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Post by rahafoorum on Nov 25, 2023 13:33:04 GMT
Took some time to analyze Estateguru's loan portfolio. It's in Estonian, but google translate will probably help, if not with anything else, then at least with table headers.
Note that majority of the defaults are relatively fresh, so it's difficult to make any confident conclusions about recovery rates going forward. Better data could possibly allow to get some better insights, but alas we don't have it.
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Post by captainconfident on Nov 26, 2023 12:35:23 GMT
@rahaforuum I congratulate you on a great piece of work which must have taken a long time to calculate and assemble. Good to see that Estateguru participated in its creation. It is not often that I come across a quality analysis like this, and I am grateful that you shared it with us.
From here you can erect two different hypotheses:
1)Loans that have become more recently problematic have not had enough time to recover, and the picture is getting significantly better.
2)The recovery of newer loans is significantly worse for some reason.
From your research, it is clear that if you draw a line at the end of 2019, EG has close to 100% success in recovering loans. So we might now look to see the resolution of 2020 defaults gathering pace. Is there evidence of that? Taking into account that recovery processes are apparently slower in newer markets. So maybe there will be a time lag before 2020 loans are finally resolved. How much time to allow for these slower processes? Would it be fairer to return to this analysis after a year or so?
The question I ask myself is how much stress is being caused to EG in sorting out the problem loans. But I do still invest with EG for diversification reasons and remain optimistic.
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Post by rahafoorum on Nov 26, 2023 19:41:03 GMT
The default statistics aren't very good, but if you look at the image provided by EG, you can see that pretty much all of the outstanding defaults occurred sometime in 2022-2023. Loans that defaulted earlier have been mostly recovered. So yes, there has not been too much time for those loans to recover, especially taken into account that recoveries seem to be slower in Germany and Finland. However, the loans that have previously recovered, were in majority Estonian loans. Meaning that you can't really assume that loans from different markets will recover as well as Estonian loans. There just isn't enough data to make those predictions.
Given EG's comments, we should expect to see recoveries pick up soon. In 6 months to a year we should have a better idea. Either the recovery rate has improved a lot or we can conclude that it doesn't really work that well in some countries.
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Post by captainconfident on Nov 26, 2023 20:54:18 GMT
You've asked all the right questions, and I look forward to you asking them again in a years time.
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Post by rahafoorum on Dec 1, 2023 11:58:51 GMT
Not sure I want to spend another week on that, but we'll see.
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