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Peer to Peer Lending News Roundup – November 10, 2012

by Peter Renton on November 10, 2012

During the week I share the latest p2p lending news on Twitter as it happens. Then every Saturday I take the most interesting news items and blog posts from the past week and share them here.

With Lending Club crossing the $1 billion mark earlier this week, not surprisingly most of the news centered around Lending Club.

LendingClub Issued $1 Billion in Loans, CEO Says from Bloomberg TV – Interview with CEO Renaud Laplanche on Bloomberg on the day they crossed $1 billion in loans.

Lending Club Now Offers Hedge Funds from Bargaineering – A description and some commentary on the LC Advisor funds.

RateSetter provision fund from P2P Money (UK) - No investor has ever lost money due to defaults at UK p2p lender Ratesetter. The provision fund has reimbursed every investor for every default. Impressive.

The P2P Lending Experiment: Lending Club Surpasses $1B In Personal Loans, Hits Profitability from Techcrunch – Coverage of the Lending Club announcement and party by the leading technology blog.

Lending Club Exceeds $1 Billion in Personal Loans from Lending Club – Cool infographic from Lending Club showing some of the details of how they made it to $1 billion.

Lending Club Returns Increase To 12.22% from Bible Money Matters – Long time blogger and Lending Club investor shares his latest returns and strategy.

Five Year Review: Lending Club Notes Outpace Stocks and Bonds from the Lending Club blog – Comparison of the returns and volatility of Lending Club notes with the S&P 500 and high yield corporate bonds.

Lending Club Loan Selection using PeerCube’s BLE Risk Index from Random Thoughts – Founder of PeerCube discusses how be is using his new BLE Index to select loans.

From the Lend Academy Forum

The Lend Academy forum is where investors go to discuss p2p lending. Below are some topics that were being discussed this week.

What’s your MO – Investors share their strategies on how they choose loans on Lending Club.

My secret weapon for lower defaults – Discussion among Prosper investors of ways of mitigating defaults.

Calculation of ROI and IRR – Lending Club Net Annualized Return numbers and other ways to calculate ROI.

{ 8 comments… read them below or add one }

Dan B November 10, 2012 at 2:02 pm

One other tidbit that is related to Lending Club’s rapid increase, but isn’t talked about much at all is its impressive growth in the number of investors. In March 2011 when figures were compiled for the GAO report on p2p lending, LC reported 20,600 total investors. Today, that figure is now over 45,000. Prosper had around 60,000 investors as of March 2011. I have not seen their most recent numbers. So that’s over 100,000 between the 2 outfits, including both individual & institutional. Although there is obviously some commonality in investors, in my opinion, the continued rapid increase of the number of investors is important in achieving more visibility for the industry in its attempt to becoming a more mainstream investment that will continue to deliver above average returns into the future.

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Peter Renton November 11, 2012 at 6:49 am

Dan, I completely agree. It is even more important for retail investors like us that this number continues to grow rapidly. We know that the institutional money is coming in fast and for every one of the those investors we need 100 or more retail investors joining to maintain some sense of equilibrium.

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Knoubodei November 11, 2012 at 3:56 pm

Speaking of retail investors, did Prosper say anything about adjusting how quickly institutional investors(WORTH-BLANKET2) can acquire notes during your meeting? Thanks in advance.

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Peter Renton November 12, 2012 at 7:00 am

This is an issue I hit them up with regularly. They are working on a resolution to this but they gave me no time frame. I have told them it is difficult for me and other investors to put the amount of money to work that we would like because of Worth-blanket2 and others snapping up the notes so quickly. They know it is a problem and have been told time and again they are working on it. I wouldn’t hold your breath, though. My guess is we are at least six months away from any resolution here. In the meantime they said their focus is to get more quality loans on the platform so it becomes less of a problem.

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Knoubodei November 13, 2012 at 4:42 pm

Thanks for the response. I guess I will just have wait and see if the Prosper loan availability situation improves.

Also, do you know if anyone has done a statistical analysis of the impact on the loan quality/quantity of LC reserving a loan portion for institutional investors/designated investors in Oct2012. I haven’t seen a big impact on my filters but there are a lot people better at data analysis in the retail P2P community than I am. It would be nice to see some hard data to either prove or dismiss the initial emotional reaction to the decision by LC to reserve a portion of the available loans; even if it is just one data point.

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Peter Renton November 13, 2012 at 10:10 pm

It is way too early to discover any impact of the new whole loan/fractional loan thing. Most of these loans haven’t even received one payment yet. Within 12 months we will get some idea but don’t expect any analysis any time soon.

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Knoubodei November 14, 2012 at 11:54 am

I agree that it will take time to determine the performance of “reserved” loans vs “non-reserved” loans. However at this time, I am more interested in how similar the loan attributes of the “”reserved” loans vs “non-reserved” loans in Oct2012. For example, what is average credit score, # of inquiries, average income, etc of the “reserved” loans vs “non-reserved” loans. If the initial loan attributes of the “reserved” loans vs “non-reserved” loans are statistically similar I would assume that they would perform similarly over time with respect to defaults. I am also curious about the % of loans that were resevered.

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Peter Renton November 15, 2012 at 10:32 am

I see what you mean. Once we have some more data that would be an interesting comparison. I think we need a couple of thousand loans first to really see any trends.

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