Author Topic: Lending Club - Time to panic?  (Read 100456 times)

chasesfish

  • Magnum Stache
  • ******
  • Posts: 3281
  • Age: 37
  • Location: Texas
Re: Lending Club - Time to panic?
« Reply #400 on: July 31, 2019, 11:52:03 AM »
Oh I didn't notice this, but LC just did a reverse stock split this month of 5:1. So their stock of $3 is now readjusted up to $15. Why is this company still valued at 1.25 Billion?
Its amazing to me.  I didn't earn anything on my put options, I guess the market can remain irrational longer than my options can remain open

My guess is that your option were also readjusted? Can you tell what happened to them? Does it only represent 20 stocks now or how does that work? I have to think selling .2 of an option isn't possible.

They're January puts at $2 share.  I only have $150 worth left, made the trade break-even back in December when the market was crashing.  Just holding them until end of year then I'll take the loss to get it into this tax year

CanuckExpat

  • Magnum Stache
  • ******
  • Posts: 3004
  • Age: 36
  • Location: North Carolina
    • Freedom35
Re: Lending Club - Time to panic?
« Reply #401 on: July 31, 2019, 03:16:59 PM »
What discount you do you offer them at? I've been trying to sell my notes for several months now, and only get a few bites. Usually offer at around a .25% discount. Should I go lower?

At what discount would you consider buying the notes if you didn't already own them?

appleshampooid

  • Stubble
  • **
  • Posts: 244
  • Relentless Snacker
Re: Lending Club - Time to panic?
« Reply #402 on: August 09, 2019, 12:32:40 PM »
Two weeks ago I started selling off my LC loans.  I am probably 80-90% into cash by now.  The returns have just not been worth keeping the account open and the larger worry of something else going to zero. 

All my loans are in a IRA account, does anyone know what the fees will be to transfer the balance to my Schwab IRA?  I fear that I will be left with 5.32$ in the account and it would cost 20$ to do a transfer.
Do you have STRATA as your custodian? I think that's the only option...(formerly SD IRA Services).

I recently went through this, but STRATA closed my account (can't even log in) so I'm not 100% sure what the fee was. Basically you have to transfer it twice. First you go to your LC account and tell them to ACH all your cash to the custodian. Then the custodian (STRATA) has your cash and you initiate the rollover with the destination IRA (Schwab in your case). In my case, Vanguard was able to initiate the rollover and grab the money. I think it was a $200 fee for this crap (which was noted in the initial SD IRA account agreement docs). So you really only want to do it once.

It was a balancing act for me... I wanted to get the money out of cash ASAP and back into my investment portfolio, but I also wanted to collect those recoveries for as long as possible. Basically I had to cut it off at a certain point and just pull the trigger.

FireLane

  • Pencil Stache
  • ****
  • Posts: 513
  • Location: NYC
Re: Lending Club - Time to panic?
« Reply #403 on: September 25, 2019, 08:12:09 PM »
This is new. When I sign in to my Lending Club account, I get a banner that says:

Quote
Investment activity in LendingClub Notes is limited for residents of some states. We are working to expand access in these states.

AK, AZ, FL, NC, ND, NM, NY, PA, TX: Residents are unable to purchase LendingClub Notes on the primary market. However, they are permitted to buy and sell LendingClub Notes on the Folio Investing Note Trading Platform.

OH: LendingClub Notes are currently unavailable for residents to purchase or trade.

I'm positive this wasn't there last week. I live in New York, and although I haven't been putting new money into Lending Club for a while, I never ran into any issue doing so before now. There's no explanation of what specifically has changed, and other people seem baffled and frustrated by it:

https://www.lendacademy.com/some-investors-locked-out-of-investing-in-lendingclub-loans/

This could be another sign that Lending Club is circling the drain. I'm just glad that I've been withdrawing my money for months rather than reinvesting. Just over $2000 left to go now.

chasesfish

  • Magnum Stache
  • ******
  • Posts: 3281
  • Age: 37
  • Location: Texas
Re: Lending Club - Time to panic?
« Reply #404 on: September 26, 2019, 04:15:17 AM »
I'm not surprised.  This is the same company that refuses to just provide standard investment reporting data, showing my YTD, 1yr, 3yr, and 5yr returns.   It still wants to show me 1.89% and include 2011 data in the numbers

AlanStache

  • Handlebar Stache
  • *****
  • Posts: 1910
  • Age: 40
  • Location: South East Virginia
Re: Lending Club - Time to panic?
« Reply #405 on: September 26, 2019, 05:48:32 AM »
@FireLane, I think I saw a headline to that effect in the last week or so.  Did not click on it. 

The bulk of my balance was sold off and is in the process of being transferred to my schwab account.  I ended up with ~400$ in loans that I could not sell off, I progressively raised the discount every few days and still no takers.  Figure I will give it a few months and try again or just let the loans mature/default then transfer the balance.

ChpBstrd

  • Handlebar Stache
  • *****
  • Posts: 1568
Re: Lending Club - Time to panic?
« Reply #406 on: September 26, 2019, 11:36:52 AM »
We have information the stock analysts don't have: Absent the sort of changes that would make it just another small bank, LC is going to fail as a lending platform.

If you'd like to place a bet, you can set up a synthetic short all the way out to January 17, 2020.

Buy the $4.50 strike put for $1.40.
Sell the $4.50 strike call for $1.48.

Thus you take an $0.08 credit to enter a trade that moves the opposite of LC stock (over time, not immediately/daily). LC is already down 21% YTD.
Wait two years for this house of cards company to tumble, or cash out at the next earnings release. Your breakeven is $4.58, which is 8% higher than today's price.
Best of all, this is portfolio insurance. If the broader stock market declines, speculative companies like LC will get hit hard and your synthetic short will make up for some of your other losses. With this synthetic short, your leverage is about 3:1 on a company that is 60% more volatile/risky than the market.
I'm checking in on the performance of my synthetic short idea from December 6th.

Last put price 1.55
Last call price 0.91
----------------------
Current profit: 0.64

Assuming you had to deposit 100% margin ($4.50/share) for the short call, that's an ROI of 14.2% since December 6th. Multiply by roughly three to annualize that! Interestingly, most of the profit came from deterioration of the call.

Today the call is worth 0.53 and the put is worth 1.45. Factor in the 0.08 received upfront to enter the trade and you'd be up $1 per share. In that time, the share price dropped about 84 cents.

It might still be a good deal to short LC. Options expiring in 2021 are now available, plus several reliable recession indicators are now in the red zone. However, someone might still acquire LC for a premium. High risks and high rewards...

Time to check the progress of this synthetic short idea. Since my last update LC did a one-for-five reverse split to prop up their stock price, so the options are now “non-standard” and represent 20 shares instead of 100. For comparison, I will multiply the usually quoted option price per share by 20 and compare it to the value of the entry position which is multiplied by 100.

Original idea:
     Buy a put for 100 shares at 4.50 strike for $140
     Sell a call for 100 shares at 4.50 strike for $148
     ———-
     Net: +$8

Current value:
     Sell a put for 20 shares at (1.68 x 20=) $33.6
     Buy a call for 20 shares at (0.025 x 20=) $0.50
     ———
     Net: +$33.10

Total return excluding commissions is +$33.1 + $8 original credit = $41.10

If I held this position I would have long ago rolled it closer to the money and to a later expiration. The reverse split and time decay have already knocked it down almost 77% since my last check in. The bleeding of time value is very high for far-OTM options nearing expiration such as these, and the liquidity of the non-standard options might get worse.

Still, this company with its horrible product still has a unicorn market cap of $1.21 BILLION. Half of that valuation will evaporate if either of the following happens next year:

1) a correction in which LC debt becomes more toxic than 2008-era NINJA mortgages, or
2) no correction and business as usual.

A short position in LC remains a compelling way to offset portfolio market beta while maintaining a chance for the appreciation of one’s hedge even if the market does go up (as would have worked in 2017 & 2018). This is offset by the risk of some fool buying LC for a premium, a change of leadership/strategy, or the issuance of a cryptocurrency by LC). Entering a bear spread would be a way to profit from LC’s probable decline while limiting risk.


chasesfish

  • Magnum Stache
  • ******
  • Posts: 3281
  • Age: 37
  • Location: Texas
Re: Lending Club - Time to panic?
« Reply #407 on: November 04, 2019, 05:47:21 AM »
One of the more interesting things about Lending Club, I have about $11,000 in charged off notes.

I wonder what my residual will be and for how long from those?   Right now its between $5 and $15 per month.

AlanStache

  • Handlebar Stache
  • *****
  • Posts: 1910
  • Age: 40
  • Location: South East Virginia
Re: Lending Club - Time to panic?
« Reply #408 on: November 04, 2019, 10:56:56 AM »
I was able to sell most all of my notes and transfer the balance to my primary schwab ira.  currently have 66$ in cash and 425$ as an adjusted balance.  will probably let it sit for a year or more then try to get the remainder out; I expect fees to eat a large percent but still should be positive.

some notes that on the surface looked fine just would not sell even as I retched up the discount.  maybe someone knows something about 38yo men in Ohio who make between 45-55k/year and needed to consolidate debt...? 

I am not sure it was a mistake to try LC but I dont think it worked out in my favor.  Even beyond LC I have been simplifying things, KISS and go outside to have some fun.