Poll

Scale of 1-10, how worried are you about LC future and your investment?

1-2 Investing as usual. Not worried one bit.
26 (44.1%)
3-4 Worried, so only investing on FOLIO.
8 (13.6%)
5-6 Paused all investing.  Not selling either, just a holding pattern.
21 (35.6%)
7-8 Stopped investing.  Put everything on FOLIO but will not sell and take losses.
4 (6.8%)
9-10 Big discounts on FOLIO so I do not lose it all.
0 (0%)

Total Members Voted: 58

Voting closed: August 14, 2016, 02:06:15 PM

Author Topic: How worried are you about LC future?  (Read 12915 times)

nonattender

  • Hero Member
  • *****
  • Posts: 726
  • I am not here.
    • View Profile
Re: How worried are you about LC future?
« Reply #15 on: May 17, 2016, 08:09:08 PM »
One, ditch the compromised or simply stupid board member(s) who haven't already or aren't now saying that priority #1 is protecting the retail investors and ordering their new chief executive officer to implement a bankruptcy remote vehicle to shield retail's interests in loans.

Two, wait for #1.  It's all deck-chair re-arranging until that directive comes down and is successfully carried out.  Figuring out how best to bribe institutional loan buyers to take more of your product isn't necessary (though nice to know that's your first thought!) if you fix retail.

Of course, this assumes that the board wants to fix the platform and wants to help retail investors, which is maybe a bit of a stretch now.

Like, a 10-20 stretch.  Chop, chop.  Get to voting.  I want to see a BRV by Tuesday.  You've got a week.  "All in favor of no jail-time? Aye!"

(says me, with all the authority vested in me by poetry)
A little nonsense now and then is relished by the wisest men.

michael49

  • Jr. Member
  • **
  • Posts: 52
    • View Profile
Re: How worried are you about LC future?
« Reply #16 on: May 17, 2016, 08:13:53 PM »
......
Update:
Lawyers are not only investigating; a class action suit has been filed though they are still trolling for claimants:
http://finance.yahoo.com/news/equity-alert-rosen-law-firm-222800444.html

This seems so ridiculously premature.

While it certainly seems that RL made some stupid and unethical decisions I don't see how the events of the past week changes the viability of LC and its potential continued success as a corporation.

nonattender

  • Hero Member
  • *****
  • Posts: 726
  • I am not here.
    • View Profile
Re: How worried are you about LC future?
« Reply #17 on: May 17, 2016, 08:16:50 PM »
While it certainly seems that RL made some stupid and unethical decisions I don't see how the events of the past week changes the viability of LC and its potential continued success as a corporation.

^^^ This.  This is why FULL STOP FOR RETAIL UNTIL BRV IN PLACE.
A little nonsense now and then is relished by the wisest men.

Ribald

  • Newbie
  • *
  • Posts: 13
    • View Profile
Re: How worried are you about LC future?
« Reply #18 on: May 17, 2016, 08:19:40 PM »
LC Access to Cash and other Funds

Cash and cash equivalents $583.842 million
Restricted cash $104.485 million
Secured Revolving Credit $120 million

Total Funds Available $1,094 million.
Loans Originated in Q1 $2,750 million.

This exercise assumes all expenses will be met by income and all cash can be used to fund new loans.

Total Internal Capacity to Originate Loans in next 3 months if originations were to stay same as previous quarter = 1,094/2,750 = 39.8%

Assuming 30% drop in new originations for next 3 months, loan originations = 2,750 x 0.70 = $1,925 million. Total Internal Capacity to Originate Loans in next 3 months = 1,094/1,925 = 56.8%

Assuming only 50% of new originations in next 3 months funded by external funds. Total internal funds required = 1,925 x 0.50 = 962.50 million. Total Internal Capacity to Originate Loans = 1,094/962.50 = 114%. It appears LC may be able to handle up to 50% drop in external funding and still manage loan originations next 3 months.

I am pretty sure large institutions are running what-if scenarios like this and doing all kind of financial modeling. Sharks are circling the blood. These institutions are going to demand very favorable terms to fund and buy LC loans. LC may not have more than a Quarter or two to get the ship upright.

What would be the point of LC spending all its cash internally originating loans since that's clearly not a sustainable model that's going to appeal to anyone?  Focus on restoring external originations and cutting expenses.

Rob L

  • Hero Member
  • *****
  • Posts: 2137
    • View Profile
Re: How worried are you about LC future?
« Reply #19 on: May 17, 2016, 09:46:34 PM »
When the stock stops dropping double digits a day and volume traded drops to semi-normal I dare say most will think the bleeding has paused. It's certainly in LC's interests for this to happen sooner rather than later. That's pretty important. Makes me wonder if LC might be using some of it's stock buyback cash to attempt to put a floor in. On the other hand they may chose to preserve the cash because they need all of it for the business. I'd guess they'll probably let the market do what it does and use the cash for the business.

Boatguy

  • Jr. Member
  • **
  • Posts: 77
    • View Profile
    • Email
Re: How worried are you about LC future?
« Reply #20 on: May 17, 2016, 11:48:30 PM »
The stock is not an indication of our position.  Retail stock traders usually over react and this is no exception.  These are not so smart guys who "buy high, sell low"!

Warren Buffet was buying like crazy in 2009 when everyone else was dumping.  He's the guy who says "when everyone is greedy, be afraid, when everyone is afraid, be greedy"!

twigster

  • Jr. Member
  • **
  • Posts: 95
    • View Profile
    • Email
Re: How worried are you about LC future?
« Reply #21 on: May 18, 2016, 06:15:15 AM »
Quote
While it certainly seems that RL made some stupid and unethical decisions I don't see how the events of the past week changes the viability of LC and its potential continued success as a corporation.
Part of the problem is I don't think the LC business model is very robust [even before all of the recent events], it relies on massive expansion of loan originations and doesn't seem to be very profitable with its current fee structure.

sommers

  • Jr. Member
  • **
  • Posts: 77
    • View Profile
    • Email
Re: How worried are you about LC future?
« Reply #22 on: May 18, 2016, 07:27:48 AM »
People shouldn't be worried in my opinion. after seeing several other posters saying that we will be screwed in a bankruptcy is silly. To prove it I simply looked at the 10-Q posted on the forum and  looked at the income statement and balance sheet. From five minutes looking at it there is $4.7B in notes paid to us, $583M cash and $104M in restricted cash, with no other major liabilities. Looking at the costs and tax, for the quarter equals $148M. So if LC goes bankrupt today, all the cash pays a years worth of expenses. I am confident that even with no cash we could likely get back at least 80-90% (guesstimate) of our investment back no problem.
Kind of blows a whole in one's ROI--doesn't it?  :)
Had I realized how fragile this business was---I would not have invested in it--and even if I get my money out---will never get in it again

Fred93

  • Hero Member
  • *****
  • Posts: 2252
    • View Profile
Re: How worried are you about LC future?
« Reply #23 on: May 18, 2016, 07:32:03 AM »
Part of the problem is I don't think the LC business model is very robust [even before all of the recent events], it relies on massive expansion of loan originations and doesn't seem to be very profitable with its current fee structure.

Judging how "profitable" a business can be is difficult when you haven't observed it in steady state.  If you look at revenue and expenses at LC, you are looking at the expenses needed to GROW BY ABOUT A FACTOR OF TWO EACH YEAR.  To grow that fast you have to hire a lot of people, rent a lot of space, etc that you don't need right now, but need to put in place to handle the coming growth.  You also have to spend money on marketing to draw in much more business than you have now.  If, on the other hand, you reduce your growth objectives, then costs can come way down.

Of course near  term they're going to have a big dip in revenue.  After that is over, it might make a lot of sense to slow down the expansion goals.

sommers

  • Jr. Member
  • **
  • Posts: 77
    • View Profile
    • Email
Re: How worried are you about LC future?
« Reply #24 on: May 18, 2016, 07:34:35 AM »
LC's stock closed at $7.10 on Friday 5/7, opened at $5.39 on Monday 5/9 after the news regarding RL's and three other's firing, loans back dated, RL conflict of interest with Cirrix, etc. I was a stock holder through this brief period (though a very much larger note holder in LC loans). Things do not have seemed to have improved over the past week.

For the sake of argument lets say all the drop in the stock price was caused by the bad news (after all LC made it's quarterly earnings number and it's first quarterly profit ever I think). Lawyers will make this argument; possibly more (they will go back all the way to the IPO). So, $7.10 - $5.39 = $1.71 loss per share x 381 million shares outstanding = $651M and change loss. That's more than the $583M LC has in cash. The stockholders have a legitimate gripe. Maybe that's why law firms are coming out of the woodwork to "investigate" LC for investors with a loss. What will the judge say (and there will be one) regarding the division of LC's assets amongst its claimants? "What, me worry?" ... AEN

There are always law firms filing class action suits.  I can't count the class action suits I"ve wasted time filling paper out for on stocks I"ve owned that suddenly dropped (for various reasons).  So, the emergence of law suits is to be expected (regardless of the merits of their case/s).  Also--this industry has been in the tank for months--they've all been selling off. Some are talking about a recession in the next year or two and P2P lending has never ridden out a recession.  There are too many players entering this business (profit margins have to get squeezed eventually with increased competition).  The next sub prime crisis outside of student loans is rumored to be auto loans---that's scaring people
This RL malfeasance was just the icing on the cake.   

Update:
Lawyers are not only investigating; a class action suit has been filed though they are still trolling for claimants:
http://finance.yahoo.com/news/equity-alert-rosen-law-firm-222800444.html

TheReaper

  • Newbie
  • *
  • Posts: 23
    • View Profile
Re: How worried are you about LC future?
« Reply #25 on: May 18, 2016, 07:41:08 AM »
The stock is not an indication of our position.  Retail stock traders usually over react and this is no exception.  These are not so smart guys who "buy high, sell low"!

Warren Buffet was buying like crazy in 2009 when everyone else was dumping.  He's the guy who says "when everyone is greedy, be afraid, when everyone is afraid, be greedy"!

Well said Warren, well quoted Boatguy.  I've been buying with both hands in the Folio market...some ludicrously good deals out there...that only last for a few minutes.  LC will make some much needed changes here and there, but it will still be here in 5 years.  They will turn this lemon into lemonade.  P2P model is here to stay...its been rolling along for 10 years now...it isn't a fad.

Rob L

  • Hero Member
  • *****
  • Posts: 2137
    • View Profile
Re: How worried are you about LC future?
« Reply #26 on: May 18, 2016, 09:24:52 AM »
I've been buying with both hands in the Folio market...some ludicrously good deals out there...that only last for a few minutes.

Wonder where they are coming from? According to the poll above, of 40 responses only 4 are selling on Folio at break even or better and 0 are liquidating at a loss. Must be folks that don't answer polls or don't participate in this forum I guess.

Ribald

  • Newbie
  • *
  • Posts: 13
    • View Profile
Re: How worried are you about LC future?
« Reply #27 on: May 18, 2016, 10:01:54 AM »
I've been buying with both hands in the Folio market...some ludicrously good deals out there...that only last for a few minutes.

Wonder where they are coming from? According to the poll above, of 40 responses only 4 are selling on Folio at break even or better and 0 are liquidating at a loss. Must be folks that don't answer polls or don't participate in this forum I guess.

A snapshot from yesterday showed around $20 million in outstanding principle for sale on folio.

Rob L

  • Hero Member
  • *****
  • Posts: 2137
    • View Profile
Re: How worried are you about LC future?
« Reply #28 on: May 18, 2016, 10:24:02 AM »
On an asking price basis it's still about the same now.
I had some snapshots from mid-April and the total was typically about $11M.
So, we've had roughly a 2X increase in Folio offers to sell over the past month.

fliphusker

  • Sr. Member
  • ****
  • Posts: 463
    • View Profile
    • Email
Re: How worried are you about LC future?
« Reply #29 on: May 18, 2016, 12:43:42 PM »
The stock is not an indication of our position.  Retail stock traders usually over react and this is no exception.  These are not so smart guys who "buy high, sell low"!

Warren Buffet was buying like crazy in 2009 when everyone else was dumping.  He's the guy who says "when everyone is greedy, be afraid, when everyone is afraid, be greedy"!

Well said Warren, well quoted Boatguy.  I've been buying with both hands in the Folio market...some ludicrously good deals out there...that only last for a few minutes.  LC will make some much needed changes here and there, but it will still be here in 5 years.  They will turn this lemon into lemonade.  P2P model is here to stay...its been rolling along for 10 years now...it isn't a fad.
I agree with you.  Too hard not to take advantage of deals on FOLIO that has notes with a -4 to -6 discount on notes with high YTM that have zero blemishes that meet my filters.  Almost wants me to sell some notes I do not want at a discount, just to grab those.  Glad NSR allows for easy filtering, unlike the nasty FOLIO filters.
As I have not done a lot of buying on FOLIO, when you find a note to buy on NSR, is there an easy way to actually find the note on FOLIO?