Author Topic: liquidation strategy on folio  (Read 10254 times)

sommers

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liquidation strategy on folio
« on: May 26, 2016, 07:03:09 AM »
I am trying to cash out.  I started the process about 3 months ago (long before this mess began).  Based on lack of knowledge (and maybe laziness)---I decided to just switch off the auto investing tool and let my notes roll off.  No big need for the cash real soon and all of my notes are 3 year terms
However, yesterday I decided to get proactive and figured out how to list my note portfolio (at least the current issued notes and the grace period notes) on folio (had I gotten off my butt three months ago---this would be in my rear view mirror a long time ago)
I just did a basic mark up % on my current and issued notes---and my plan is to keep lowering it (then go into discount mode) as time goes by.  I do not have the time nor expertise to analyze each note.  I started with a 3% markup across the board
As of this morning-- I have sold ONE note (I have 2,000 notes up for sale)---24 hours on folio and ONE note has sold
 
QUESTION---How long should I wait before reducing my markup %?  Is 24 hours a long enough period to have adequately tested the market?  (I have never been on folio before). 
I figure that if I just keep lowering my mark up % I'll eventually get some action. 
Are these robots worthwhile to subscribe to?  (Peer Cube etc)

dompazz

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Re: liquidation strategy on folio
« Reply #1 on: May 26, 2016, 10:27:45 AM »
I routinely list a large portion of my loans on Folio at a markup.  I start at +2.5% and reduce to +1.5%.  Rinse repeat.  I use LendingRobot to do this. 

Prior to shinanigans, I would sell 2 to 4 notes a week.  Now I sell 0 to none.

I have been buying on Folio recently.  I have not had to buy anything I wanted for premium over -1.8%.

Personally, if I wanted to liquidate in a timely manner, I think I would need to start at +0% and work down to -2%.  Iterate until done. 

It's a buyers market, currently.

 

justice42

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Re: liquidation strategy on folio
« Reply #2 on: May 26, 2016, 10:52:21 AM »
I'm fairly new to LC in general, (about 6 months) but I invest about 80% of my deposits into folio notes. I've never bought a single note at a markup. I don't really know why you would but thats because I'm a noob and don't know these things  :D

I buy the majority of my notes at ~2 - 4% discount. It's funny because the $ amount isn't that much, but the principal of discount is a powerful one.

I get on folio about 5 times a week looking for my secret blend of desired notes. So to answer your question, I think 1 day is a little short, if you can slow down your liquidation, I'd give them 3 days, then lower your markup. Just my opinion. Good luck!   

sommers

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Re: liquidation strategy on folio
« Reply #3 on: May 26, 2016, 11:48:52 AM »
I routinely list a large portion of my loans on Folio at a markup.  I start at +2.5% and reduce to +1.5%.  Rinse repeat.  I use LendingRobot to do this. 

Prior to shinanigans, I would sell 2 to 4 notes a week.  Now I sell 0 to none.

I have been buying on Folio recently.  I have not had to buy anything I wanted for premium over -1.8%.

Personally, if I wanted to liquidate in a timely manner, I think I would need to start at +0% and work down to -2%.  Iterate until done. 

It's a buyers market, currently.
 
Yeah--I figured as much--it has to be under the circumstances.  IF I knew these notes were safe--I'd just stick with my original plan to let them run down "naturally".  However, I'd kick myself for not at least trying should worse case occur (and not sure what worse case is in terms of these notes)

 

nmay2k

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Re: liquidation strategy on folio
« Reply #4 on: May 27, 2016, 08:14:28 AM »
I routinely list a large portion of my loans on Folio at a markup.  I start at +2.5% and reduce to +1.5%.  Rinse repeat.  I use LendingRobot to do this. 

So there were 83,000 notes ($25 initial, never late) put up for sale yesterday and the average mark-up for them is 2.49%. If you really want to sell or standout in this crowd, I suggest you don't start at 2.5%. Most buyers are likely to find what they want at a discounted rate than at a mark-up, so their filters probably exclude anything as high as 2.5%. They probably stop at -1% or 0%.

Notes on folio expire in 7 days if left untouched. The folio notes that put on for sale on 5/20 average 1.06% mark-up.

Taking the 23rd as an example, the loans listed on the 23rd that were not sold/removed at the end of the 24th averaged 2.38% and ranged from 0.9% for A1 (min) to 3.67% for G5 with max at 4.15% for G2. So depending on the loans class you are selling, depends what the mark-up can be to attract buyers in a 24 hour period. You want to undersell these guys at least.

If you are a motivated seller, I would start at 0% and go down from there. Start with a small batch at 0% and see if there is any action.
« Last Edit: May 27, 2016, 09:03:52 AM by nmay2k »

dompazz

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Re: liquidation strategy on folio
« Reply #5 on: May 27, 2016, 09:02:12 AM »
If you really want to sell ...
I don't, really.  But I am willing to take a markup on notes if someone is willing to pay.

daniel2023

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Re: liquidation strategy on folio
« Reply #6 on: May 27, 2016, 09:28:52 AM »
I started liquidating my portfolio (~11k) in mid March, primarily because it's a taxable account and I realized the level of defaults (50% of total interest collected) over the last 5 years was killing my after tax return. 

I successfully sold about half of my portfolio close to break-even (0.75-1% markup) before the "crisis" (of confidence).  Since then, I've sold maybe 2 notes... perfectly good notes are selling at 5-8% discount, so it's definitely a buyers market.  I will have to ride it out for awhile, but that's not a problem for me financially, as it was primarily a decision of where I am allocating my investments.

Rob L

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Re: liquidation strategy on folio
« Reply #7 on: May 27, 2016, 10:22:37 AM »
Just took a look at the Folio listings for issued and current notes. There are 530,714 total notes listed.

167,136 are listed at a discount, (31%).
    19,560 of them are at a -2% discount or more (3.7% of total)
     1,499 of them are at a -2% discount or more that are NeverLate FicoTrend UP (only 0.6 % of total)
         Of these 995 have outstanding principal of $50 or less (0.19% of total):
               436 are 36 month term and 559 are 60 month term
               117 have a YTM that is at least 1% greater than the original note interest rate (0.02% of total)

I don't see a lot of compelling buy's here.

101,909 are listed at par (19%)
261,669 are listed at a markup (50%)
I don't doubt it's a buyers market, but the sellers don't know it or don't care.
By definition everything listed now is overpriced or it would have sold already; right?

Ran

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liquidation strategy on folio
« Reply #8 on: May 27, 2016, 10:50:28 AM »
Nice analysis. But shall those 117 -2% discount notes(never late, 36m term, up FICO) be picked up already if Folio is liquid? I see this is a rare opportunity to beat LC average returns.

Just took a look at the Folio listings for issued and current notes. There are 530,714 total notes listed.

167,136 are listed at a discount, (31%).
    19,560 of them are at a -2% discount or more (3.7% of total)
     1,499 of them are at a -2% discount or more that are NeverLate FicoTrend UP (only 0.6 % of total)
         Of these 995 have outstanding principal of $50 or less (0.19% of total):
               436 are 36 month term and 559 are 60 month term
               117 have a YTM that is at least 1% greater than the original note interest rate (0.02% of total)

I don't see a lot of compelling buy's here.

101,909 are listed at par (19%)
261,669 are listed at a markup (50%)
I don't doubt it's a buyers market, but the sellers don't know it or don't care.
By definition everything listed now is overpriced or it would have sold already; right?

dompazz

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Re: liquidation strategy on folio
« Reply #9 on: May 27, 2016, 11:01:45 AM »
By definition everything listed now is overpriced or it would have sold already; right?
You Chicago guys and your EMH...

Now on to me kicking my dead horse: It would be really nice to be able to bid on one of those overpriced notes and see if the seller would meet you in the middle.


rubicon

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Re: liquidation strategy on folio
« Reply #10 on: May 27, 2016, 11:49:24 AM »
I started liquidating my portfolio (~11k) in mid March, primarily because it's a taxable account and I realized the level of defaults (50% of total interest collected) over the last 5 years was killing my after tax return. 

I successfully sold about half of my portfolio close to break-even (0.75-1% markup) before the "crisis" (of confidence).  Since then, I've sold maybe 2 notes... perfectly good notes are selling at 5-8% discount, so it's definitely a buyers market.  I will have to ride it out for awhile, but that's not a problem for me financially, as it was primarily a decision of where I am allocating my investments.

don't forget that lendingclub takes a 1% cut as well.

RaymondG

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Re: liquidation strategy on folio
« Reply #11 on: May 27, 2016, 02:21:05 PM »
If you really want to sell ...
I don't, really.  But I am willing to take a markup on notes if someone is willing to pay.
I thought about collecting markups before but I eventually against it after none of the notes were sold at 2.5% and up markups. It would probably not worth the trouble for a markup lower than 2.5%, considering the following charge/risks:
* 1% taken by Folio
* Time needed to re-invest the proceeds. About 0.6% return is missed before it is reinvested in LC. I assume it take 3 weeks for the money to settle in a issued note, and assume 10% annual portfolio return (my TTM XIRR).
* It's more likely the better quality notes were sold while lower quality notes were left. It leads to higher expected default rate to remaining notes. Assume the expected default rate of the remaining same $ amount notes increase by 1%. Using my account as example, the lost rate is about 7% out of average interest rate is about 17%

In summary, about 2.6% is missed. The markups collected hardly break even.

« Last Edit: May 27, 2016, 02:35:41 PM by RaymondG »

daniel2023

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Re: liquidation strategy on folio
« Reply #12 on: May 27, 2016, 03:30:45 PM »
I started liquidating my portfolio (~11k) in mid March, primarily because it's a taxable account and I realized the level of defaults (50% of total interest collected) over the last 5 years was killing my after tax return. 

I successfully sold about half of my portfolio close to break-even (0.75-1% markup) before the "crisis" (of confidence).  Since then, I've sold maybe 2 notes... perfectly good notes are selling at 5-8% discount, so it's definitely a buyers market.  I will have to ride it out for awhile, but that's not a problem for me financially, as it was primarily a decision of where I am allocating my investments.

don't forget that lendingclub takes a 1% cut as well.

Yes, that's why I said "close to break-even" -- 0.75-1% minus 1% is "close to break-even".

daniel2023

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Re: liquidation strategy on folio
« Reply #13 on: May 27, 2016, 03:36:19 PM »
By definition everything listed now is overpriced or it would have sold already; right?
You Chicago guys and your EMH...

Now on to me kicking my dead horse: It would be really nice to be able to bid on one of those overpriced notes and see if the seller would meet you in the middle.

I agree -- EMH makes sense in theory, but if it were reality, the stock market would trade with a lot less swings.  Sure the market moves towards the center, but it takes time (with certain sectors even longer), which is why people "play" the market, trying to take advantage of inefficiencies. 

sommers

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Re: liquidation strategy on folio
« Reply #14 on: May 27, 2016, 05:35:44 PM »
Just took a look at the Folio listings for issued and current notes. There are 530,714 total notes listed.

167,136 are listed at a discount, (31%).
    19,560 of them are at a -2% discount or more (3.7% of total)
     1,499 of them are at a -2% discount or more that are NeverLate FicoTrend UP (only 0.6 % of total)
         Of these 995 have outstanding principal of $50 or less (0.19% of total):
               436 are 36 month term and 559 are 60 month term
               117 have a YTM that is at least 1% greater than the original note interest rate (0.02% of total)

I don't see a lot of compelling buy's here.



101,909 are listed at par (19%)
261,669 are listed at a markup (50%)
I don't doubt it's a buyers market, but the sellers don't know it or don't care.
By definition everything listed now is overpriced or it would have sold already; right?

Human nature.  Sellers are greedy and want to at least try to get what they can.  I started at a 2.5% universal mark up on 1400 current notes.  I sold 4 in two days.  I lowered all to 1% this AM and I have sold 71 notes so far--so I assume the best of my notes are getting picked off.  Think I'll give it a couple more days and then go to par and let that sit for a week or so. 
I'm not employing any robots and not analyzing my portfolio at all.  Just gradually lowering my markup/discount --waiting--rinse and repeat.  This makes the most sense to me.
At some point--I hope I reduce my exposure to LC notes by 50% and at that point might just ride things out--depending on new about LC's funding efforts etc.