Author Topic: Institutional Investors Taking All The Good Loans!  (Read 12077 times)

rlv99

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Re: Institutional Investors Taking All The Good Loans!
« Reply #15 on: July 23, 2013, 12:32:05 PM »
You people need to think outside the box.  LC won't be the only player.  This marketplace is huge!  While LC has a nice headstart, there will be others, better funded with more marketing savvy. They won't waste their money sponsoring sailboat races.

Rawraw, count me in!








« Last Edit: July 23, 2013, 11:10:32 PM by rlv99 »

rawraw

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Re: Institutional Investors Taking All The Good Loans!
« Reply #16 on: July 24, 2013, 09:07:50 PM »
A 50% limit per investor won't be functionally any different than a 70% limit. Both policies still result in a loan being wiped out by 2 investors. Force more diversification onto investors by making a 10% limit. I think this would be substantial.
I agree and I don't understand why people got so excited over the Prosper limit.

Fred

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Re: Institutional Investors Taking All The Good Loans!
« Reply #17 on: July 25, 2013, 01:55:16 AM »
You people need to think outside the box.  LC won't be the only player.  This marketplace is huge!  While LC has a nice headstart, there will be others, better funded with more marketing savvy.

OK, let's say a big player has $100 million to do this. 

1. Would they use the money to start a new P2P operator getting 5% origination fees, and spend time & money on IT, Marketing, Legal, Management?  Last time I heard, LC was only operationally profitable, not quite bottom-line profitable.

2. Or, would they be better to simply invest the money in P2P loans getting 10% net return?


rlv99

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Re: Institutional Investors Taking All The Good Loans!
« Reply #18 on: July 25, 2013, 11:19:35 AM »
Or, would they be better to simply invest the money in P2P loans getting 10% net return?

Where there is money to be made, there is always someone who thinks he can do it better and make even more money than the first guy in the market, and, in the case of LC, I happened to think there are plenty of reasons to believe that somebody else could do it better!

Personal lending is probably the second oldest business, so there are plenty of potential competitors out there with sufficient knowledge and resources to  make the risk minimal and the reward huge, in my opinion.  These next few years will be interesting!





yojoakak

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Re: Institutional Investors Taking All The Good Loans!
« Reply #19 on: July 25, 2013, 12:47:24 PM »
1. Would they use the money to start a new P2P operator getting 5% origination fees, and spend time & money on IT, Marketing, Legal, Management?  Last time I heard, LC was only operationally profitable, not quite bottom-line profitable.

2. Or, would they be better to simply invest the money in P2P loans getting 10% net return?

5% a week vs 10% a year?

I'd probably go with 5% a week.

Fred

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Re: Institutional Investors Taking All The Good Loans!
« Reply #20 on: July 25, 2013, 07:22:56 PM »
5% a week vs 10% a year?

I'd probably go with 5% a week.

You might be confusing revenue vs. return here.

The 5% is revenue.  However, based on the recent financial statements, the expense side might be well over 5%, yielding negative returns.  Even after all these years (LC was incorporated in Delaware in October 2006) and $2+ billion in loan origination, LC is still negative net cash flow.

As an investor, I'd welcome more competition in P2P operator field.  However, if I had the money to start a new P2P operation, I would really think twice before committing to such an endeavor.

yojoakak

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Re: Institutional Investors Taking All The Good Loans!
« Reply #21 on: July 25, 2013, 11:19:14 PM »
5% a week vs 10% a year?

I'd probably go with 5% a week.

You might be confusing revenue vs. return here.

The 5% is revenue.  However, based on the recent financial statements, the expense side might be well over 5%, yielding negative returns.  Even after all these years (LC was incorporated in Delaware in October 2006) and $2+ billion in loan origination, LC is still negative net cash flow.

As an investor, I'd welcome more competition in P2P operator field.  However, if I had the money to start a new P2P operation, I would really think twice before committing to such an endeavor.

$50-60 million a year in Origination Fees alone and they still can't turn a profit?

What is this? Hollywood?

Fred

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Re: Institutional Investors Taking All The Good Loans!
« Reply #22 on: July 26, 2013, 01:00:01 AM »
$50-60 million a year in Origination Fees alone and they still can't turn a profit?
What is this? Hollywood?

Not quite $50-60 million a year, yet.

From LC Income Statement  -- for nine months ended December 31, 2012 (in 000's):

Total Net Revenue:         28,593
Total Operating Expenses: (32,831)
Net Loss:                  (4,238)


More than 60% of the expenses was for "Sales, marketing and customer service."

rlv99

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Re: Institutional Investors Taking All The Good Loans!
« Reply #23 on: July 26, 2013, 10:01:40 AM »
More than 60% of the expenses was for "Sales, marketing and customer service."

That's about the right percentage for a start-up.  However, bottom line takes a huge hit for choosing to operate in California.

SeattleSun

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Re: Institutional Investors Taking All The Good Loans!
« Reply #24 on: July 26, 2013, 01:47:19 PM »
However, bottom line takes a huge hit for choosing to operate in California.


It's the "sunshine tax" we don't have it here in the northwest.

415ab

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Re: Institutional Investors Taking All The Good Loans!
« Reply #25 on: July 27, 2013, 08:52:54 PM »
More than 60% of the expenses was for "Sales, marketing and customer service."

However, bottom line takes a huge hit for choosing to operate in California.
Based in San Francisco, with easy access to good IT staff and venture capital, that's not a bad place to be for a tech company these days,  Not sure if they also do their customer support from SF, too, but would imagine that would move out of state eventually as other San Francisco based financial companies have done.
« Last Edit: July 27, 2013, 08:59:52 PM by 415ab »

rawraw

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Re: Institutional Investors Taking All The Good Loans!
« Reply #26 on: July 28, 2013, 08:33:24 AM »
Alright guys, we have had 31 people reply so far. 

31 people represent a volume of $1,486,743 in LC accounts.

21 people indicated a desire for some sort of group, representing  $1,156,046 in LC accounts.

The mean portfolio size of everyone is $47,959.45.  The median portfolio size is $20,000.

The mean portfolio of people wanting to group up is $55,050. 

The mean portfolio of those not wanting to group up is $33,070.

rlv99

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Re: Institutional Investors Taking All The Good Loans!
« Reply #27 on: July 28, 2013, 09:02:01 AM »
that's not a bad place to be for a tech company these days,

LC is not a tech company.  They are more akin to a bank.  Every bank, big and small, in the U.S.A. has an online platform which is, in most cases, more complex than LC's.  IT talent can be found almost everywhere without paying a premium for their services as is the case in San Francisco.  VC's will go anywhere to fund a good idea.  The sooner they move out, the better for their bottom line, in my opinion, however, that doesn't appear to be in their plans anytime soon.

rev

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Re: Institutional Investors Taking All The Good Loans!
« Reply #28 on: July 28, 2013, 10:08:41 AM »
Yes, they should move to Nebraska, which will increase their bottom line, so when they retire they can comfortably move to California and enjoy the good weather!

Most banks in the US outsource their IT. WebBank does the whole banking stuff for them (compliance, licensing, securitization etc.),  and LC is a tech company in essence, with some folks doing analytics and underwriting for sure, but the tech platform is their most valuable asset.

Imho