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Jun 30, 2015
7:23:35am
Blog entry #23 (6/30/15) Lending Club: 8.34% return to date; Value $10,227
Recap: This is part of a series of posts. I invested weekly from Nov 2011 through Dec 2013 until I hit $10,000 (actual deposits were $9,460). Beginning January 1, 2014, I have withdrawn at a 6% rate ($150/Quarter) and let the balance move where it moves (I expect a 6% net return, so anything above $10K represents a higher return than expectation) The return percentage listed in the topic heading is what is reported by LC. Specific stats are below. I have made previous monthly and quarterly posts that provide some history of my experience and a lot more detail and background (probably good background to read if you missed them to bridge to what is below). Search under “Acorn” and “Lending Club” and you should find the various numbered entries. I generally post these the last day of each quarter.

Here is the update of my stats/experience to date, followed by a number of observations:

5 year/3 year note mix: 92%/8%. All notes are $25 lots, but I have been considering raising that to $50.

1 A Notes; 6.83% average yield
239 B Notes; 10.48% average yield
364 C Notes; 14.64% average yield
9 D Notes; 18.26% average yield
2 E Notes; 22.40% average yield
0 F Notes;
0 G Notes;

Payments Received to Date:
Principal: $11,317
Interest: $2,856
Late Fees: $0.97 (clearly, late fees are hardly ever collected)
Recoveries $69.43
Default Losses ($1,097 – original principal amount on these defaulted notes was $1,450)

Current forecasted monthly cash flow rate: $495 (includes both principal and interest)

Current Average Yield – 13.30%. The primary difference between the return to date and the average yield primarily is defaulted notes. In addition, a small piece of the difference is service fees, or ½% for fees to LC to administer my loans; to date, I have paid $143 in fees, and those are netted out of the returns.

Here is my note count rollup by status:
Not yet issued: 14 notes, plus some idle cash
Issued and Current: 571 notes
Fully paid: 226 notes
In Grace Period: 8 notes
Late 16 to 30 days: 6 notes
Late 31 to 120 days: 14 notes
Default: 1 note
Written off: 58 notes

A few observations:

It is getting more difficult each quarter to find something new to report or some new angle to analyze. I would be interested in hearing some of your experiences, either with this, or other developments in the market.

Recently, I have noticed that my LC selection criteria is not being fulfilled on a timely basis. In the past, I would have to “turn off” my automatic investment in order to withdraw the $150 per quarter. Right now, I have more than that sitting idle, and during the quarter I withdrew $150 without needing to turn off the auto invest.

Several of you have complained to me about the same. Some of you have told me that you are giving up in frustration and withdrawing your cash. I am going to continue for now and watch how this plays out in what I expect to be a higher interest rate environment, and at some point, through a recession. It is very difficult to find a fixed income type product that I am comfortable with, and while I wouldn’t put a large allocation in this, it might be something to generate some income off of in retirement.

One of my concerns is if LC has stronger demand than supply, they will lower their standard and the resulting returns will diminish from where they are currently. The basic economic model is raise prices when demand is too strong. Another angle that will be interesting to watch.

Changing the subject radically, for those of you that are accredited investors, I saw a very impressive presentation last night. I haven’t had the chance to look at the numbers (and based on current trends, it is probable that the pre money valuation is insane), but check out this company: http://www.holganix.com/. They have had some nice success in the ornamental market (i.e., grass) with hundreds of golf courses as well as professional sports venues. They are entering the agricultural market and could have some explosive growth. I know they are doing a fundraising round, but I haven’t seen any of the details. I was very impressed with their CEO.

Another one I saw last night that I was also very impressed with: http://www.arvegenix.com/ They are developing a “weed”, Pennycress, to be an in-between crop planted at the end of the corn crop in the fall and harvested just before soybeans are planted in late spring. Serves as a cover crop that generates revenue. Very interesting. I don’t think they are fundraising right now, but I wondered about how much farmland the church has and if this could be a big positive for them in a couple of years once it is developed. The plant material will be used for animal feed and the seed will be used as a biofuel.

I went to the presentations sponsored by this group: http://www.theyieldlab.com/. I am probably mentally disturbed to find this stuff fascinating. While the initial attraction is searching for alternative investments, sometimes I think I should have been a farmer or a botanist. Growing stuff is really fun. I think it falls into the same category – growing plants, growing money. Yep, I am mentally deranged.

Well, that is enough for my rambling. Hopefully someone enjoys/benefits from this still…
Acorn
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Acorn
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