Author Topic: So, let's talk liquidation strategies….  (Read 2437 times)

.Ryan.

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So, let's talk liquidation strategies….
« on: October 04, 2017, 10:54:57 AM »
From spending way too much time on this board, I gather that a few people are in the same boat as I am….. Pretty much done with P2P Lending.

After 3 years of investing in Prosper and LC, I quit re-investing roughly 6 months ago with the intention of letting the accounts naturally run off. After continuing to watch my loans late % and default rates continue to climb, I'm not sure I want to wait this one out.

Prosper…. I guess I am stuck with you. You win the award for most illiquid investment ever. Uggh.

LendingClub… I'm considering a "steady liquidation" strategy and would appreciate any thoughts or ideas. I'd like sell my loans on the secondary to liquidate, but I am in no rush to get them all sold immediately. In fact, I'd rather take my time and eek out as much as I can get for them. I am thinking about a 2-3 month process of liquidating.

To make things easy and simple, I have been thinking of pricing each loan (regardless of status, details) at a 5% premium, assuming only a very small percentage, if any will sell. After 2 weeks, bringing the rest down to 4%. After 2 more weeks, down to 3%. Rinse and repeat.

Once challenge is that I have over 7k loans, which makes automated selling almost a requirement.

What do you think of this strategy? Are there any services out there (Peercube, NSR, etc…) that would be well suited for automating a strategy like this?  Anybody else like to share their strategy/thoughts?

Thanks in advance…

bkcarp00

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Re: So, let's talk liquidation strategies….
« Reply #1 on: October 04, 2017, 12:08:29 PM »
When you list on folio you can markup all your loans at once. Just select them all and at the top of the column hit the + next to the markup until you get to the % that you want to markup. You can use that to markup all your loans so you don't have to do them one at a time. You can also use that when you reprice as well.

I guess your strategy is worth a try. I find people rarely buy my loans that are marked up more than 2%. Let us know how it goes.

dbailey75

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Re: So, let's talk liquidation strategies….
« Reply #2 on: October 04, 2017, 12:50:05 PM »
I guess your strategy is worth a try. I find people rarely buy my loans that are marked up more than 2%. Let us know how it goes.

I second this, while there's always a chance you'd sell something, I have several never lates/current loans that i've been lucky to sell at +1%, but most were -1%.

lascott

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Re: So, let's talk liquidation strategies….
« Reply #3 on: October 04, 2017, 03:24:50 PM »
Thanks for the thread. I need to do this. I do want to wind down one of my kids ROTH IRAs tho because he has less than $10K and there is the $100 annual fee for that. We will just move his money to Vanguard with an account he has there.

Quote
Self-directed IRAs are offered in partnership with our preferred custodian, Self Directed IRA Services, Inc. (SDIRA). SDIRA charges an annual account fee of $100 for administering each Lending Club self-directed IRA, but we'll pay the $100 annual account fee on your behalf if your account has an initial minimum balance of $5,000 or more invested in Lending Club Notes and maintains this minimum invested balance for the following 12 months. Lending Club will pay the $100 annual fee in subsequent years if your account maintains a minimum balance of $10,000 or more invested in Lending Club Notes. 1
Tools I use: (main) BlueVestment: https://www.bluevestment.com/app/pricing + https://www.interestradar.com/ , (others) Lending Robot referral link: https://www.lendingrobot.com/ref/scott473/  & Peercube referral code: DFVA9Y

Paulie2083

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Re: So, let's talk liquidation strategies….
« Reply #4 on: October 04, 2017, 03:50:53 PM »
From spending way too much time on this board, I gather that a few people are in the same boat as I am….. Pretty much done with P2P Lending.

After 3 years of investing in Prosper and LC, I quit re-investing roughly 6 months ago with the intention of letting the accounts naturally run off. After continuing to watch my loans late % and default rates continue to climb, I'm not sure I want to wait this one out.

Prosper…. I guess I am stuck with you. You win the award for most illiquid investment ever. Uggh.

LendingClub… I'm considering a "steady liquidation" strategy and would appreciate any thoughts or ideas. I'd like sell my loans on the secondary to liquidate, but I am in no rush to get them all sold immediately. In fact, I'd rather take my time and eek out as much as I can get for them. I am thinking about a 2-3 month process of liquidating.

To make things easy and simple, I have been thinking of pricing each loan (regardless of status, details) at a 5% premium, assuming only a very small percentage, if any will sell. After 2 weeks, bringing the rest down to 4%. After 2 more weeks, down to 3%. Rinse and repeat.

Once challenge is that I have over 7k loans, which makes automated selling almost a requirement.

What do you think of this strategy? Are there any services out there (Peercube, NSR, etc…) that would be well suited for automating a strategy like this?  Anybody else like to share their strategy/thoughts?

Thanks in advance…
if your not in too much of a hurry, ill tell you my experience. I've been selling off my 1000-ish E & F active notes for the last 4 months. Of those 1000 i sold 2 notes at 7% markup.1 note at 5% and like 6 of them at 4%. i sold about 100 notes between 2-3% over the course of a month. Starting at 2% premium ive been been listing all my notes in increments of .10% on folio until their default expiration(1 week). 1.90% for 1 week, 1.80% for the next week, so on a so forth. i've sold  maybe 200 more notes between 1-2% premium. i have about 700 active notes now and am currently selling them at 1% markup(folio takes 1%, so i'm more or less breaking even on these notes). i'm guessing once my notes finally get down to 0% markup and beyond they will start flying.

all in all you can expect to sell maybe 1/3 of your portfolio at a premium. 4 or 5% markup is a good place to start but don't expect many to sell. sub 3% is when you start seeing noticeable movement. also, it's much simpler to lump all your notes into one big batch rather than changing markups based upon credit score trends or "never late" status. Don't waste time trying to make your notes more "marketable", they will sell eventually when they hit the right price point.


OleBill

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Re: So, let's talk liquidation strategies….
« Reply #5 on: October 05, 2017, 07:51:02 AM »
My experience with dumping notes is apparently different than others. I decided to dump all my notes ending after 2020. These were all 5-year notes selected by automatic investing. I moved them to a seperate portfolio and listed all at the same time. Based on previous tests, I started them at a 1% discount. I tracked the results on my investment blog.

About 25% sold within 3 days and the selling practically stopped. I moved the discount to 2% and about another 25% sold.  I re-listed the remaining notes this past Monday at a 1% discount and about 10% sold by mid-week. I raised the discount to 2% and another 10% sold. I expect the sales to level off here.

A couple of other points. I offered the notes that were in the grace period for $10 and those late for $5. Some of these sold. I did not like offering bigger discounts until I remembered my purpose was to get rid of these notes and that the increasing discounts were only a few cents per note.


.Ryan.

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Re: So, let's talk liquidation strategies….
« Reply #6 on: October 05, 2017, 08:34:00 PM »
When you list on folio you can markup all your loans at once. Just select them all and at the top of the column hit the + next to the markup until you get to the % that you want to markup. You can use that to markup all your loans so you don't have to do them one at a time. You can also use that when you reprice as well.

I've tried this, and unfortunately I have a lot of loans with lower interest rates or few payments left, which makes their YTM already low. Applying a markup of any significance to a large set of loans in folio and you will inevitably put at least one loan in a negative YTM offering, which makes the whole batch sale attempt fail.

If you can figure out a way around this, please let me know! I cant seem to figure out how to filter these loans out of my attempted batch sales.

I guess your strategy is worth a try. I find people rarely buy my loans that are marked up more than 2%. Let us know how it goes.

My guess is that few, if any, would sell at 5%. But since I am not in a hurry to liquidate, I don't mind starting high and slowing decreasing the markup until it is a discount and all the loans are gone.

Thanks for the feedback bkcarp00!

Paulie2083

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Re: So, let's talk liquidation strategies….
« Reply #7 on: October 06, 2017, 12:56:43 AM »
When you list on folio you can markup all your loans at once. Just select them all and at the top of the column hit the + next to the markup until you get to the % that you want to markup. You can use that to markup all your loans so you don't have to do them one at a time. You can also use that when you reprice as well.

I've tried this, and unfortunately I have a lot of loans with lower interest rates or few payments left, which makes their YTM already low. Applying a markup of any significance to a large set of loans in folio and you will inevitably put at least one loan in a negative YTM offering, which makes the whole batch sale attempt fail.

If you can figure out a way around this, please let me know! I cant seem to figure out how to filter these loans out of my attempted batch sales.

find the negative YTM and change it. if you have thousands of notes use CTRL+F and look for parentheses. negative YTM will show in parentheses. ex. (1.25 %)

dr.everett

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Re: So, let's talk liquidation strategies….
« Reply #8 on: October 08, 2017, 11:05:29 PM »
I've been doing this now for several months- started with my taxable account and am now liquidating my IRA now that my taxable account is close to done.

Lessons learned:

1. You can sell a good amount of your notes at markup- I've sold up to 2/3rd's of them this way. There will come a point when your selling declines doing this- possibly quickly depending on the quality of your notes.

2. When this happens you'll sell many more notes at between 1%-3% markup. As said before when you get to this point, your selling declines doing this- possibly quickly depending on the quality of your remaining notes.

3. You may want things to be over quickly when you get to the last 1/3rd of your notes, and then you'll start selling at 0% markup. I'm at this point, as the losses are less than what I'm currently losing to chargeoffs and lost opportunity investing the money elsewhere. We'll see if I have to discount further to keep the selling going. I "might" be willing to continue discounting depending on how things go.

My next headache will be starting the transfer process from SDIRA- I'm planning to start that tomorrow.

The hardest part of this has been the loss of automated selling solutions. I am still using Interest Radar, it works- but not as well as LR did. Like others I'll be very happy when my selling is done.

.Ryan.

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Re: So, let's talk liquidation strategies….
« Reply #9 on: October 08, 2017, 11:49:49 PM »
When you list on folio you can markup all your loans at once. Just select them all and at the top of the column hit the + next to the markup until you get to the % that you want to markup. You can use that to markup all your loans so you don't have to do them one at a time. You can also use that when you reprice as well.

I've tried this, and unfortunately I have a lot of loans with lower interest rates or few payments left, which makes their YTM already low. Applying a markup of any significance to a large set of loans in folio and you will inevitably put at least one loan in a negative YTM offering, which makes the whole batch sale attempt fail.

If you can figure out a way around this, please let me know! I cant seem to figure out how to filter these loans out of my attempted batch sales.

find the negative YTM and change it. if you have thousands of notes use CTRL+F and look for parentheses. negative YTM will show in parentheses. ex. (1.25 %)

Thanks! This helped.