Author Topic: LC raises rates 10/2016 and updates loss forecast #s  (Read 16387 times)

newstreet

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Re: LC raises rates 10/2016 and updates loss forecast #s
« Reply #30 on: October 17, 2016, 12:14:23 PM »
I hate to say this but the first time I ever saw Scott Sanborn speak in person was a few weeks ago at a conference and my impression was that he is in way over his head. Compared to the confidence that Laplanche used to exude, I don't think Sanborn has what it takes to even pretend that there is a bright future. I walked away thinking the company's best days were well behind it.

Always has been....this potential Renaud buyback fraud is crazy.  Is LC paying these legal bills?  How bad is their cash position now?

LonghornSF

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Re: LC raises rates 10/2016 and updates loss forecast #s
« Reply #31 on: October 17, 2016, 01:51:19 PM »
I hate to say this but the first time I ever saw Scott Sanborn speak in person was a few weeks ago at a conference and my impression was that he is in way over his head. Compared to the confidence that Laplanche used to exude, I don't think Sanborn has what it takes to even pretend that there is a bright future. I walked away thinking the company's best days were well behind it.

Sanborn was always more the behind the scenes guy / thinker while Renaud was the PR guy. I wouldn't be surprised if operations improved under Sanborn as Laplanche was much more interested in hitting the media circuit and sailing than the nitty gritty. Unfortunately, LC's current crisis is 90% confidence driven and Sanborn's skillset is probably weakest at dealing with this type of external, media-driven problem.

Rob L

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Re: LC raises rates 10/2016 and updates loss forecast #s
« Reply #32 on: October 17, 2016, 07:22:15 PM »
Unfortunately, LC's current crisis is 90% confidence driven and Sanborn's skillset is probably weakest at dealing with this type of external, media-driven problem.

I dunno... there's more than media confidence in play here. Sure LC needs to shore up the media's view of confidence in its lending base but it (we) are facing a real erosion of yield. Confidence ("playoffs ... playoffs!! are you kidding me???" quote Marc Levy  :-\ lol). With 20/20 hindsight it seems very (very) clear that LC way over did the interest rates cuts over the past couple of years in the high yield loans. Reminds me of Prosper 1.0 (or whatever it was called) where investors did the "underwriting" for lack of a better term. I'm told that was a freakin disaster. LC is compelled to originate, originate, originate ... If I sound like LC should protect me from myself, okay I'll go with that. If I diversify sufficiently I should earn what LC claims. Either LC blew it, they became overconfident in their underwriting model, or what they are attempting is impossible. Maybe they don't have a crystal ball. Can't please everyone (John Fogerty told me so).

lascott

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Re: LC raises rates 10/2016 and updates loss forecast #s
« Reply #33 on: October 19, 2016, 01:50:32 PM »
Sean Murray of Debanked.com had a reaction to LC's announcement which was similar in its skepticism to my reaction.  I think I may start checking his blog more often.  (I believe he's a member here, under a different name.)

Fourth poster in this thread I think.  SeanMCA = http://debanked.com/about-us/


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TheLittleDuke

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Re: LC raises rates 10/2016 and updates loss forecast #s
« Reply #34 on: October 19, 2016, 02:18:45 PM »
As soon as investors decide that the risk/return proposition doesn't make sense, they will leave, and it will be difficult -- perhaps impossible -- to coax them back.

In part that is what's happening now over on Prosper -- with the end of the Folio relationship we're stuck with our notes until discharged.   I've already stopped buying 5-yr notes on them because of the illiquidity they've created by eliminating the secondary market.

In reality our only option would be to start setting up multiple accounts and then selling off the usernames/passwords to the whole portfolio if we wanted to liquidate (disconnecting bank account obviously)

It's Better 2GIVE!  https://2Give.Info

Rob L

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Re: LC raises rates 10/2016 and updates loss forecast #s
« Reply #35 on: October 19, 2016, 04:16:17 PM »
Couldn't help but notice the recent drop in A3, A4 and A5 interest rates in lascott's table above. (Maybe because they're red). :)
Were these in LC speak "pockets of over performance"??
Or possibly a "Marcus" effect? I know it's a real stretch, but my theory is that Marcus will primarily target "A" grade borrowers.

AnilG

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Re: LC raises rates 10/2016 and updates loss forecast #s
« Reply #36 on: October 19, 2016, 04:23:13 PM »
Accounts are associated with SSN. The IRS tax information filed by Prosper will still be associated with same SSN. I doubt you can sell usernames/passwords to whole portfolio to achieve liquidity. If you want more liquidity, this investment is not for you. One component of higher return with this investment is illiquidity premium that you receive as a compensation in lieu of not able to sell your investments readily. Once liquidity rises, the illiquidity premium will go away, i.e. lower returns.


In part that is what's happening now over on Prosper -- with the end of the Folio relationship we're stuck with our notes until discharged.   I've already stopped buying 5-yr notes on them because of the illiquidity they've created by eliminating the secondary market.

In reality our only option would be to start setting up multiple accounts and then selling off the usernames/passwords to the whole portfolio if we wanted to liquidate (disconnecting bank account obviously)
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fliphusker

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Re: LC raises rates 10/2016 and updates loss forecast #s
« Reply #37 on: October 19, 2016, 06:57:26 PM »
Fraud is a mighty strong word.  Why would LC pay anything LP related?
Q2 was not as bad as I expected with my limited knowledge.  The question will be how much under that $70M loss will Q3 be?  I am not worried one bit about LCs cash reserves, not for a few years at least. 
I hate to say this but the first time I ever saw Scott Sanborn speak in person was a few weeks ago at a conference and my impression was that he is in way over his head. Compared to the confidence that Laplanche used to exude, I don't think Sanborn has what it takes to even pretend that there is a bright future. I walked away thinking the company's best days were well behind it.

Always has been....this potential Renaud buyback fraud is crazy.  Is LC paying these legal bills?  How bad is their cash position now?

TheLittleDuke

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Re: LC raises rates 10/2016 and updates loss forecast #s
« Reply #38 on: October 20, 2016, 10:06:47 AM »
Create LLC's with their own EIN's and then sell the company off ;-)

Accounts are associated with SSN. The IRS tax information filed by Prosper will still be associated with same SSN. I doubt you can sell usernames/passwords to whole portfolio to achieve liquidity. If you want more liquidity, this investment is not for you. One component of higher return with this investment is illiquidity premium that you receive as a compensation in lieu of not able to sell your investments readily. Once liquidity rises, the illiquidity premium will go away, i.e. lower returns.


In part that is what's happening now over on Prosper -- with the end of the Folio relationship we're stuck with our notes until discharged.   I've already stopped buying 5-yr notes on them because of the illiquidity they've created by eliminating the secondary market.

In reality our only option would be to start setting up multiple accounts and then selling off the usernames/passwords to the whole portfolio if we wanted to liquidate (disconnecting bank account obviously)
It's Better 2GIVE!  https://2Give.Info

rj2

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Re: LC raises rates 10/2016 and updates loss forecast #s
« Reply #39 on: October 23, 2016, 12:18:08 AM »
I think what's driving this is fraud. The grifters have figured out how to get a loan from LC and they are binging.


Fred

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Re: LC raises rates 10/2016 and updates loss forecast #s
« Reply #40 on: October 25, 2016, 03:49:36 AM »
I think what's driving this is fraud. The grifters have figured out how to get a loan from LC and they are binging.

Any data to back this up?  Or, is this just an assumption?

Amusant42

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Re: LC raises rates 10/2016 and updates loss forecast #s
« Reply #41 on: October 25, 2016, 07:35:04 PM »


My software is reinvesting every day. 

I am shocked that you're still re-investing right now, especially after the admission on the 8K that the problem is across loan grades.  Can you briefly explain the reason for your decision?  I am just letting cash accumulate

Fred93

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Re: LC raises rates 10/2016 and updates loss forecast #s
« Reply #42 on: October 25, 2016, 08:57:11 PM »
My software is reinvesting every day. 
I am shocked that you're still re-investing right now, especially after the admission on the 8K that the problem is across loan grades.

Well, I don't make my investment decisions on what they admit!  Although the effect can be seen in all grades, it is definitely much bigger in the lower quality grades, as you can see in this chart from insikt.  I've shown grades B thru E, each in its own color.  Three curves for each grade, representing different vintages.  For B grade, you can see a change vintage to vintage, but it is tiny.  For E grade, the difference between vintages leaps right off the page at you.  Therefore, you can distance yourself from this effect, whatever the  cause, by shifting some toward the low-risk grades.



Quote
Can you briefly explain the reason for your decision?  I am just letting cash accumulate

I don't see a need for panic at this point.  The loans I bought in 2015 are not providing as much return as I had hoped.  That is a disappointment for sure, but it isn't the end of the world.  (I invested conservatively enough so that I should not suffer losses even when defaults more than double -- at least so say my backtesting results.) 

I have spent a lot of time making sure I have the latest info on the economy, so I can at some point understand whether we are seeing changes in economic conditions or changes in LC.  The jury i still out, but I expect it will become clear within a few months.  (And I wouldn't be surprised if the answer is some of each.)  I have moved my filters down a couple of subgrades (toward the low-risk end) while we wait.

I look forward to LC's release of data for the Q3 vintage a few days from now.  I want to know if it is yet worse than Q2, or just the same, or what.  We will only get a couple of months of data at that time, but as you can see, the effect on delinquency has shown up quite early in recent vintages, so seeing those first 2 months will reveal quite a bit. 

Meanwhile I am happy that LC has been increasing interest rates.  I don't yet know if their response is adequate.

I think you're choice to let cash accumulate is also a reasonable one.
« Last Edit: October 25, 2016, 09:14:49 PM by Fred93 »

RT45

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Re: LC raises rates 10/2016 and updates loss forecast #s
« Reply #43 on: October 26, 2016, 01:57:01 AM »
Quote
I think what's driving this is fraud. The grifters have figured out how to get a loan from LC and they are binging.

Any data to back this up?  Or, is this just an assumption?

I'm in agreement with him on this and have anecdotally heard of this occurring.