Lend Academy Network Forum

Lending Club Discussion => Investors - LC => Topic started by: bkcarolina on October 07, 2018, 10:00:12 AM

Title: Is LC no longer interested in retail investors?
Post by: bkcarolina on October 07, 2018, 10:00:12 AM
About a year ago I quit putting more money in and now only manually reinvest what is avaialble--many days there are only 40-60 notes available. Is Lending Club just flat out not interested in individual investors anymore? I don't really follow the news, but that's the impression I am getting. Time to just start taking my cash out as it becomes available?
Title: Re: Is LC no longer interested in retail investors?
Post by: storm on October 07, 2018, 08:16:05 PM
From the latest available SEC filings, 7% of loan origination funding came from self-directed/retail investors and falling. (source:  https://www.lendacademy.com/roundup-of-q2-2018-earnings-greensky-ondeck-lendingclub/)  LC hasn't cared about the retail investor in a long time, IMHO.  CD rates are very close to outpacing my LC returns, and it just isn't worth my time hunting down new loans to invest my idle cash.  There was a time when I really liked the steady returns and security of this investment and told everyone I knew about it.  I wish I could find something similar where they gave a crap.
Title: Re: Is LC no longer interested in retail investors?
Post by: SLCPaladin on October 08, 2018, 01:11:05 AM
There was a time when I had $100k+ in LC and Prosper. Now I'm down to about $20k as I let things run off. I think there are other long-time investors that are still using their special sauce to try and juice returns. I just don't have the time or expertise to try and outperform. My best CDs these days are paying 3.63%. Hard to get excited about the return with LC and Prosper once you take into account the tax penalty. They have been slow to increase rates and I've been frustrated that LC's business model derives the bulk of their revenue on the loan origination. This means that they care less about the loan performance over time than the investors. Not sure what LC could do since they have competition from other sources, like Goldman Sachs's Marcus platform. Maybe their cost of funding and their acquisition cost are structurally too high now.
Title: Re: Is LC no longer interested in retail investors?
Post by: investny on October 15, 2018, 11:28:43 PM
I noticed that starting October 1 the number of LC loans that match my filters dropped by 80-90%. At first i thought that this happened because LC pulled most loans into end of September to hit their Q3 numbers. But its been 2 weeks and the volume did not pick up.
Title: Re: Is LC no longer interested in retail investors?
Post by: Reginald on October 19, 2018, 03:22:15 PM
I've noticed that over the past 6 months or so, my automatic investing (with filters!!) are finding fewer notes that qualify. I have tightened my own requirements since last year, following a sharp rise in charge-offs.

I dont know if that has anything to do with the question of retail vs commercial investors, but I do think that LC seems to give up the better quality notes super fast probably to commerical vendors or third party apps that are designed to cherry pick the loans automatically (as opposed to using their default 'automatic investing' algolrithm with 'filters').

In an attempt to find why so many loans were suddenly charging off, I started to use several diffenent filters, and then mark the qualifying loans by putting them into portfolios. While I seem to have made a dent in *new* (early) chargeoffs, I cant find very many loans that qualify, so I increased the amount to be invested in each note. Even with that I end up with extra dead money in my account.

As a retail investor, I think we are given the leftovers after commercial interests have picked over the better loans. I believe commercial players have more data, expertise and systems that can pick notes, so they have a distinct advantage.

The name of the geam in loan picking is to reduce risk and maximise return. If you believe the LC site data that would mean choosing more B loans (or higher grades). Its hard to find lower grade loans that arent going to charge off early.

I've been hit hard with chargeoffs. The effects of chargeoffs on overall earnings are so bad I am willing  to be very selective to get have to Positive Return (Interest-Chargeoffs/Principal+Recoveries). Its better to be out of the market in cash (or ub safter investments like govt insured CD's and Treasuries) than in a market where you are statistically likely to have losees year over year.



Title: Re: Is LC no longer interested in retail investors?
Post by: investny on October 30, 2018, 09:43:56 PM
I'm actually using 3rd party automated tool to pick loans.
The volume of notes that the tool is able to select decreased drastically on October 1 and still did not improve.

Not sure if overall volume of LC loans available to individual investors has decreased or my filters are too tight for current LC notes. Given that overall interest rates for safe investments (money market, 12-18 months CD) have increased from around 1.5% a year ago to close to 2.7+% right now, LC's interest rates have not kept up to justify additional risk.

Given above, LC definitely needs to come up with some sort of money market account of idle cash similar to what Peter described in today's article.

https://www.lendacademy.com/the-future-of-idle-cash-held-at-marketplace-lending-platforms/
Title: Re: Is LC no longer interested in retail investors?
Post by: .Ryan. on October 31, 2018, 10:57:47 AM
Look, retail investors are not a target market for LC, nor any other well established & funded P2P platform. We are a relic from days past in which they needed us to get their business off the ground.

On average, we invest small & take much more effort to support than the institutional investors. Supporting a few institutions that invest by the $100Ks or more will always be a better model than trying to cater to the thousands of us needy, whiny, less sophisticated (than institutional) investors.

As a percentage we are providing less of the overall LC funding, and I think we all see the trend towards neglecting the retail market. We're just not as necessary as we once were, and don't be surprised if we are eventually shut out.
Title: Re: Is LC no longer interested in retail investors?
Post by: MarinBB on November 08, 2018, 03:51:35 PM
The drop-off of loan availability on the fractional platform seems to be persisting well into November. Do you agree that fewer loans are now coming onto the platform than earlier in Q4? Has anyone asked LC about it?
Title: Re: Is LC no longer interested in retail investors?
Post by: lascott on November 08, 2018, 10:12:21 PM
The drop-off of loan availability on the fractional platform seems to be persisting well into November. Do you agree that fewer loans are now coming onto the platform than earlier in Q4? Has anyone asked LC about it?
20s, 30s, maybe 40s --
Peercube twitter feed https://twitter.com/search?q=Lending%20Club%20Available%20Loans%20Tracker&src=typed_query&f=live (https://twitter.com/search?q=Lending%20Club%20Available%20Loans%20Tracker&src=typed_query&f=live)
Title: Re: Is LC no longer interested in retail investors?
Post by: investny on November 08, 2018, 10:27:18 PM
New loans in October are 1/2 of September and about 1/3 of July August volume :(
Looks like November will be even less than October.
Is LC giving all of us a hint?
Title: Re: Is LC no longer interested in retail investors?
Post by: MarinBB on November 11, 2018, 06:10:23 PM
New loans in October are 1/2 of September and about 1/3 of July August volume :(
Looks like November will be even less than October.
Is LC giving all of us a hint?

Yeah, that looks brutal. I asked them what's going on. We'll see if anything comes back...
Title: Re: Is LC no longer interested in retail investors?
Post by: MarinBB on November 12, 2018, 01:55:14 PM
Yeah, that looks brutal. I asked them what's going on. We'll see if anything comes back...

I got the standard answer; i can't help but feel like they're winding down the fractional platform:

Quote
Thank you for reaching out to us.

Loan inventory varies over time due to internal and external factors. As a two-sided marketplace we are constantly monitoring loan inventory and working to match supply and demand between our investors and borrowers. Please note, we make new loans available four times a day at 6:00am, 10:00am, 2:00pm, and 6:00pm, PST. Please check during these times to see new availability.

I apologize for this inconvenience. Let me know if you have any additional questions."
Title: Re: Is LC no longer interested in retail investors?
Post by: Fred93 on November 13, 2018, 02:56:15 AM
I've been thru this cycle many times.  Here's how it works...

At LC, the allocation of loans between the whole-loan market and the fractional-loan market is done by "some guy" who rotates a big knob.  He adjusts this knob to try to balance (within his understanding) allocation of loans between the two markets.  Then 4 times per day, the computer processes a batch of loans and X% go to the whole loan market, and 100%-X% go to the fractional loan market.

About once a year or so a new guy takes over this job.  The new guy makes the same mistake every time.  He looks at how fast loans are bought up.  He says "wow, the whole loan market buys up the loans instantly, so they want more, whereas the fractional loan market leaves them sitting there, sometimes for days, so they want fewer."

The mistake this fellow is making is that the two markets operate differently.  The fractional loan market REQUIRES INVENTORY to function.  Investors need to be able to login to the web site and see a nice array of choices, so they can apply their investment criteria (whatever it may be) and find a few loans they can buy.  If the fractional loan investor  logs in and sees nothing, or crap, like the 52 loans presently in inventory, he'll go away disappointed, and that destroys the fractional loan business.

The solution is to educate the guy.  Retail investors need to complain that LC is presently operating the fractional loan market (ie the market on the web site) with INVENTORY LEVELS THAT ARE TOO LOW.

A reasonable inventory level which makes fractional loan investors able to do their thing is around 500 loans.

Please call or write LC and make this point.  The squeaky wheel gets the grease.  I guarantee you that the institutional investors aren't shy about squeaking when they need grease.

Don't just assume that because "some guy" at LC is doing something stupid that there's a big organized and informed corporate policy to screw you.  The world isn't that organized.

Title: Re: Is LC no longer interested in retail investors?
Post by: panther02912 on November 13, 2018, 05:44:56 PM
Who do we write or call?
Title: Re: Is LC no longer interested in retail investors?
Post by: investny on November 13, 2018, 05:58:55 PM
Who do we write or call?

investing@lendingclub.com
Title: Re: Is LC no longer interested in retail investors?
Post by: mschoenf on November 15, 2018, 09:34:37 PM
On a somewhat related note, last week, I got a Prosper offer via email for a 1% bonus (Like LC used to do sometimes) for adding new money and investing in notes over there ($2,500 min) so interesting that they might be trying to spur some retail interest on their platform.  Unlike what we're seeing with LC.
Title: Re: Is LC no longer interested in retail investors?
Post by: investny on November 28, 2018, 01:26:10 PM
I guess this is where all the loans are going to
https://www.lendacademy.com/lendingclub-reaches-1bn-in-club-certificate-issuance/
Title: Re: Is LC no longer interested in retail investors?
Post by: panther02912 on December 19, 2018, 02:56:48 PM
I emailed LC investing about low loan inventory in mid-November and got back a generic email about supply and demand.  Then, this week I got a phone call from another investor services rep to discuss loan supply. 

This rep told me that LC hasn't given up on retail investors, and that our feedback is used to make allocation decisions (as recently as yesterday in some sort of loan inventory meeting).  Inventory might increase from <100 loans like today to 100-200, but not to 500 loans like prior years.  I might want to start pulling back from my account, if I can't find enough loans to invest my cash.

On reflection: someone is listening at LC, but there's no reason to expect any major change.  Talking to them does help advocate for our interests.
Title: Re: Is LC no longer interested in retail investors?
Post by: investny on January 01, 2019, 10:26:15 PM
December retail volume was as low as November's.
Doubt anything will improve in 2019

https://www.peercube.com/histperf/available_loans/lc
Title: Re: Is LC no longer interested in retail investors?
Post by: bkcarolina on February 10, 2019, 05:56:47 AM
I just emailed this:

Hello

I've been a lending club individual investor for quite a few years now (since 2011) and even though my account is relatively small, worth about $22,000, I have appreciated using your platform and done fairly well, with over 8% ROI consistently.

About a year ago I wound down putting new cash into my account because I realized that you began shutting out retail investors in a major way.

I know well your routine platitudes about how the loans available depend on many factors and go up and down etc etc etc.  But let me state that I'm really sorry to see what was a good company providing a really useful service to average investors and borrowers in an equitable way sell out to the big finance boys. Really disappointing.

I continue to manually put my returns back into new loans, but expect I'll quit doing that someday soon as I'm finding it almost impossible, with your pitiful inventory, to find loans I want to invest in.
Title: Re: Is LC no longer interested in retail investors?
Post by: investny on March 18, 2019, 03:03:19 AM
Looks like the retail loan volume so far this year is just as low as Q4 of last year.
http://prntscr.com/mzbwx3

From https://www.peercube.com/histperf/available_loans/lc
Title: Re: Is LC no longer interested in retail investors?
Post by: AnilG on March 18, 2019, 04:04:18 AM
Look at the chart below the one, you posted, on PeerCube, you will know the reason. There is not enough demand, since Oct of last year, LC has been self-funding the shortfall in loan funding.

Looks like the retail loan volume so far this year is just as low as Q4 of last year.
http://prntscr.com/mzbwx3

From https://www.peercube.com/histperf/available_loans/lc
Title: Re: Is LC no longer interested in retail investors?
Post by: .Ryan. on March 18, 2019, 10:18:57 AM
Anil, what do you read into this? Is the capability for lender money not able to keep up with increased loan requests? Or is the lender $ pool decreasing in size? Any insight into retail vs. institutional lending trends?

Thanks Anil. Always appreciate your input.
Title: Re: Is LC no longer interested in retail investors?
Post by: investny on March 18, 2019, 02:56:30 PM
Anil,

Are your referring to this?
http://prntscr.com/mzmraa

August was fine. September was 1 off month either because LC did something or people decided to put money in stock market while it was at all time high.

Until October 1 i was able to fully reinvest all the interest and repayments that i was getting. I did not change my filters as i do not want to take additional risk. Since October i can barely pick up 2-3 notes a day. Right now i keep accumulating cash balance even though amount invested is smaller than before. Cash balance got to a point where im planning to move it off LC.
Title: Re: Is LC no longer interested in retail investors?
Post by: Fred93 on March 18, 2019, 03:38:50 PM
Look at the chart below the one, you posted, on PeerCube, you will know the reason. There is not enough demand, since Oct of last year, LC has been self-funding the shortfall in loan funding.

I don't accept this logic.  Volume is not a measure of "demand".  Both supply and demand affect volume.

LC is steering volume toward securitizations. 
Title: Re: Is LC no longer interested in retail investors?
Post by: jd on March 18, 2019, 06:57:34 PM
Quote
I don't accept this logic.  Volume is not a measure of "demand".  Both supply and demand affect volume.

LC is steering volume toward securitizations.

Good evening Fred,

I'm always impressed with your observations. Do you think your view of LC moving toward securitizations will be good, bad, or neutral toward those of us investing in notes.

Thanks
Title: Re: Is LC no longer interested in retail investors?
Post by: AnilG on March 19, 2019, 01:57:29 AM
My assessment is that a lot of loan listings were not being "fully" funded in institutional and retail platform that require SEC filing. Loans issued and transferred to banks and securitization are not part of these SEC filings. Each loan listing can cost as much as $300 in lead generation payments to likes of CreditKarma. LC doesn't receive origination fees, and also loses lead generation fee, unless loans are issued so LC had to step up and fill the unfunded remaining amount.The last big self-funding of about $3M happened in mid-Sept at almost end of quarter most probably to fund the "unfunded" portion and issue loans before the end of quarter. Since then, LC seems to have reduced the volume of new loan listings (downward trajectory of both volume and total amount curve) on platform to reduce the need for self-funding remaining "unfunded" portion as well as reducing lead generation cost.

My observation is loans are staying longer on the platform to be fully funded. One example was the borrower who came on LA forum and Scott did check on his loan time to time on funding status. It took quite a while for that loan to be fully funded. And we don't know how much of that was funded by LC itself. Borrowers are not going to wait forever for loan to be issued so LC has to sooner or later step in and fund the remaining amount. More loans are partially funded, more LC need to self-fund remaining unfunded portion and issue loans.

If you are lending fixed amount per loan, you will be impacted by fewer loans being listed on platform as there may not be enough loans for you to deploy your cash. Consider employing multiple strategies or increasing amount per loan of course your risk per loan increases.

Again, this is all conjecture and speculation on my part. I don't have any special knowledge of what is going on inside LC.

Anil,

Are your referring to this?
http://prntscr.com/mzmraa

August was fine. September was 1 off month either because LC did something or people decided to put money in stock market while it was at all time high.

Until October 1 i was able to fully reinvest all the interest and repayments that i was getting. I did not change my filters as i do not want to take additional risk. Since October i can barely pick up 2-3 notes a day. Right now i keep accumulating cash balance even though amount invested is smaller than before. Cash balance got to a point where im planning to move it off LC.
Title: Re: Is LC no longer interested in retail investors?
Post by: Fred93 on March 19, 2019, 02:54:40 AM
Do you think your view of LC moving toward securitizations will be good, bad, or neutral toward those of us investing in notes.

Definitely negative.  Means LC has less interest in us and our needs. 
Title: Re: Is LC no longer interested in retail investors?
Post by: AnilG on March 19, 2019, 03:53:32 AM
You didn't elaborate and explain your logic so I can't comment on it.

My logic is simple, if there was enough demand on platform, LC wouldn't need to self-fund the remaining portions of the loans. The loans will be funded by lenders quickly and disappear from platform without need for LC to contribute their funds to complete the loan funding and issue the loans. It all points to not enough demand from lenders on platform. Listing more loans on platform (increasing supply) will only increase the "unfunded" portion that LC need to either fund itself or not issue loans and eat the lead generation cost.

The loans for banks and securitization never show up on the platform. My understanding is that banks commit in advance the amount they will fund in a quarter/month and loan quality they want. LC then goes out and finds enough quantity of such loans for the banks. Most probably, securitization has similar "advance" information exchange with institutions where LC has the indication/knows the loan quality and maximum amount it can securitize then goes out and find such loans.

Look at the chart below the one, you posted, on PeerCube, you will know the reason. There is not enough demand, since Oct of last year, LC has been self-funding the shortfall in loan funding.

I don't accept this logic.  Volume is not a measure of "demand".  Both supply and demand affect volume.

LC is steering volume toward securitizations.
Title: Re: Is LC no longer interested in retail investors?
Post by: panther02912 on March 24, 2019, 02:20:16 PM
Fractional loan inventory has become terrible so I wanted to visualize the trend.  There is a gradual taper in fractional loan listing count (and percentage-of-total) through the end of 2018.  For example in December 2018, 4285 out of 40131 loans (11%) were fractional. 

I anecdotally observe that essentially zero good loans linger on the market recently.  Either bots are grabbing all of the best fractional loans more quickly or the fractional loan supply is even worse in 2019.  I'll recheck when the 2019Q1 dataset posts.
Title: Re: Is LC no longer interested in retail investors?
Post by: Rob L on March 24, 2019, 07:11:08 PM
Fractional loan inventory has become terrible so I wanted to visualize the trend.  There is a gradual taper in fractional loan listing count (and percentage-of-total) through the end of 2018.  For example in December 2018, 4285 out of 40131 loans (11%) were fractional. 

I anecdotally observe that essentially zero good loans linger on the market recently.  Either bots are grabbing all of the best fractional loans more quickly or the fractional loan supply is even worse in 2019.  I'll recheck when the 2019Q1 dataset posts.

Very nice. Thanks.