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LendingClub Files for $500M IPO

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Re: LendingClub Files for $500M IPO

#31

Post by guiambros »

halcyondaze wrote: post #23

I really like LendingClub. I was a bit mad at my default rate, as I followed stringent criteria, but I'm still sitting at 6.5%. I actually had someone die that I lended to and it really hit home with me for some reason. The return isn't amazing, but I'm not doing anything else with that capital right now, and don't care to toss it in a different vehicle right now. It's fun to use for me.

Same here. I'm getting a 6.03% return. Low, for sure, but at least I get the feeling that I'm helping a few folks to borrow money, at rates and conditions that are more reasonable than with traditional banks.

Re: LendingClub Files for $500M IPO

#32

Post by pmorici »

AjithAntony wrote: post #29
rtanaka wrote: post #20

Earlier quoted context omitted.

I started in January of this year. It does seem high for sure. I'd like to think I spent a lot of time finding people that had the most to lose when making a decision (mortgage, relatively high income, stable job, etc) to lower my risk. But who knows. edit: so i just checked for real. looks like it's been over a year (time flies). for the record, it shows 199 (instead of my stated 200) because i put $50 into one inve…

> i put $50 into one investment instead of the standard $25 It's funny you mention that. I went through a phase where I started doing $50 and $100, becuase I couldn't find enough high quality borrowers. I figured that since I trusted these people with $25, why not a little more. It just hurts more when they default. When I see a high value note charged-off, I just feel more betrayed than usual.

I think that's one of the mistakes people make when investing in LC. The safety of the investment comes from having a small amount invested in a large number of notes. Until you are invested in 800+ notes you shouldn't be investing more than the minimum in any one note. If you look at LC's statistics on investor returns 800 notes seems to be the magic number to amortize the default risk.

Re: LendingClub Files for $500M IPO

#33

Post by pmorici »

bsims wrote: post #11

A part of this article is false. "LendingClub doesn't loan out its own capital and collects fees of loans that are originated on its platform from both individuals and more sophisticated investors alike." Lending Club owns a subsidiary fund that invests in the platform as well. Investors should be aware that LC is both a platform, and an investor in it's own platform which, if not monitored closely, can be potentiall…

I don't think it is. The subsidiary you are talking about LC Advisers isn't using LC's own capital. It is a vehicle that manages investments from institutional investors.

As LendingClub has grown it has transitioned from a purely P2P model where individuals made the majority of the loans to a whole loan model where banks and other accredited institutional investors make up the majority of the loaned capital. They still have the original platform but their growth isn't coming from Joe off the street it's coming from big banks etc... who see this as a cheaper way to do underwriting.

Re: LendingClub Files for $500M IPO

#34

Post by pmorici »

cylinder wrote: post #28
MIKEMAC972 wrote: post #4

LendingClub reported $86.9 million of revenue in the first six months of the 2014, up 134 percent. P2P is fundamentally shifting how people gets loans- banks should definitely be paying attention.

Banks don't really care about these types of loans. They do their unsecured individual lending through credit cards. At the retail level they are more concerned with mortgages, HELOC, high net worth individuals, and collateralized business lending.

Banks and institutional investors make up the majority of the money being loaned out. If you look at the S1 filing you will see that something like 80% of the money being loaned out isn't coming for individuals. It's coming from banks and institutions.

http://www.lendacademy.com/forum/index.php?topic=2612.msg225...

Re: LendingClub Files for $500M IPO

#35

Post by nostromo »

jliptzin wrote: post #18

I have had a LC account for about 4 years. The returns aren't that great, around 6%. I did some random loans of mixed interest rates, but have also applied my own set of filters which brought the rate up a little bit over the last year. The notes are also not liquid. You will suffer huge losses if you need to sell. I thought this would mean that I could get other people's notes at deep discounts...typically sellers w…

For comparison: I put $1000 into Prosper around 2007 as an experiment. My average annual return is 4.19% (just logged in for the first time in... forever).

However, the return has been rising. Through 2008 my annualized return was negative (-4%) and has since been closer to 8%, with double the returns coming from lower credit scores.

Re: LendingClub Files for $500M IPO

#36

Post by bsims »

pmorici wrote: post #33
bsims wrote: post #11

A part of this article is false. "LendingClub doesn't loan out its own capital and collects fees of loans that are originated on its platform from both individuals and more sophisticated investors alike." Lending Club owns a subsidiary fund that invests in the platform as well. Investors should be aware that LC is both a platform, and an investor in it's own platform which, if not monitored closely, can be potentiall…

I don't think it is. The subsidiary you are talking about LC Advisers isn't using LC's own capital. It is a vehicle that manages investments from institutional investors. As LendingClub has grown it has transitioned from a purely P2P model where individuals made the majority of the loans to a whole loan model where banks and other accredited institutional investors make up the majority of the loaned capital. They sti…

Agreed on the institutional side. However LC also invests in their own loans from time to time, both directly or through LC Advisers.

In the early days LC invested their own capital more heavily to make sure loans were fully funded, and to ensure the community was active enough.

This is why they have "funded_amnt" and "funded_amnt_inv" to denote how much of the loan was funded by investors vs. internally.

Re: LendingClub Files for $500M IPO

#37

Post by Scoundreller »

nostromo wrote: post #35
jliptzin wrote: post #18

I have had a LC account for about 4 years. The returns aren't that great, around 6%. I did some random loans of mixed interest rates, but have also applied my own set of filters which brought the rate up a little bit over the last year. The notes are also not liquid. You will suffer huge losses if you need to sell. I thought this would mean that I could get other people's notes at deep discounts...typically sellers w…

For comparison: I put $1000 into Prosper around 2007 as an experiment. My average annual return is 4.19% (just logged in for the first time in... forever). However, the return has been rising. Through 2008 my annualized return was negative (-4%) and has since been closer to 8%, with double the returns coming from lower credit scores.

Given the crash in 2009 and how hard-hit most public lending institutions have been, you've probably done very well.

Re: LendingClub Files for $500M IPO

#38

Post by akg_67 »

bsims wrote: post #36
pmorici wrote: post #33

Earlier quoted context omitted.

I don't think it is. The subsidiary you are talking about LC Advisers isn't using LC's own capital. It is a vehicle that manages investments from institutional investors. As LendingClub has grown it has transitioned from a purely P2P model where individuals made the majority of the loans to a whole loan model where banks and other accredited institutional investors make up the majority of the loaned capital. They sti…

Agreed on the institutional side. However LC also invests in their own loans from time to time, both directly or through LC Advisers. In the early days LC invested their own capital more heavily to make sure loans were fully funded, and to ensure the community was active enough. This is why they have "funded_amnt" and "funded_amnt_inv" to denote how much of the loan was funded by investors vs. internally.

LC no longer invests any significant amount of own money in loans. See https://www.peercube.com/blog/post/11 for the analysis. IMO, it is negative that LC no longer has their own skin in the game as their interests are no longer aligned with lenders on their platform. Most of the recent policy changes, for example loosening the credit quality and charging lenders to pay for collection and charging lenders for first few days of interest to LC's loan originator, seem to reflect this dissociation.

Re: LendingClub Files for $500M IPO

#39

Post by chriogenix »

I've been investing in lending club for 4 years. Returns on different loan filters vary from 6%-13% on the high end. You're going to have defaults. When I try to explain this investment vehicle they look at me skeptically. Its a great place to invest risk capital as you'll get a semi decent return on your cash but I definitely wouldn't invest anything you can't stand losing. It will be interesting to see how the IPO turns out.

Check out lendingmemo.com and lendacademy.com for more insight on how to invest properly in the platform.

Re: LendingClub Files for $500M IPO

#40

Post by chriogenix »

jliptzin wrote: post #18

I have had a LC account for about 4 years. The returns aren't that great, around 6%. I did some random loans of mixed interest rates, but have also applied my own set of filters which brought the rate up a little bit over the last year. The notes are also not liquid. You will suffer huge losses if you need to sell. I thought this would mean that I could get other people's notes at deep discounts...typically sellers w…

Buying the defaulted discounted notes sounds like a good idea but usually the discount rate I've found on FolioFn to be not that great and will thus make it difficult to drive returns. On top of it to make it worse, Lending Club charges collection fees which makes getting a return even more difficult.
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