awesome post though!
Title: Re: LC - end of Quarter effect
Post by: Lovinglifestyle on December 28, 2014, 11:23:46 AM
Love your explanations and graphs.  Very understandable!  Hope you do an update with this quarter's information when it comes.  Thanks!
Title: LC - end of Quarter effect
Post by: BBingo on December 28, 2014, 12:07:15 PM
Great analysis Fred! An excellent set of visualization as well.


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Title: Re: LC - end of Quarter effect
Post by: bobeubanks on December 28, 2014, 01:16:00 PM
Fred they are the 10th largest bank in the U.S.A they don't need to be transparent anymore. Awesome post though!

LC's business model is different from other banks. With traditional banks, there would be no particular reason for stock investors to want much more transparency. But LC has stock investors and loan investors. LC may well find that transparency to the loan investors is indeed important to their business.
Title: Re: LC - end of Quarter effect
Post by: Fred93 on December 28, 2014, 04:57:23 PM
I have tons of "not yet issued" loans now.....I expect a flood of issuances on Jan 2nd. ... this is getting ridiculous. It causes losses for us investors as our funds are tied up and it has to frustrate borrowers who are expecting their loans to issue.

Same here.  I agree, frustrating and inconveniencing your customers is bad business policy.  Part of the value a business provides to its customers is consistency.

Imagine if you called your stock broker to buy some stock, and he said "Sorry, you have to wait 2 weeks so we can book this commission next quarter." ... or worse if he didn't tell you, but just delayed the transaction two weeks.   Imagine driving up to a gas station to fill your tank and being told "There's a two week waiting list at the end of this quarter, so we can smooth our earnings." 
Title: LC - end of Quarter effect
Post by: BruiserB on December 28, 2014, 06:05:34 PM
As much as I generally hate class action lawsuits and the lawyers who pursue them, this seems like Lending Club is just opening themselves up for future legal action.  As investors we give our money to Lending Club with the understanding that they will deploy it in a timely manner.  I am hoping they were doing this to get through the IPO period and to maybe insure a great 1st quarter as a publicly traded company, but I hope they wean themselves off of this. I don't really see the benefit anyway....at their current growth rate, it seems like they would still show excellent Q to Q growth even if they just let the business flow where it naturally would.


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Title: Re: LC - end of Quarter effect
Post by: Thatguybil on December 28, 2014, 11:15:16 PM
As much as I generally hate class action lawsuits and the lawyers who pursue them, this seems like Lending Club is just opening themselves up for future legal action.  As investors we give our money to Lending Club with the understanding that they will deploy it in a timely manner.  I am hoping they were doing this to get through the IPO period and to maybe insure a great 1st quarter as a publicly traded company, but I hope they wean themselves off of this. I don't really see the benefit anyway....at their current growth rate, it seems like they would still show excellent Q to Q growth even if they just let the business flow where it naturally would.


Sent from my iPhone using Tapatalk

Agreed. The time and energy spent on these book keeping add no value in the long run for anyone.
Lender, borrower or investor.
Title: Re: LC - end of Quarter effect
Post by: Randawl on December 28, 2014, 11:17:44 PM
Thank you for taking the time to put that together, Fred93!  I owe you a [<insert favorite beverage here>].



Title: Re: LC - end of Quarter effect
Post by: Fred93 on December 29, 2014, 01:20:35 AM
...seems like Lending Club is just opening themselves up for future legal action.  As investors we give our money to Lending Club with the understanding that they will deploy it in a timely manner.

IANAL, so don't take this as authoritative, but I disagree.   I don't see how this behavior would make them guilty of violating any law, regulation, or contract.  It certainly violates our notion of how they ought to behave, but that doesn't make it illegal. 

Quote
...at their current growth rate, it seems like they would still show excellent Q to Q growth even if they just let the business flow where it naturally would.

That would certainly be my preferred approach. 
Title: LC - end of Quarter effect
Post by: BBingo on December 29, 2014, 03:22:50 AM
I do wonder whether, laid out in such plain terms, share holders of LC would take issue with the practice, or the SEC for that matter. I don't claim to be at all versed in what kinds of creative bookkeeping and business practices are/are not kosher, but that seems to be not only inconsiderate of the lenders, but also a blatant attempt to manipulate numbers, which if construed as an attempt to artificially buoy stock prices...


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Title: Re: LC - end of Quarter effect
Post by: rawraw on December 29, 2014, 05:49:40 AM
Fred they are the 10th largest bank in the U.S.A they don't need to be transparent anymore. Awesome post though!
I don't know by which metric you are using, but I doubt that ha ha.
Title: Re: LC - end of Quarter effect
Post by: thezfunk on December 29, 2014, 11:16:06 AM
Fred they are the 10th largest bank in the U.S.A they don't need to be transparent anymore. Awesome post though!
I don't know by which metric you are using, but I doubt that ha ha.

Stock valuation?
Title: Re: LC - end of Quarter effect
Post by: rawraw on December 29, 2014, 04:15:58 PM
Fred they are the 10th largest bank in the U.S.A they don't need to be transparent anymore. Awesome post though!
I don't know by which metric you are using, but I doubt that ha ha.

Stock valuation?
There are like 4,000 banks in the USA -- very few of which are publicly traded. LC is more like a mortgage broker than a bank.
Title: Re: LC - end of Quarter effect
Post by: hoggy1 on December 30, 2014, 11:13:53 AM
As much as I generally hate class action lawsuits and the lawyers who pursue them ...

I'll guess that Bruiser and those who share this opinion have never been involved in a class action lawsuit? I spent almost 6 years as the only named plaintiff suing General Electric in a class action of 40,000 members for fraud, deceptive trade practices, breach of contract. It is a very long and interesting story so let me see if I can summarize.

Here is the normal bad wrap class action (CA) attorneys are subject to:
A) You only hear on the news about CAs won by the plaintiff (A court has to "Certify" a CA meet stiff requirement - you don't just roll up in front of a jury)
B) One class certification requirement is that redress is not possible by any other means (i.e. damages are too small for any individual plaintiff to seek relief on their own)
C) The poor defendant reluctantly agreed to settle for x million dollars without admitting any wrongdoing.
D) The plaintiff attorneys will receive y million dollars and the class member each receive a coupon to purchase more of the defendants products (scum suckers)

The facts of the matter are:
A) Most class members never knew and never would have known they had been ripped off had it not been for CA attorneys willing to take hard cases on contingency
B) If the case is lost, no one (public or class members) are ever likely to know the suit was brought (no one sends a thank you card with $5 to thank them for fighting the good fight)
C) No one has anything invested in the outcome except the attorneys (I had 5 attorneys at 3 law firms who invested $1.4million in billable hours over 5 years)
D) Class Certification is 4/5ths the hurdle - if the court certifies the action there is more than a little smoke with this fire ( I certified a national CA against GE in state district court)
E) All class actions over $5million are now removed to federal court and are no longer heard in state courts - http://www.bna.com/removal-under-the-class-action-fairness-act/

BOTTOM LINE - Class Action law is the only thing that keeps any business honest and even then there's loophole - the total amount must be material even though we already know individual class members claims must be small. So there is a simple formula for making large amounts of money unlawfully but for which the law provides no remedy: steal a very small amount of money from all your customers with as many different schemes as you can conjure and change the contract language every month. (All class members must have been subjected to exactly the same course of treatment)
Title: Re: LC - end of Quarter effect
Post by: BruiserB on January 02, 2015, 10:30:07 PM
I actually do appreciate the effect that class action suits have on keeping businesses honest.  I guess I was more lamenting the fact that they are even necessary....I would much prefer a business to just behave ethically to start with.  It is lamentable that most of the proceeds from a victorious case usually seem to end up going to the lawyers, but I do realize that it costs money for them to take it on to start with. 

I expected to see a bunch of "not yet issued" notes issue today, but I only had 2 issues.  I'm wondering if they now don't appear issued in our accounts until after WebBank gets their couple of days of interest and then the note is transferred to me?   So maybe the avalanche of issues will begin Tuesday or Wednesday of next week?
Title: Re: LC - end of Quarter effect
Post by: Silverstorm on January 03, 2015, 12:09:19 AM
I expected to see a bunch of "not yet issued" notes issue today, but I only had 2 issues.  I'm wondering if they now don't appear issued in our accounts until after WebBank gets their couple of days of interest and then the note is transferred to me?   So maybe the avalanche of issues will begin Tuesday or Wednesday of next week?

After reading this thread, I expected the same, but didn't have anything issue.  I'm quite new, so I haven't seen the previous quarter boundaries.  Several of my notes show less than a day left, so will those expire and return my investment?  Will they issue anyway, even though the "time left" on the Order History page shows only a few hours remaining?
Title: Re: LC - end of Quarter effect
Post by: rawraw on January 03, 2015, 05:45:56 AM
As much as I generally hate class action lawsuits and the lawyers who pursue them ...

I'll guess that Bruiser and those who share this opinion have never been involved in a class action lawsuit? I spent almost 6 years as the only named plaintiff suing General Electric in a class action of 40,000 members for fraud, deceptive trade practices, breach of contract. It is a very long and interesting story so let me see if I can summarize.

Here is the normal bad wrap class action (CA) attorneys are subject to:
A) You only hear on the news about CAs won by the plaintiff (A court has to "Certify" a CA meet stiff requirement - you don't just roll up in front of a jury)
B) One class certification requirement is that redress is not possible by any other means (i.e. damages are too small for any individual plaintiff to seek relief on their own)
C) The poor defendant reluctantly agreed to settle for x million dollars without admitting any wrongdoing.
D) The plaintiff attorneys will receive y million dollars and the class member each receive a coupon to purchase more of the defendants products (scum suckers)

The facts of the matter are:
A) Most class members never knew and never would have known they had been ripped off had it not been for CA attorneys willing to take hard cases on contingency
B) If the case is lost, no one (public or class members) are ever likely to know the suit was brought (no one sends a thank you card with $5 to thank them for fighting the good fight)
C) No one has anything invested in the outcome except the attorneys (I had 5 attorneys at 3 law firms who invested $1.4million in billable hours over 5 years)
D) Class Certification is 4/5ths the hurdle - if the court certifies the action there is more than a little smoke with this fire ( I certified a national CA against GE in state district court)
E) All class actions over $5million are now removed to federal court and are no longer heard in state courts - http://www.bna.com/removal-under-the-class-action-fairness-act/

BOTTOM LINE - Class Action law is the only thing that keeps any business honest and even then there's loophole - the total amount must be material even though we already know individual class members claims must be small. So there is a simple formula for making large amounts of money unlawfully but for which the law provides no remedy: steal a very small amount of money from all your customers with as many different schemes as you can conjure and change the contract language every month. (All class members must have been subjected to exactly the same course of treatment)
Well Core definitely knows who you are now lol
Title: Re: LC - end of Quarter effect
Post by: mchu168 on January 03, 2015, 08:53:43 AM
This is interesting data and confirms what we all have observed.  I think in a class action lawsuit some group of people has to harmed.  Managing growth and earnings in my opinion is good for the stock and doesn't harm the investors on the platform.
Title: Re: LC - end of Quarter effect
Post by: hoggy1 on January 03, 2015, 03:22:42 PM
Well Core definitely knows who you are now lol

Anyone know where Core is? Last post Dec 22. Must be off at the in-laws for the holidays with turkey and cookies but no internet connection.
Title: Re: LC - end of Quarter effect
Post by: BruiserB on January 06, 2015, 11:34:22 AM
Notes are finally starting to issue for this quarter!  I had almost 10% of my account value tied up in "not yet issued" notes through the Holidays.  I did make a deposit in December, so it's not all from re-investments.  Anyway, about 1/3 of what was tied up issued this morning.  I suppose there will be big days for the rest of the week.  I guess the notes don't reflect as issued to us until WebBank has earned their interest on the first two business days.  So they were probably really issued on Friday (first business day of year) and then transferred to us today.  WebBank earned 4 days of interest on our tied up money.  Most of this money was tied up for me since mid December earning nothing.  I don't know how anyone can say that we investors aren't suffering "losses" or "damages" because of the way Lending Club is doing business.  I don't want them to get sued, but I do want them to change their end of quarter practice and issue loans as quickly as possible.  And I want that both as a investor in notes and as a shareholder in the company.

Yes, Lending Club has a right to manage growth, but you don't manage growth by stockpiling orders at the end of one quarter to fill in the next quarter.  You manage growth by turning on or off advertising or by raising or lowering credit standards, etc.  But business should still flow in as it happens.  There is a difference between management and manipulation.
Title: Re: LC - end of Quarter effect
Post by: thezfunk on January 06, 2015, 11:55:04 AM
Notes are finally starting to issue for this quarter!  I had almost 10% of my account value tied up in "not yet issued" notes through the Holidays.  I did make a deposit in December, so it's not all from re-investments.  Anyway, about 1/3 of what was tied up issued this morning.  I suppose there will be big days for the rest of the week.  I guess the notes don't reflect as issued to us until WebBank has earned their interest on the first two business days.  So they were probably really issued on Friday (first business day of year) and then transferred to us today.  WebBank earned 4 days of interest on our tied up money.  Most of this money was tied up for me since mid December earning nothing.  I don't know how anyone can say that we investors aren't suffering "losses" or "damages" because of the way Lending Club is doing business.  I don't want them to get sued, but I do want them to change their end of quarter practice and issue loans as quickly as possible.  And I want that both as a investor in notes and as a shareholder in the company.

Yes, Lending Club has a right to manage growth, but you don't manage growth by stockpiling orders at the end of one quarter to fill in the next quarter.  You manage growth by turning on or off advertising or by raising or lowering credit standards, etc.  But business should still flow in as it happens.  There is a difference between management and manipulation.

Yeah, I don't see them able to keep these shenanigans going.  One of the LendIt videos I watched had one of the executives of one of the lending platforms opin about the future with mobile loans being requested and filled in minutes, on the go, to enable a big purchase.  How does that happen when Lending Club holds our money for weeks at a time before issuing.
Title: Re: LC - end of Quarter effect
Post by: mchu168 on January 06, 2015, 01:10:26 PM
Yes, Lending Club has a right to manage growth, but you don't manage growth by stockpiling orders at the end of one quarter to fill in the next quarter.  You manage growth by turning on or off advertising or by raising or lowering credit standards, etc.  But business should still flow in as it happens.  There is a difference between management and manipulation.

Every company "manipulates" bookings, shipments, etc to smooth out quarters.  I've seen this from inside public companies in sales and finance roles and as a fundamental stock analyst. The difference between management and manipulation is in name only.  I don't think any of this illegal by the way, rather this is what investors want.  As a company, investors do not want to see volatile earnings.  Unpredictable, volatile earnings are the surest way to get a low multiple for you stock.

Furthermore, the day LC is unable to smooth growth due to overwhelming demand for loans is the day I don't want to invest on the platform.  When loan supply outstrips demand for whatever reason (rising risk of recession, low return potential compared to other yielding assets etc), I'll likely be pulling money out anyways.  Plus, what kind of returns do you really expect to get on your cash for 4 days?  10yr is yielding less than 2% and they probably they have the money sitting in money market yielding almost nothing, so I don't think LC or Web Bank are profiting from your funds. 

This is really a non-issue and there's really no reason to make a big deal about it imho.  If you really hate to see dead money for a few days, just withdraw cash in the last week or the month or quarter. 
Title: Re: LC - end of Quarter effect
Post by: rawraw on January 06, 2015, 01:24:23 PM
Notes are finally starting to issue for this quarter!  I had almost 10% of my account value tied up in "not yet issued" notes through the Holidays.  I did make a deposit in December, so it's not all from re-investments.  Anyway, about 1/3 of what was tied up issued this morning.  I suppose there will be big days for the rest of the week.  I guess the notes don't reflect as issued to us until WebBank has earned their interest on the first two business days.  So they were probably really issued on Friday (first business day of year) and then transferred to us today.  WebBank earned 4 days of interest on our tied up money.  Most of this money was tied up for me since mid December earning nothing.  I don't know how anyone can say that we investors aren't suffering "losses" or "damages" because of the way Lending Club is doing business.  I don't want them to get sued, but I do want them to change their end of quarter practice and issue loans as quickly as possible.  And I want that both as a investor in notes and as a shareholder in the company.

Yes, Lending Club has a right to manage growth, but you don't manage growth by stockpiling orders at the end of one quarter to fill in the next quarter.  You manage growth by turning on or off advertising or by raising or lowering credit standards, etc.  But business should still flow in as it happens.  There is a difference between management and manipulation.

Yeah, I don't see them able to keep these shenanigans going.  One of the LendIt videos I watched had one of the executives of one of the lending platforms opin about the future with mobile loans being requested and filled in minutes, on the go, to enable a big purchase.  How does that happen when Lending Club holds our money for weeks at a time before issuing.
I've also been waiting for a P2P/credit card hybrid.  Where you can purchase like a credit card but it converts into installment note if there is investor demand.
Title: Re: LC - end of Quarter effect
Post by: Fred93 on January 06, 2015, 02:10:32 PM
Notes are finally starting to issue for this quarter!  I had almost 10% of my account value tied up in "not yet issued" notes through the Holidays. ...

 I don't want them to get sued, but I do want them to change their end of quarter practice and issue loans as quickly as possible.  And I want that both as a investor in notes and as a shareholder in the company.

Tell them so!
Title: Re: LC - end of Quarter effect
Post by: TonySaunders on January 06, 2015, 03:47:49 PM
Humans are wired to suspect conspiracy when things look strange. In reality these kinds of things are often just the hiccups of procedure and resources. For example: What if the same employees who process loans are required to spend a few days at the end of each quarter filing reports about the loans they processed? I just made that up, but suppose it's an unavoidable thing... like it's required by the SEC. I would expect disruption at the end of each quarter, because they get super busy with the extra demand on their time. The disruption would manifest in various unpredictable outcomes with no particular rhyme or reason, and it's not a conspiracy, just a quirk of procedure.

Or more likely for December, suppose 50% of LC employees take the holidays off? (Where I work, it's like 80%.) I wouldn't expect their loan processing to be on-the-ball in December, ever.
Title: Re: LC - end of Quarter effect
Post by: Fred93 on January 06, 2015, 04:57:04 PM
What if the same employees who process loans are required to spend a few days at the end of each quarter filing reports about the loans they processed? I just made that up, but suppose it's an unavoidable thing...

Doesn't fit the data.  Its more than a couple of days.  It has been a couple of weeks a few times, and in December was more like the whole month.


Quote
Or more likely for December, suppose 50% of LC employees take the holidays off? (Where I work, it's like 80%.) I wouldn't expect their loan processing to be on-the-ball in December, ever.

But it wasn't just December.  Was also June and September. 
Title: Re: LC - end of Quarter effect
Post by: TonySaunders on January 06, 2015, 05:59:28 PM
What if the same employees who process loans are required to spend a few days at the end of each quarter filing reports about the loans they processed? I just made that up, but suppose it's an unavoidable thing...

Doesn't fit the data.  Its more than a couple of days.  It has been a couple of weeks a few times, and in December was more like the whole month.


Quote
Or more likely for December, suppose 50% of LC employees take the holidays off? (Where I work, it's like 80%.) I wouldn't expect their loan processing to be on-the-ball in December, ever.

But it wasn't just December.  Was also June and September.

You are right that my incredibly arbitrary examples do not individually fit your very specific and concrete observations. I wasn't suggesting that my hypothetical musings were the actual explanations, just examples of the kind of procedural circumstance that can innocently lead to these kinds of outcomes. In reality, there's probably a combination of several things... so I would never expect to be able to deduce a single cause anyhow (neither should you).

EDIT: One thing I'm suggesting is that we shouldn't assume it's a conspiracy to bolster LC's business interests.
Title: Re: LC - end of Quarter effect
Post by: bobeubanks on January 06, 2015, 07:25:20 PM
EDIT: One thing I'm suggesting is that we shouldn't assume it's a conspiracy to bolster LC's business interests.

A business doing something to bolster their own interests should always be one of the usual suspects.
Title: LC - end of Quarter effect
Post by: BruiserB on January 06, 2015, 07:26:34 PM

EDIT: One thing I'm suggesting is that we shouldn't assume it's a conspiracy to bolster LC's business interests.

I'd be happy to entertain a different theory, but I do know that this sort of behavior would happen in the last couple days of a month when LC used to report their results monthly. As soon as they went to only reporting results quarterly, it began happening at the end of every third month....coincidentally the last month of each quarter. And it's getting worse each quarter. As mentioned it was almost all of December.  (Which I believe is also end of Fiscal Year)

And they aren't slowing down processing loans.  Applicants are still getting screened and those that don't meet requirements are getting kicked out.  The loans that stack up in "not yet issued" are all loans that will be approved.  They are just held to the next quarter for issuance.  If it was a lack of resources, then many of the loans would be rejected and the funds returned once the resources became available.

So what's a different possible theory to explain this?


Sent from my iPhone using Tapatalk
Title: Re: LC - end of Quarter effect
Post by: BruiserB on January 06, 2015, 07:36:05 PM
Notes are finally starting to issue for this quarter!  I had almost 10% of my account value tied up in "not yet issued" notes through the Holidays. ...

 I don't want them to get sued, but I do want them to change their end of quarter practice and issue loans as quickly as possible.  And I want that both as a investor in notes and as a shareholder in the company.

Tell them so!

I guess I should reply to this email I received at 9:15PM (California Time) on Sunday Night:


Quote
Subject: Plans for 2015

Hi "BruiserB",

I wanted to touch base and make sure your accounts with us are continuing to meet your expectations.  Do you have any specific plans (additions, withdrawals etc) for the accounts as we begin the new year?

-Xxxx


Xxxx Xxxxxxx | Investor Executive
Title: Re: LC - end of Quarter effect
Post by: rawraw on January 06, 2015, 07:40:04 PM
Man, I hope I am part of the 1% with those kind of emails one day :)
Title: Re: LC - end of Quarter effect
Post by: BruiserB on January 06, 2015, 08:21:13 PM
Man, I hope I am part of the 1% with those kind of emails one day :)

LOL....I was just as surprised to receive the note.  I feel like small potatoes compared to many here.
Title: Re: LC - end of Quarter effect
Post by: lascott on March 23, 2016, 10:57:06 AM
Can anyone tell we are at the end of a quarter again <grin>. I monitor my portfolio page ( https://www.lendingclub.com/account/portfolios.action ) almost daily and compare note counts and "Expected Monthly Payments" (EMP) to the previous days.  EMP has stalled (notes being issued) in the past couple days.
Title: Re: LC - end of Quarter effect
Post by: dompazz on March 23, 2016, 11:08:16 AM
I show 7 notes in the 9am drop this morning and about 20-40 per drop yesterday (last one had 99 though).  Down from the ~120 per drop of the past few weeks.  Ouch.
Title: Re: LC - end of Quarter effect
Post by: MarinBB on March 23, 2016, 01:30:47 PM
I'm seeing the same low count of new listings on the website along with some massive API latencies. This is unusual. The API used to take 100s of milliseconds to return around posting periods but now takes 2-5 seconds. Has anyone else observed the same slowness?

Title: Re: LC - end of Quarter effect
Post by: dompazz on March 23, 2016, 02:06:33 PM
I'm seeing the same low count of new listings on the website along with some massive API latencies. This is unusual. The API used to take 100s of milliseconds to return around posting periods but now takes 2-5 seconds. Has anyone else observed the same slowness?
I've seen long latencies with my 2 pulls today.  Not enough to say if it is a trend.
Title: Re: LC - end of Quarter effect
Post by: Fred93 on March 23, 2016, 03:25:58 PM
...along with some massive API latencies. This is unusual. The API used to take 100s of milliseconds to return around posting periods but now takes 2-5 seconds. Has anyone else observed the same slowness?

Yes, I've been seeing the same thing.  Its always been highly variable, but lately there have been some long ones in my log.  One was over 10 seconds recently to get the new loans at feeding time.  Glad its not just me.  Thanks for mentioning this.  As long as everybody's in the same boat, I'm happy.
Title: Re: LC - end of Quarter effect
Post by: MarinBB on March 23, 2016, 05:15:19 PM
Quote
One was over 10 seconds recently to get the new loans at feeding time.

Phew, glad i'm not the only one. I was mildly worried that I broke something.
Title: Re: LC - end of Quarter effect
Post by: Rob L on March 23, 2016, 05:54:35 PM
I've seen all of the above. End of the quarter and LC has met their quota; "managed growth".
Thus has it been for a while now.

I have noticed something new that perhaps others might be able to confirm or refute.
Until quite recently (January some time?) LC always merged newly released loans with previously released loans not yet fully funded.
The merged loans were released at feeding times.

It now appears LC includes only new loans in the feeding time releases.
All previously released loans are removed (presumably funded by sources other than retail investors).
Anyone else see same?
Title: Re: LC - end of Quarter effect
Post by: AnilG on March 23, 2016, 06:37:20 PM
It doesn't seem likely considering currently 500+ loans are available for funding and last release only had 25 new loans.

I've seen all of the above. End of the quarter and LC has met their quota; "managed growth".
Thus has it been for a while now.

I have noticed something new that perhaps others might be able to confirm or refute.
Until quite recently (January some time?) LC always merged newly released loans with previously released loans not yet fully funded.
The merged loans were released at feeding times.

It now appears LC includes only new loans in the feeding time releases.
All previously released loans are removed (presumably funded by sources other than retail investors).
Anyone else see same?
Title: Re: LC - end of Quarter effect
Post by: Rob L on March 23, 2016, 07:03:12 PM
It doesn't seem likely considering currently 500+ loans are available for funding and last release only had 25 new loans.

I looked at the last drop drop. 673 loans, all same listing_date 3-23-2016 14:00:0000.
I have not checked loan id's for uniqueness. I'm sure I must be doing something simple and wrong, but this is what I see.
Any ideas? TIA.

This just off the press: Took another look at the last drop.
Only 3 "new" fractional loans. All others were originated as "whole loans" first.
I never look at loans listed as whole loans first then moved to fractional. Figure if the pro's don't want them neither will I.
Title: Re: LC - end of Quarter effect
Post by: dompazz on March 23, 2016, 07:38:22 PM
It doesn't seem likely considering currently 500+ loans are available for funding and last release only had 25 new loans.

I looked at the last drop drop. 673 loans, all same listing_date 3-23-2016 14:00:0000.
I have not checked loan id's for uniqueness. I'm sure I must be doing something simple and wrong, but this is what I see.
Any ideas? TIA.
Are you specifying showAll=true on "https://api.lendingclub.com/api/investor/v1/loans/listing?"?  I have it set to false and only saw 21 new loans listed (took 18 flippin seconds too!).

Quote
23MAR16:17:00:22.458 - Read 21 from LC. showAll=false
23MAR16:17:00:22.458 - Through Getting Loans TOOK: 18.4509999752044

Just ran a pull with showAll=true and got 515 loans (in 1.7 seconds).  I see 45 distinct listing date values.

Code: [Select]
select count(distinct listing_date) from new_loans;

select listing_date,
          count(*)
   from new_loans
   group by listing_date
   order by listing_date;

Or as I have been told multiple times, "It's not me, it's you."   ;)
Title: Re: LC - end of Quarter effect
Post by: Rob L on March 23, 2016, 10:07:38 PM
I have not specified show all, so the default is false. The only notes I do see and should see are the new ones.
I long ago requested and have access to whole loans when they are released. They show up as expected.
No LC changes of late, my mistake. Or as MIss Emily Litella (Gilda) would have said; "Nevermind" ....
Title: Re: LC - end of Quarter effect
Post by: Booleans on March 24, 2016, 01:01:30 PM
My father just opened a Lending Club account and I've been running it with my automated investing code. Last week my filter was giving me around 20 loans each day. Now though I haven't managed to buy a single loan within the past two days.

It turns out changing my password messed up the task scheduler and my code wasn't running properly.
Title: Re: LC - end of Quarter effect
Post by: lascott on March 24, 2016, 02:45:40 PM
I was thinking that my Expected Monthly Payment (EMP) would go up along with the list of notes being "issued" BUT even tho I see notes being "issued" my EMP is really changing very modestly in the past few days.  I'm I wrong about "issued" notes supposedly jiving directly with EMP?!?  (Logically EMP does change (go down) with paid off notes as well. This is obvious when I see changes to my P2P-Picks portfolios).

Image: http://i.imgur.com/oNBmzxN.png
(https://forum.lendacademy.com/proxy.php?request=http%3A%2F%2Fi.imgur.com%2FoNBmzxN.png&hash=f995710b8e9e86379c2c5e52318c2c8a)

Via: https://www.lendingclub.com/account/getLenderActivity.action
Image: http://i.imgur.com/dMNBZVi.png
(https://forum.lendacademy.com/proxy.php?request=http%3A%2F%2Fi.imgur.com%2FdMNBZVi.png&hash=5b2a64e3311f27ece098d716806f0bd9)
Title: Re: LC - end of Quarter effect
Post by: lascott on March 25, 2016, 06:08:06 PM
Well this is quite a ski slope ;)

Image: http://i.imgur.com/DNZ49PG.png
(https://forum.lendacademy.com/proxy.php?request=http%3A%2F%2Fi.imgur.com%2FDNZ49PG.png&hash=c7216fd657874c5ab5495328c3cd0b1f)
Title: Re: LC - end of Quarter effect
Post by: Fred93 on March 25, 2016, 06:13:13 PM
It is the end of the quarter, and both LC and P are releasing significant #s of loans.  (rather than the usual slowdown)  This means that they are not ahead of plan, as they usually are at this time.  Hard to know whether they are at plan or behind.

Perhaps this quarter's numbers may show a bit slower growth than the recent past? 

Or perhaps the additional delay thru webbank these days has shifted the timing?
Title: Re: LC - end of Quarter effect
Post by: jheizer on March 25, 2016, 06:17:41 PM
And weirdly I've only bought into 2 loans in the last 5 days.  Cash is backing up.  Not sure why.  Haven't had time to dig into it really.
Title: Re: LC - end of Quarter effect
Post by: MarinBB on March 25, 2016, 09:43:57 PM
And weirdly I've only bought into 2 loans in the last 5 days.  Cash is backing up.  Not sure why.  Haven't had time to dig into it really.

Same story here. There was a massive release of ~736 listings at 6pm PT today and I bid on zero of them. Only 80 of them had a rate of over 10% which seems oddly imbalanced.