Lend Academy Network Forum

Lending Club Discussion => Investors - LC => Topic started by: DLIFVOIP on June 14, 2016, 01:23:16 PM

Title: WT*????????????????????
Post by: DLIFVOIP on June 14, 2016, 01:23:16 PM
So Lending Club makes this big push to try and reassure the retail investor after the recent debacle.  Asks for our feedback, offers a deposit bonus, etc, etc.

Looks like they took all of our responses to heart and their reply speaks volumes.  Or should I say lack of volume.  It has been over a week since there has been a meaningful amount of new loans available that are not absolute junk.  I know I know what I call junk you may call gold, but I currently hold 25k+ loans, so I doubt seriously that my filters are so tight I am missing out on loans I would be interested in.

Ok, seriously your reward to the retail investor is making almost 0 loans available? 

I hope the recent dry up in loans is due to the change in rates and new loans are about to flood the market with the new rates, if not, what next?

Unfortunately this position will take years to unwind as I am not willing to fire sale my inventory, but unless volume picks up, I am seriously looking elsewhere.

I believe the Direct Lending Fund is a good option and still doing my due diligence on the fund, but it looks very promising for those who meet the investor criteria.  I would be interested to hear what others are exploring as an alternative the LC and the stock market.



Title: Re: WT*????????????????????
Post by: Fred93 on June 14, 2016, 01:42:32 PM
Ok, seriously your reward to the retail investor is making almost 0 loans available? 

The way this business works, they adjust the quantity of loans they source (or in your words "make available") to the demand.  Demand is way down, so they are sourcing fewer loans.  Therefore you see fewer loans.

With fewer loans available, there are of course fewer that meet your criteria.

I remind you that you have the ability to invest more $ per loan.
Title: Re: WT*????????????????????
Post by: DLIFVOIP on June 14, 2016, 02:07:31 PM
Trust me I am way past the $25 per loan strategy.

So what exactly are those of us who are loyal investors and what to continue investing supposed to do?  I understand what you are saying about demand, but right now I am not encouraged to deposit more $ onto the site given the quantity of available loans. 

Again my solution to the problem is to put 100% of loans on the retail side first (we do not need 14 days, give us 2 days).  All unfunded amounts are offered to whole loan market as a whole loan and LC simply needs to internally track the retail and whole loan separately.

Example:

Borrower loan #1 - $10,000
Retail investors fund $2k in 2 days.  Remaining $8k is offered to whole loan market.  If whole loan market does not fund the loan, 100% of loan is cancelled.  If funded, loan #1 becomes loan #1retail and loan #1whole.  Borrower makes same one payment, Lending Club has to do a bit more work distributing the monthly payment.

This solution is a win win for everyone, retail investor gets more options, whole loan market gets more options.  Lending Club keeps everyone happy.

I am not arguing with you Fred, just saying those of us who want to continue to invest are getting hosed.  I really feel like the above solves a lot of problems and really does not require much more work.

Just venting my frustration.  LC has been a great investment for me for the last 6.5 years and I am starting to get the feeling that the ride is about to end.
Title: Re: WT*????????????????????
Post by: kiltym on June 14, 2016, 02:13:09 PM
Second.

Same boat, and very disappointed in what is going on this past week.

LC shouldn't try to entice us to invest more, when there is basically nothing to invest in.  And, they can't push us to invest in much larger amounts, as that defeats their entire marketing strategy to the "small" people like us.  Diversify, diversify, diversify....
Title: Re: WT*????????????????????
Post by: Fred93 on June 14, 2016, 02:31:05 PM
Just venting my frustration.  LC has been a great investment for me for the last 6.5 years and I am starting to the feeling the ride is about to end.

I'm quite frustrated too.  This is very painful to watch.  We're have to have patience to make it thru this tough period.  LC has been great for note investors, and it would be a shame really stupid if current events put and end to it.

I sent LC a note a few days ago with my views on some things he must do to regain investor confidence.  Told them to  COMMUNICATE a lot, frequently, instead of not at all, and announce layoffs immediately ie assure us that they aren't stuck in a fantasy that the high-growth past will magically return.  My basic pitch was that with a lack of communication, investor's fantasies about scary things get the best of them.  Told them that the decision to delay the shareholder's meeting was at last as bad for investor confidence as the May 9th events.  Suggested that while there may be good reasons for not having the official meeting, I believe they could have monthly investor conference calls where they tell us what is happening during this unusual period.  My contact tells me he forwarded my message to Sanborn, tho I'm sure he's been getting lots of advice he didn't ask for, and mine is no doubt one among hundreds.  I have no reason to suspect he has even read my note.
Title: Re: WT*????????????????????
Post by: Fred93 on June 14, 2016, 02:37:17 PM
LC shouldn't try to entice us to invest more, when there is basically nothing to invest in. 

It works the other way around.  Supply is adjusted to be lower because investor demand is low at the present time.  It was great when the flow of loans was large, and some of us could be picky and yet invest quickly.  That was nice.  It is more difficult now.  Just complaining that "they should post more loans" doesn't help.

Quote
And, they can't push us to invest in much larger amounts, as that defeats their entire marketing strategy to the "small" people like us.  Diversify, diversify, diversify....

Diversification is a good thing, but after you have a reasonable amount of diversification, more doesn't buy you much.

There are many investors who have >1000 loans, are still investing $25 each, and are complaining about supply of loans.   These people could invest more per loan.  Nobody needs 1000 loans worth of diversification.

If you have 100 loans, on the other hand, then I would not push you to increase $/loan.
Title: Re: WT*????????????????????
Post by: dompazz on June 14, 2016, 02:53:39 PM
Just venting my frustration.  LC has been a great investment for me for the last 6.5 years and I am starting to the feeling the ride is about to end.

I'm quite frustrated too.  This is very painful to watch.  We're have to have patience to make it thru this tough period.  LC has been great for note investors, and it would be a shame really stupid if current events put and end to it.

I sent LC a note a few days ago with my views on some things he must do to regain investor confidence.  Told them to  COMMUNICATE a lot, frequently, instead of not at all, and announce layoffs immediately ie assure us that they aren't stuck in a fantasy that the high-growth past will magically return.  My basic pitch was that with a lack of communication, investor's fantasies about scary things get the best of them.  Told them that the decision to delay the shareholder's meeting was at last as bad for investor confidence as the May 9th events.  Suggested that while there may be good reasons for not having the official meeting, I believe they could have monthly investor conference calls where they tell us what is happening during this unusual period.  My contact tells me he forwarded my message to Sanborn, tho I'm sure he's been getting lots of advice he didn't ask for, and mine is no doubt one among hundreds.  I have no reason to suspect he has even read my note.
I sent them a note Monday morning (after the no note weekend) along the same lines.  Your response shows the size of your account.  I got a canned response.  You big fish, me small minnow.  Hopefully the message gets through and they can start to restore confidence.
Title: WT*????????????????????
Post by: rawraw on June 14, 2016, 03:10:52 PM
I don't think LC will ever sell fractional whole loans. Retail loans and whole loans are completely different legal structures. I don't even think this is an option.

This reminds me of when I started on LC. It used to take 2 weeks just to have my loans finish funding. Talk about cash drag!

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Title: Re: WT*????????????????????
Post by: AnilG on June 14, 2016, 03:19:02 PM
Agree with you. Only for last 2 years, lenders were spoiled with large inventory, quick funding, and loan issuance.

Lending Club Loan Listings, Issuance, and Impact on Yield from Non-performing Period
https://www.peercube.com/blog/post/lending-club-loan-listings-issuance-and-impact-on-yield-from-non-performing-period

I don't think LC will ever sell fractional whole loans. Retail loans and whole loans are completely different legal structures. I don't even think this is an option.

This reminds me of when I started on LC. It used to take 2 weeks just to have my loans finish funding. Talk about cash drag!

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Title: Re: WT*????????????????????
Post by: Fred93 on June 14, 2016, 03:22:45 PM
I believe the Direct Lending Fund is a good option and still doing my due diligence on the fund, but it looks very promising for those who meet the investor criteria.  I would be interested to hear what others are exploring as an alternative the LC and the stock market.

Direct Lending's fund invests via small company originators, who don't publish data.  You have no idea what is going on under the covers. 

With these individualized "facilities", ie special deals with each originator with secret terms... what confidence do you have that he accounts for loan impairments?

I don't see any way to see into this thing.  No data from originators.  No data showing the risk profile of his investments.  No data on his deals with originators.  No data on how he records impairments. 

It is possible that everything is fine.  On the other hand, there could be significant problems in the portfolio, and you wouldn't know it until he was forced to take a writedown.
Title: Re: WT*????????????????????
Post by: Larry321 on June 14, 2016, 03:35:19 PM
I agree with you guys. For the last few days, there have been really crappy loans put out there.  I am letting cash sit there, uninvested because the loans I want, that used to be available daily, are not there at the moment.
Title: Re: WT*????????????????????
Post by: rubicon on June 14, 2016, 05:27:43 PM
I'm also looking at Direct Lending Income fund and am close to an investment there.
Title: Re: WT*????????????????????
Post by: jheizer on June 14, 2016, 05:43:04 PM
And here I was excited I bought 3 notes in the last 2 days.  Pretty darn good ones too IMO.  Two are renters, but with great everything else and they are 100% funded already.
Title: Re: WT*????????????????????
Post by: dompazz on June 14, 2016, 07:31:14 PM
And here I was excited I bought 3 notes in the last 2 days.  Pretty darn good ones too IMO.  Two are renters, but with great everything else and they are 100% funded already.
New rates or old rates?
Title: Re: WT*????????????????????
Post by: nmay2k on June 14, 2016, 07:33:15 PM
I think the tide is slowing turning. The secondary market (folio) was hard to compete with. Since June 2nd (~ the low) the folio average sales price mark-up has been steadily rising from 1.62% to 3.1% (so fewer people are liquidating their accounts). So until June 2nd the cash was probably mostly flowing into folio. Now the cash should probably flow to LC if only the loans were there to invest into. I had moved some cash to get some deals on folio but looks like that has dried-up. Not sure how much cash needs to sitting on the sidelines for LC to crank up the volume. But I think they will probably want to dump the loans no one wants first with those desperate to invest their cash quickly and save the good loans for later.
Title: Re: WT*????????????????????
Post by: jheizer on June 14, 2016, 07:49:22 PM
And here I was excited I bought 3 notes in the last 2 days.  Pretty darn good ones too IMO.  Two are renters, but with great everything else and they are 100% funded already.
New rates or old rates?

1 New C and 2 old rate Ds.  On the rate change day I blocked buying any high D/ any Es.  The new C rate one was https://www.lendingclub.com/browse/loanDetail.action?loan_id=82441119
Title: Re: WT*????????????????????
Post by: Lovinglifestyle on June 14, 2016, 08:10:19 PM
I bought that C one too.  It was the only one I bought today.
Title: Re: WT*????????????????????
Post by: rj2 on June 15, 2016, 01:53:36 AM
I recently made my 2016 IRA contribution. The $5500 went to Vanguard instead of LC because I have doubts whether I could find $5500 worth of notes to buy.

I'm sure that Sanborn isn't losing any sleep over my $5500 and maybe he doesn't even care about all our $5500's added up together. Maybe he only cares about being invited to golf with his new friends in the institutional world.
Title: Re: WT*????????????????????
Post by: jrr6415sun on June 15, 2016, 05:07:43 AM
I have $5k in cash built up because the last week has been 0 loans. My search doesn't even have that many requirements I just invest in D+ notes. I was considering doing the 2% bonus with a deposit, i'm glad I didn't.

I really don't understand why this is a good strategy for LC. What was the point of trying to get people to invest more and then blocking new loans? I get not wanting to flood the market but this is worse.
Title: Re: WT*????????????????????
Post by: Fred93 on June 15, 2016, 05:13:19 AM
What was the point of trying to get people to invest more and then blocking new loans? I get not wanting to flood the market but this is worse.

I don't see any evidence of LC "blocking new loans".  I think you are fantasizing.
Title: Re: WT*????????????????????
Post by: jrr6415sun on June 15, 2016, 11:28:19 PM

I don't see any evidence of LC "blocking new loans".  I think you are fantasizing.


where are the loans then? I'm not fantasizing that there are no D+ loans for the last week.
Title: Re: WT*????????????????????
Post by: Fred93 on June 15, 2016, 11:56:14 PM
I don't see any evidence of LC "blocking new loans".  I think you are fantasizing.
where are the loans then? I'm not fantasizing that there are no D+ loans for the last week.

Here's how it works.  LC has to pay to acquire borrowers.  There are several borrower acquisition channels, such as direct mail, brokers, bank partners, etc.  Because LC has to pay to get borrowers, they adjust how much of this they do to get the "right" number of borrowers, in other words enough borrowers to satisfy the demand they have from lenders.  If they rev up the sourcing too high, several bad things happen.  Borrowers are disappointed.  Money is wasted.  Finally, there are government regulations regarding some channels, such as direct mail.  LC is forced to fund some loans themselves if they were direct mail sourced and no buyer grabs them.  (Its a sort of an anti-bait-and-switch regulation.)

On May 9th, lender demand took a sudden dive.  In response, LC dropped the level of sourcing activity.  As a result of this adjustment, there are many fewer loans being posted, and you don't see the selection that you used to see.

My main point is that the reduced number of loans being posted is a result of the reduced demand by lenders.  That's the way it has to be.

We all hope demand will pick up over the next few weeks.  There are already some signs that retail demand is picking up a bit.  The number of loans posted is already up a bit from the trough.
Title: Re: WT*????????????????????
Post by: pclee37 on June 16, 2016, 12:49:01 AM
Below is the chart for the % of Fractional Loan assigned. Since 5/10 the % increase to 70%, record high since Feb 2016. Then from 6/7, % of Fractional dropped significantly to 10%, confirming some of other members saying loans assigned have dropped. Hope it is only temporary and they can manage the balance in the long run


Title: Re: WT*????????????????????
Post by: Rob L on June 16, 2016, 09:51:21 AM
Below is the chart for the % of Fractional Loan assigned. Since 5/10 the % increase to 70%, record high since Feb 2016. Then from 6/7, % of Fractional dropped significantly to 10%, confirming some of other members saying loans assigned have dropped. Hope it is only temporary and they can manage the balance in the long run

Very nice chart. Since you have the data available would it be easy to produce a stacked bar chart based on dollars w&f offered each day. That would be pretty informative too. TIA.
Title: Re: WT*????????????????????
Post by: pclee37 on June 17, 2016, 01:09:02 AM
Daily loan is too volatile. Instead, I put the Weekly number of new loans (Whole + Fractional)
Last week uptick is fishy and could be seasonal due to Direct Mail. I do see same trend up in last quarter too
Title: Re: WT*????????????????????
Post by: Fred93 on June 17, 2016, 01:32:57 AM
Last week uptick is fishy and could be seasonal due to Direct Mail. I do see same trend up in last quarter too

Traditionally, LC has cut way back in the last few weeks of each quarter.  My theory is that they have normally run a little hotter than plan during most of the quarter, and then put on the brakes in the last few weeks to end up right on plan.  This was easy to do before the scandal, because demand was strong, so they could just throttle supply and end up with whatever numbers they wanted.

2016Q1 was different.  They pumped at the end of the quarter.  This was our early sign that the quarter was below plan.  Instead of originations being up 15% or 16% from the prior quarter, they were only up 6%.  Q2 will certainly be a down quarter, so I would imagine that they would like to pump now.  Of course demand has softened, so this would be pushing on a string.

We're all watching the loan posting numbers to see if and when and how volume will return.  I agree that 1 up week is not enough to believe we see at trend.
Title: Re: WT*????????????????????
Post by: sommers on June 17, 2016, 07:13:09 AM
Trust me I am way past the $25 per loan strategy.

So what exactly are those of us who are loyal investors and what to continue investing supposed to do?  I understand what you are saying about demand, but right now I am not encouraged to deposit more $ onto the site given the quantity of available loans. 

Again my solution to the problem is to put 100% of loans on the retail side first (we do not need 14 days, give us 2 days).  All unfunded amounts are offered to whole loan market as a whole loan and LC simply needs to internally track the retail and whole loan separately.

Example:

Borrower loan #1 - $10,000
Retail investors fund $2k in 2 days.  Remaining $8k is offered to whole loan market.  If whole loan market does not fund the loan, 100% of loan is cancelled.  If funded, loan #1 becomes loan #1retail and loan #1whole.  Borrower makes same one payment, Lending Club has to do a bit more work distributing the monthly payment.

This solution is a win win for everyone, retail investor gets more options, whole loan market gets more options.  Lending Club keeps everyone happy.

I am not arguing with you Fred, just saying those of us who want to continue to invest are getting hosed.  I really feel like the above solves a lot of problems and really does not require much more work.

Just venting my frustration.  LC has been a great investment for me for the last 6.5 years and I am starting to get the feeling that the ride is about to end.
Buy my loans--I'm liquidating out of this turkey
Title: Re: WT*????????????????????
Post by: pplinvestor on June 18, 2016, 10:16:45 AM
can you discount more?  The amount of discount on available notes seems lower than what I was able to find 5 months ago.
Title: Re: WT*????????????????????
Post by: Larry321 on June 18, 2016, 04:22:24 PM
Some of you guys gave great explanations on why there are so few new good (D and higher risk) loans being offered.
Yesterday there were a couple of D rated loans I liked. The day before two F rated loans.  Today, all the loans are A and B rated.

If this continues, I will just let the payments build up and slowly shift over to Prosper.
My ANAR has been hovering at around 8.5% so I have been happy until now. 
Do any of you have a preference as to an alternative to Lending Club? 

Title: Re: WT*????????????????????
Post by: Fred93 on June 18, 2016, 04:43:21 PM
If this continues, I will just let the payments build up and slowly shift over to Prosper.
...
Do any of you have a preference as to an alternative to Lending Club?

I'm in both LC and Prosper.  I'm trying to build my investment at P, but I find it very difficult.  I get one or two loans that match my filter about every 2nd or 3rd day.  My P filter is much looser than my LC filter, but still is difficult.

If the recent low volume at LC is getting you down, then P is not a magic solution.
Title: Re: WT*????????????????????
Post by: fliphusker on June 18, 2016, 06:33:25 PM
Some of you guys gave great explanations on why there are so few new good (D and higher risk) loans being offered.
Yesterday there were a couple of D rated loans I liked. The day before two F rated loans.  Today, all the loans are A and B rated.

If this continues, I will just let the payments build up and slowly shift over to Prosper.
My ANAR has been hovering at around 8.5% so I have been happy until now. 
Do any of you have a preference as to an alternative to Lending Club?

One word, FOLIO
Title: Re: WT*????????????????????
Post by: Larry321 on June 20, 2016, 09:34:02 AM

One word, FOLIO
I just looked at FOLIO.  There are a few loans where the seller inveted several thousand dollars.  I have been investing $25 at a time.  A several thousand dollar investment into one loan goes way against the principle of spreading your risk around.

Any thoughts?
Title: Re: WT*????????????????????
Post by: rawraw on June 20, 2016, 12:14:38 PM
If this continues, I will just let the payments build up and slowly shift over to Prosper.
...
Do any of you have a preference as to an alternative to Lending Club?

I'm in both LC and Prosper.  I'm trying to build my investment at P, but I find it very difficult.  I get one or two loans that match my filter about every 2nd or 3rd day.  My P filter is much looser than my LC filter, but still is difficult.

If the recent low volume at LC is getting you down, then P is not a magic solution.
From what I've seen, Prosper is much less friendly to retail. The above seems to confirm it.

I haven't had to fund a loan on the primary market since this all started. I've been buying on Folio. Plenty of options for me, but I don't reach as far down the credit spectrum as some. And surely don't have a six+ digit portfolio like others.

There are surely short term annoyances for us. But what do you guys really want? LC to try to meet our needs, possibly overshoot, and add more risk to this business. I'd prefer to have my access to consumer credit for   years and if that means a slow couple months, so be it. I doubt many people will even remember this time period a few years from now.

 I'm a little worried what this forum is going to sound like next recession. If cash drag has people so upset I can only imagine what losses are going to do to our psyche



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Title: Re: WT*????????????????????
Post by: Fred93 on June 20, 2016, 12:14:48 PM
I just looked at FOLIO.  There are a few loans where the seller inveted several thousand dollars.  I have been investing $25 at a time.  A several thousand dollar investment into one loan goes way against the principle of spreading your risk around.

Any thoughts?

Not necessarily.  Depends on how much money you have in your account.

1000 notes x $25 each = $25,000 account
1000 notes x $5,000 each = $5,000,000 account
1000 notes x $20,000 each = $20,000,000 account
...


Title: Re: WT*????????????????????
Post by: Rob L on June 20, 2016, 07:54:09 PM
I'm a little worried what this forum is going to sound like next recession. If cash drag has people so upset I can only imagine what losses are going to do to our psyche

Maybe so but I've never looked at it that way. Always figured the economic cycle would do its thing and if I lost money to borrowers in bad times that was just fine. Gotta think most of us accept that. It's all this other garbage that has everyone all worked up.