Skip to main content

Author Topic: LC Article on Seeking Alpha

R
  • Posts: 23
LC Article on Seeking Alpha
OP: October 18, 2017, 11:00:00 PM
I ran across an interesting article about Lending Club the other day which I believe is relevant to this forum. The author examines the incentives built in to Lending Clubs business model, and how their own rush to grow loan originations could be threatened by capital flight due to increasing risk and lower returns as investors start to move capital elsewhere.

"LendingClub: Capital Supply A Major Risk"
https://seekingalpha.com/article/4113649-lendingclub-capital-supply-major-risk

What do you think?
  • IP logged

  • *****
  • Hero Member
  • Posts: 594
LC Article on Seeking Alpha
#1: October 19, 2017, 11:00:00 PM
He doesn't say anything we didn't already know. 

These are valid concerns.  They are not conclusions about the future tho.  He doesn't predict the future, so he can't be "wrong".  !!!   

Even tho LC's product returns are lower than they used to be, banks are still increasing the amount they put into LC each quarter.  He sounds like he's trying to make a connection between returns going down and banks decision-making, but he fails to complete the argument. 

What is a reasonable return for this product?  Hard to say.  As an investor I'd like to get the outrageously great returns I got a few years ago, but apparently that is no longer possible. 

If the product returns had stayed what they were a few years ago, then LC's stock would have been  worth the IPO price, because they would have continued to grow really fast.   As is often the case, real events proved a little more difficult than that.

  • IP logged

j

jd

  • Posts: 22
LC Article on Seeking Alpha
#2: October 19, 2017, 11:00:00 PM
What would you consider outrageously great returns? I'm relatively new to Lending Club and would like to hear the perspective from someone who has been around a while.

Thanks


  • IP logged

a
  • Posts: 32
LC Article on Seeking Alpha
#3: October 19, 2017, 11:00:00 PM
  • IP logged

l
  • Posts: 10
LC Article on Seeking Alpha
#4: October 19, 2017, 11:00:00 PM
In addition, with LC you are taking single company risk; with HYG you are not.
  • IP logged

T
  • Posts: 6588
LC Article on Seeking Alpha
#5: October 19, 2017, 11:00:00 PM
  • IP logged

T
  • Posts: 6588
LC Article on Seeking Alpha
#6: October 19, 2017, 11:00:00 PM
I thought >10% was pretty great.


It is
  • IP logged

r
  • *****
  • Hero Member
  • Posts: 568




T
  • Posts: 6588
LC Article on Seeking Alpha
#11: October 30, 2017, 11:00:00 PM
Another interesting and insightful article about LC. 

https://www.lendacademy.com/lending-club-closes-five-investment-funds-rebrands-lc-advisors/

Some of this is ancient history, but it's interesting to note that the company seems optimistic, but a few years ago there was significant pressure to liquidate loan portfolios, after the scandal. Still they are able to get 6% returns, which is better than my performance as of late.
  • IP logged

R
  • Posts: 484
LC Article on Seeking Alpha
#12: October 30, 2017, 11:00:00 PM
As I read it they are not "still getting" 6%. From the blog post:

"When we asked Suri about positioning the new offerings to investors he stated that their biggest flagship fund under LC Advisors had delivered slightly over 6% annualized since 2011."

There were some awfully good returns 2011 through mid 2015 that are included the 6% annualized statistic.
Would be curious to see returns by year rather than a 6 year aggregate. Think the last couple of years have yielded very poor returns but I am not an investor with them and don't know for certain.
  • IP logged