Author Topic: Seeking Alpha article  (Read 3142 times)

fliphusker

  • Sr. Member
  • ****
  • Posts: 463
    • View Profile
    • Email
Seeking Alpha article
« on: June 20, 2016, 12:54:58 PM »
A month of so I went on a rant about bad journalism, I really do not remember where the article was from.  Anyway, I ran across the article below today, and it has me ticked off again as I feel Seeking Alpha is a pretty reputable site.  (Correct me if I am wrong.) 

http://seekingalpha.com/article/3983013-lending-club-one-year

So many poor assumptions in the article. 
1)
Quote
the company is now hemorrhaging cash to fund the loans that it originates. At a rate of $18.9 million per week, we are talking about $983 million per year.
  LC is going to be keep the pace on funding of the notes is asinine at best to assume. 
2)
Quote
"Furthermore, this cash drain will likely increase as volume of originations rises, since the company would have to spend more of its own cash to plug the funding deficiency."
  Does anyone know how much LC is on the hook for and having to sell or buy themselves?  Someone wrote about LC having to guarantee those direct marketers to fund.  That has been cut by 75%, so common sense dictates that LC will not have to fund much there.
3)
Quote
"if we assume that the cash drain of $983 million per year will be the norm in the near-term"
.  Do people actually believe anything in the business world falls under the category of "norm"?
4)
Quote
"On Deck Capital (NYSE:ONDK)) would be busy gobbling up market share in the meantime." 
why would he even mention ONDK?  They only deal with small business loans.  Does he think they are going to step outside of their business model and get into other areas?
5)
Quote
I'm not implying that the cash used to fund the loans will be lost, as the assets (i.e. the loans) will still be on the balance sheet.
  Believe LC has already said they are/will be selling these notes.  Correct me if I am wrong. 

I know that he is writing his biased side of it, just feel that he is doing so ignoring facts and with misleading sensationalist statements.  The bait click title is something you would see for the "top 10 boob jobs in Hollywood", you see on every site. 

Fred93

  • Hero Member
  • *****
  • Posts: 2252
    • View Profile
Re: Seeking Alpha article
« Reply #1 on: June 20, 2016, 01:01:10 PM »
A month of so I went on a rant about bad journalism, I really do not remember where the article was from.  Anyway, I ran across the article below today, and it has me ticked off again as I feel Seeking Alpha is a pretty reputable site.  (Correct me if I am wrong.) 

You are wrong.  Seeking Alpha doesn't qualify the people who write in any way.  Its just a bunch of blogs.  A few people there are good, but most are not.

There have been several articles about LC recently, and most are as uninformed as the one you mention.

fliphusker

  • Sr. Member
  • ****
  • Posts: 463
    • View Profile
    • Email
Re: Seeking Alpha article
« Reply #2 on: June 20, 2016, 01:13:09 PM »
Thanks for the correction. 
Everyday I check the news on LC and see how the stock is doing, so I go to Market  Watch as they also have articles there about LC.  They have articles from WSJ, Bloomberg, the Street and Seeking Alpha in their feed, so figured they were reputable. 
My bad for not doing my research and knowing better. 

LonghornSF

  • Full Member
  • ***
  • Posts: 208
    • View Profile
Re: Seeking Alpha article
« Reply #3 on: June 20, 2016, 01:27:55 PM »
As Fred said, Seeking Alpha is basically a collection of people blogging on stocks. Some of them are good and know what they're talking about, but a lot of them have no idea. The writers that are highly rated tend to be fairly reliable and I would put stock in what they say. You can basically ignore the rest.

Larry321

  • Jr. Member
  • **
  • Posts: 57
    • View Profile
    • Email
Re: Seeking Alpha article
« Reply #4 on: June 20, 2016, 04:17:10 PM »
I LOVE Seeking Alpha, but it is a gossip site. Most of the articles are mediocre and not very well researched.  Anyone on this thread, in fact, on this forum, could write something suitable, and perhaps better for Seeking Alpha.

Seeking Alpha is useful just to get ideas and to see what otehr investors think, but this forum is much more useful.

The articles on Seeking Alpha cater to the speculator and not even the investor. One recent article focused on whether recent LC management decisions will affect the short term stock price.  It was an article saying that LC had to buy loans using its own capitakl and that it only had enough capital to buy loans for a year.  Well, if LC buys loans with its own capital, it is committing to 36 to 60 months.  There will be a return from the loans, so LC will actually have more money available.  There really is no reason for LC to continue to operate for 20 years.  All they have to do is keep the ship above water. After all, regular banks stay profitable for years taking depsoits and making loans. It surely should not be that hard for LC to do the same thing. The big difference is that despite needing large institutional investors, a good portion of their capital to make loans comes from smallerr investors like us.Yes, I enjoy gossip as much as the next guy.  Some people like follow their favorite sports team and some of us live on here and on Seeking Alpha, but, really, they have a brilliant business model. Actually, the stock price of LC should not matter to any of us. As long as they are attracting borrowers and making loans and making money from servicing the loans, and have enough money to keep in operation, the stock price does not matter.
« Last Edit: June 20, 2016, 04:32:10 PM by Larry321 »
LC notes investor for 3 years

Bitcoin speculator

rawraw

  • Hero Member
  • *****
  • Posts: 2795
    • View Profile
Re: Seeking Alpha article
« Reply #5 on: June 21, 2016, 07:36:51 PM »
Seekingalpha can move stocks, as some activists use it to publish their research.  But most of the authors are pretty mediocre at best.  I use Seeking Alpha to get a background on the company (they normally don't screw that up) and what retail sentiment is.