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Messages - Tomp

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Is your primary source a Lending Club press release?

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Another reason would be years of data on this type of unsecured loans that lending club has. No other company in the world has this much data on this segment. That's why being the market leader gives you an advantage too. The more data you have, the better underwriting you have.

If LC has "hidden" (or obvious) value this could be it. In a world increasingly driven by big data, somebody out there may think they have the mother lode. LC may or may not have done a good job of underwriting using the data but somebody may think they could do very well with it. Could possibly be used for purposes other than unsecured lending; who knows? I haven't a clue how to place a value on it though.

One more thing, all it takes to know how much interest banks have in acquiring fin-tech companies in lending space, you can listen to some interviews with Ron Suber (industry legend/founder of prosper)

Ron Suber>Charles Ponzi   

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FWIW LC closed at an all time low today of $2.70 (-5.6%) on modest volume.
The low print of the day was $2.68, the high $2.93.
If there was any important news I missed it. Just the usual law firms soliciting shareholders with large losses to join a suit.
Sure wonder if Mr. Chen is a buyer here? IIRC his last average price was around $3.50. He started buying at $3.14 and stopped at $3.80.
Maybe we will find out Monday.

Xposting from the other thread:
My guess is that they are gonna report results within their guidance but probably at the lower end as cost of borrowing for investors has gone up and bank participation was already sharply lower last quarter partly because of that, and they hinted this could worsen as interest rates hike.
Additionally, according to PeerIQ marketplace securitization was 50% lower in q1 vs q4.
It also looks as if they are having competitive issues on the borrowing side as they have left the interest rates for borrowers unchanged for the most part.
Their CLUB certificates could potentially surprise us tho but the volume was so low in q4 that I don't expect a big origination bump there.
Their interest revenue is probably going to help push the revenue higher although with interest rates having risen so much since last quarter, there could be considerable markdowns (accounting rules).
Having said all of that, the stock is trading at a very attractive valuation right now when you look at their EBIDTA, revenue, and cash on hand so I'm heavily invested in them. I really hope they initiate a stock buyback but that could be unlikely as they are more and more tapping into their balance sheet to originate loans.
The FTC thing is nonsense and political and they will easily clear that but it's unfortunate that their brand is getting a hit from it, and there will be additional legal costs.
Their other legal issues related to the ouster of the CEO are behind them for the most parts.
I think there is a big possibility that they will sell themselves to a bank this year. They have a very strong and well connected board. It's unfortunate that their CEO lacks vision. They could have so much potential as a market leader but the best path forward might be to sell themselves at a good premium. I also hope they won't be subjected to a takeover as that could sharply reduce the premium.

LC outlook....I got the under....and cash of $502 at 12/31/2017 less $125 M for settlement less $2 M to Massachusetts for lending without license, less legal fees, less cash loss... let's say $300 left.

First Quarter 2018

Total Net Revenue in the range of $145 million to $155 million

Net Income (Loss) (3) in the range of $(25) million to $(20) million

Adjusted EBITDA(2)(3) in the range of $5 million to $10 million

Reconciling Items between net loss and non-GAAP adjusted EBITDA consisting of stock-based compensation of approximately $19 million, and depreciation and amortization and other net adjustments of approximately $11 million

In regard to your comment regarding LC's data and in and of itself makes them better underwriters....they kinda sorta suck at underwriting.

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You will recall that Goldman Sachs Marcus doesn't have an up front fee.  I wouldn't be surprised if GS lobbyists planted the idea with the FTC that LC's up front fee was "hidden".

That was my first thought. Mentioned it to my wife so she'll vouch. Just my suspicious mind.

Entirely possible....also possible that LC's "studies" which they touted in their response were likely due to connections of Larry Summers. So...alls fair, live by the sword/die by the sword. Hard to believe that this was "sudden" and Larry didn't know it was going done when he left the Board only 3 weeks ago. It is completely f*cked up that FTC currently only has 2 of the five directors positions filled and I guess one is leaving. Tough to deal with a gutted government, MAGA and whatnot.

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I've read the complaint.  I don't find it "damning" at all.  I find it typical bureaucratic regulatory hooha.

The primary issue is that FTC says that the loan application fee is "hidden".  In other words, LC isn't clear ENOUGH about it.  They do mention it several places, so it isn't completely hidden.  This is about whether it is obvious ENOUGH.

A few other issues thrown in...

Second issue is that FTC is claiming violation of privacy regulations, because LC didn't deliver the "privacy notice" to customers well enough.  FTC admits that you can click on something and read the privacy notice, but that isn't good enough because LC didn't stick it in the customer's face.  You know, I get these damn privacy notices now required by law from a zillion financial companies, and I've stopped reading them.  They do nothing to improve my privacy.  Therefore it is difficult for me to have sympathy with the FTC on this one.

Third issue is that LC has occasionally made accidental double withdrawals from some borrower's bank accounts.  We knew this, because we've heard people discuss this on this forum.  However, what is not clear is how often this has happened.  The FTC complaint doesn't say.  It says "numerous instances".  Well, that could mean that FTC received three or four complaints out of over 1.5 million loans.  We just don't know. 

Fourth issue is that FTC claims that LC's language is not clear enough about the status of the application as it proceeds, and some people thought their loan was approved when it was not yet approved, so were surprised later to find they didn't get the loan.  I know that some people were surprised, but I wonder if there is a specific regulation about how obvious or in-your-face the language needs to be.

In my prior experiences with regulators in general, and FTC in particular, I find many of their actions petty and idiotic.  In the past, in my opinion, the FTC has often undertaken massive campaigns that were extralegal, ie without statutory authority or regulatory process.  (In other words, there needs to be a law passed by congress, and regulations written and subject to public review, and printed in the Federal Register.  Often the FTC has acted without this authority.)   That said, they certainly do have clear legal authority on the privacy notice issue, although the issue that the customer had to click a link does make it seem somewhat petty.  The FTC has the authority to be petty.

You will recall that Goldman Sachs Marcus doesn't have an up front fee.  I wouldn't be surprised if GS lobbyists planted the idea with the FTC that LC's up front fee was "hidden".

However, regulators have a big stick, so LC is in some serious legal trouble here, which will distract management and probably result in the payment of a substantial fine.  In addition, regulators have a "kick 'em while they're down" mentality, so expect extra scrutiny to be applied on all regulatory interfaces for the next year or two.

Some of these issues are clearly a failure of LC's compliance function.  I believe a lot of internal functions have gone downhill since Renaud left.  I see it in other areas.  Why should compliance be any different.  They don't have people who are on their toes any more.

$25 to $2.92........all is well-my bad

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https://www.ftc.gov/system/files/documents/cases/lending_club_complaint.pdf

This is really damning....I'm in this space and this stuff is compliance 101. Institutional Investors have been calling LC out on it (noted in the complaint). Can't even fathom how egregious their actions were.

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Been saying these men are incompetent crooks since LC was at $25.....hmm why do think Larry just resigned from the Board.

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PAF filed for bankruptcy

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End of quarter dial adjustments?



Are the notes that aren't "new"-refis?

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Investors - LC / No Fin No Tech
« on: January 03, 2018, 10:31:04 AM »
How exactly is LC a fintech company? No chief tech officer and no chief credit officer.........or course no woman.

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Investors - LC / Re: Dear LC
« on: December 07, 2017, 09:39:22 AM »
Down 18% today. That's some rocking C-Suite you got there.

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Investors - LC / Re: Dear LC
« on: December 04, 2017, 05:53:34 PM »
They're back to advertising how it's virtually impossible to lose money again.

Of course the buried footnote says that doesn't include F or G notes. I guess since they just stopped offering those notes, they think it's ok to pretend previous losses to investors never happened. It's misleading at best but I think it's more securities fraud than anything else. Lending Club's management has been made up of just the worst kind of people.

Yes-it is likely a violation of SEC return advertising. Agreed-but its been an amazing short.  They need to accept any buyout offer now.

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Investors - LC / Re: Dear LC
« on: December 03, 2017, 08:36:26 PM »
No doubt 2015 and 2016 are bad vintages.

I guess what I do not understand is how low of a return is LC willing to advertise before something changes.  I am referring to the banner they post all over the place.  Attached.

It used to say 8-10, then 7-9, then 6-8, then 5-7 and now 4-6.  How low will they go, before they realize people are not willing to invest in this asset class for that return.

Indeed, it must be each time it goes down, the CIO (SID) gets a raise.  Also-I'd wager that giving away United Air miles to invest in securities registered with the SEC is not quite Kosher. Suck at credit, suck at marketing.

My question is... the banner says "solid" returns. Are they really that solid?

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Investors - LC / Re: Dear LC
« on: December 02, 2017, 08:23:00 AM »
For the 100th time. They need to FIRE the CIO. It's that simple. They need to fire the CEO. That's even simpler.

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Investors - LC / Re: LC Cash on Balance Sheet Down
« on: November 11, 2017, 04:21:50 PM »
You can't write off principal losses against interest income.  I don't know if they lost money but clearly returns were lower than expected.  I think lending club's management is very poor-always has been. That said-I actually bought stock at 4.30 -the board has to move and get rid of CEO, CFO and "new" President or someone else will do it for them.

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