Enhancements to Automated Note Selling on Lending Club Folio Secondary Market

[AnilG]

Based on feedback from Rob L and others, we introduced enhancement to our Note selling feature. New attributes added for sell filter:

• Never Late
• Interest Rate
• Outstanding Note Principal
• Markup/Discount Range
• Capability to sell Notes in a Specific Portfolio only

We also improved our ability to identify listed notes for sale that are similar to the note you are selling for better price discovery. The blog post detailing enhancements at https://www.peercube.com/blog/post/enhancements-to-automated-note-selling-on-lending-club-folio-secondary-market

[Rob L]

VERY NICE!! Know this was a lot of hard work on your part!
You even figured a very clever way to include "sell from portfolio" to cover all the bases.

I read your Peer Cube blog post.

The comments on Never Late are spot on. Assume Never Late unless certain a loan is not.
This means one will never sell a perfectly good Never Late at a low price by accident.

It may sound counterintuitive but I intend to hold my NOT Never Late notes and let the chips fall where they may.
The Folio market requires very substantial discounts to sell them and I'm at an informational disadvantage to the expert buyers there.
The more I keep the better my diversification; I'll rely on the law of large numbers to deal the cards and let them fall where they may.

Markup/Discount range is exactly what I had in mind (and I implemented what you did pretty much verbatim in my own software).

Is Outstanding Note Principal a number or a range (or a percentage range)? We all know that as Never Late notes mature probability of default declines and the Folio Markup/Discount increases (up to a point). Not sure how you've implemented it, but this could be the most important feature by which sellers may target their offer prices.

Kudos!!

[AnilG]

Rob,

Thanks for the feedback and comments.

It may sound counterintuitive but I intend to hold my NOT Never Late notes and let the chips fall where they may. The Folio market requires very substantial discounts to sell them and I'm at an informational disadvantage to the expert buyers there. The more I keep the better my diversification; I'll rely on the law of large numbers to deal the cards and let them fall where they may.

I am currently in the process of writing blog post on pros and cons of holding vs selling notes with different loan status. You might find the analysis interesting. My strategy is almost opposite, my whole portfolio is listed on Folio all the time.

Is Outstanding Note Principal a number or a range (or a percentage range)?

Outstanding Note Principal attribute is a dollar range. Users can specify minimum and maximum values so that automation will only sell notes that fall within the outstanding note principal range. Interesting you think this might be the most important field. How will you use this field in developing sell filter?

[Rob L]

Outstanding Note Principal attribute is a dollar range. Users can specify minimum and maximum values so that automation will only sell notes that fall within the outstanding note principal range. Interesting you think this might be the most important field. How will you use this field in developing sell filter?

I'd use it as a proxy for number of payments remaining. As you know buyers are willing to pay a premium for Never Late notes that are a year or so old.

[Rob L]

Rob,

Thanks for the feedback and comments.

It may sound counterintuitive but I intend to hold my NOT Never Late notes and let the chips fall where they may. The Folio market requires very substantial discounts to sell them and I'm at an informational disadvantage to the expert buyers there. The more I keep the better my diversification; I'll rely on the law of large numbers to deal the cards and let them fall where they may.

I am currently in the process of writing blog post on pros and cons of holding vs selling notes with different loan status. You might find the analysis interesting. My strategy is almost opposite, my whole portfolio is listed on Folio all the time.

Very much interested in reading this when it is available.
I've listed and sold enough so that I'm comfortable with my level of LC investment and am no longer listing any of my portfolio.
I can remedy my informational disadvantage Vis-a-vis Not Never Late notes, but with very considerable effort and unsure it is worth it.
It's just so easy to sit back and let the market do it's thing. Or I could move my Not Never Late notes into a PeerCubeSell portfolio and let you do the heavy lifting. Just a thought.

[AnilG]

I decided to address sale of delinquent loans on Folio first so it may be a while before I address Never Late loans. The blog post is coming along slowly. But it is becoming too long so I need to look into splitting it.

How much did you reduce your investment in LC? 50%? Did you redirect funds to Prosper or just reduced your exposure to marketplace lending overall?

Sometime it is easier to just list your portfolio on Folio all the time and let the buyer pick the ones they want or you can narrowly focus using PeerCubeSell portfolio.

Very much interested in reading this when it is available.
I've listed and sold enough so that I'm comfortable with my level of LC investment and am no longer listing any of my portfolio.
I can remedy my informational disadvantage Vis-a-vis Not Never Late notes, but with very considerable effort and unsure it is worth it.
It's just so easy to sit back and let the market do it's thing. Or I could move my Not Never Late notes into a PeerCubeSell portfolio and let you do the heavy lifting. Just a thought.

[Rob L]

I decided to address sale of delinquent loans on Folio first so it may be a while before I address Never Late loans. The blog post is coming along slowly. But it is becoming too long so I need to look into splitting it.

It's the sale of delinquents that I'm interested in. Will be looking forward to your paper but I'm in no rush.

How much did you reduce your investment in LC? 50%? Did you redirect funds to Prosper or just reduced your exposure to marketplace lending overall?

I reduced my LC investment by 40%. My total investment is now about 75% of the cash value I started with.
Said another way, I've reduced my initial cash investment by 55% and left all the profits invested.
Investment continues to drop as I am no longer reinvesting payments received. I hear there are no D's and E's anyway.

FYI, ANAR numbers are:
Primary Notes: 7.80%,  weighted average interest rate 17.25%, weighted average age of portfolio 24.6 months
Traded Notes 16.74% on 1347 notes
Combined Return 8.58%.

My plan to move more into Prosper is on hold. Took a look at returns and the past couple of months have been terrible.
Guess I'll wait and see on that one. Maybe I've just had a run of bad luck. Still continuing to reinvest in Prosper.