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Post by bellybuster on Nov 6, 2018 23:21:19 GMT
I'm shorting their shares.
I don't think investors are going to stick around as their loan books struggle to make the decent returns of the past.
Hopefully they don't go all Elon on me and try and bury me.
I just need IG Index to open their sell market and I'm in.
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markr
Member of DD Central
Posts: 766 
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Post by markr on Nov 7, 2018 12:06:54 GMT
A risky strategy.
"Savvy" investors, such as those likely to use a forum like this, can no longer make the returns of the past because we can't dump our risk on to other investors. I'm sure the majority of retail investors have seen an improvement in their portfolios now that we aren't dumping our risk on them.
FC's business model is changing on both sides. For investors, the product has become much simpler, essentially, deposit your money and we will lend it for you to attempt to achieve a stated target return. No more bidding wars crashing the website, no more robots hoovering up D and E loans creaming off a month's interest and selling at a profit, no more refreshing the loans page constantly to try to beat the robots, no more rants on Trustpilot from people who lost money buying dented E parts from the roboteers. The target rates are conservatively set, so most investors should make or exceed them, and the current 5-7% bottom line target is typical for P2P platforms.
For borrowers, not having to chase headline rates for investors means they can target the prime loans market that P2P traditionally struggles with. The 1.9% rate on the TV adverts are real - I have 1.9% loans in my portfolio - but there's no way they'd have filled loans that low in the old model. This was a constant thorn in FC's side; investors would demand high rates but obsess about bad debt. Being able to allocate investors money as they see fit means they can guarantee to fill them, and improve their loan book bad debt performance.
So, in summary, assuming that huge swathes of investors have or will desert FC is a very forum-centric view.
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r00lish67
Member of DD Central
Posts: 2,692
Likes: 4,048
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Post by r00lish67 on Nov 7, 2018 14:57:18 GMT
A risky strategy. "Savvy" investors, such as those likely to use a forum like this, can no longer make the returns of the past because we can't dump our risk on to other investors. I'm sure the majority of retail investors have seen an improvement in their portfolios now that we aren't dumping our risk on them. FC's business model is changing on both sides. For investors, the product has become much simpler, essentially, deposit your money and we will lend it for you to attempt to achieve a stated target return. No more bidding wars crashing the website, no more robots hoovering up D and E loans creaming off a month's interest and selling at a profit, no more refreshing the loans page constantly to try to beat the robots, no more rants on Trustpilot from people who lost money buying dented E parts from the roboteers. The target rates are conservatively set, so most investors should make or exceed them, and the current 5-7% bottom line target is typical for P2P platforms. For borrowers, not having to chase headline rates for investors means they can target the prime loans market that P2P traditionally struggles with. The 1.9% rate on the TV adverts are real - I have 1.9% loans in my portfolio - but there's no way they'd have filled loans that low in the old model. This was a constant thorn in FC's side; investors would demand high rates but obsess about bad debt. Being able to allocate investors money as they see fit means they can guarantee to fill them, and improve their loan book bad debt performance. So, in summary, assuming that huge swathes of investors have or will desert FC is a very forum-centric view. An excellent analysis, I entirely agree. The only thing I can imagine stymying FC is if a temporary panic sets in for whatever reason, and a significant number of investors haven't understood the product. Then: 1) They suddenly find they can't actually sell all of their loans due to those that are downgraded. 2) Once they understand that, they may calculate their return as being very low/negative because they haven't factored in the multi-year recovery processes that need to happen to make up their return. Which probably won't stop them being mad once they're made aware. I suspect there are may be a lot of casual investors in this camp, but we'll only know if/when they start pitching up in droves here to complain. We get a few Zopa posts here about poor returns, (because they're stupid enough to show month-by-month performance  _ , whilst FC cruise along diplaying their rather misleading summary figures on the main account page.
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invester
P2P Blogger
Posts: 612
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Post by invester on Nov 7, 2018 15:47:36 GMT
I think I would be quite bearish too, although I wouldn't be prepared to back it with cash.
Their market cap is £1.4bn. Priced into this the assumption that they will be grow at a rate of knots.
I don't believe that decent organic growth is there. A good business has no real reason to go to FC, because they can access funding in conventional ways.
Chasing growth would most likely mean a decrease in quality. And because the adverse news is delayed there may be temptation to focus on these metrics first.
I don't think it matters too much if investors do not stick around, there must be a fair amount of institutional cash.
Having said that changes in the macro environment don't look good for them. What would things be like in a genuine recession?
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michaelc
Member of DD Central
Say No To T.D.S.
Posts: 5,710
Likes: 2,985
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Post by michaelc on Nov 7, 2018 16:24:49 GMT
Another thing to consider with shorting that has caught me out more than once is that even if a company performs poorly its share price might still rise - just slower than other stocks in the same market.
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coogaruk
Hello everyone! Anyone remember me?
Posts: 706
Likes: 464
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Post by coogaruk on Nov 7, 2018 18:03:33 GMT
My strategy for making money from FC has already worked.
Between the time their changes were announced and taken effect in Sept. 2017 I had withdrawn 100% of my capital investment, leaving just the earnings invested hoping to make a little on top.
As things stand I would have been better off had I cashed the whole lot in at the time but at least I am guaranteed to have made money from FC in the end. Only (a very long) time will tell exactly how much.
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Post by hammertime on Dec 3, 2018 16:52:39 GMT
My strategy was to get out of F/C best thing i ever did.
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Post by bellybuster on Apr 10, 2020 1:27:05 GMT
A risky strategy. "Savvy" investors, such as those likely to use a forum like this, can no longer make the returns of the past because we can't dump our risk on to other investors. I'm sure the majority of retail investors have seen an improvement in their portfolios now that we aren't dumping our risk on them. FC's business model is changing on both sides. For investors, the product has become much simpler, essentially, deposit your money and we will lend it for you to attempt to achieve a stated target return. No more bidding wars crashing the website, no more robots hoovering up D and E loans creaming off a month's interest and selling at a profit, no more refreshing the loans page constantly to try to beat the robots, no more rants on Trustpilot from people who lost money buying dented E parts from the roboteers. The target rates are conservatively set, so most investors should make or exceed them, and the current 5-7% bottom line target is typical for P2P platforms. For borrowers, not having to chase headline rates for investors means they can target the prime loans market that P2P traditionally struggles with. The 1.9% rate on the TV adverts are real - I have 1.9% loans in my portfolio - but there's no way they'd have filled loans that low in the old model. This was a constant thorn in FC's side; investors would demand high rates but obsess about bad debt. Being able to allocate investors money as they see fit means they can guarantee to fill them, and improve their loan book bad debt performance. So, in summary, assuming that huge swathes of investors have or will desert FC is a very forum-centric view. An excellent analysis, I entirely agree. The only thing I can imagine stymying FC is if a temporary panic sets in for whatever reason, and a significant number of investors haven't understood the product. Then: 1) They suddenly find they can't actually sell all of their loans due to those that are downgraded. 2) Once they understand that, they may calculate their return as being very low/negative because they haven't factored in the multi-year recovery processes that need to happen to make up their return. Which probably won't stop them being mad once they're made aware. I suspect there are may be a lot of casual investors in this camp, but we'll only know if/when they start pitching up in droves here to complain. We get a few Zopa posts here about poor returns, (because they're stupid enough to show month-by-month performance _ , whilst FC cruise along diplaying their rather misleading summary figures on the main account page. Price at time: £3.80 Price now: 55p
This was the best way to make money from FC.
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_ , whilst FC cruise along diplaying their rather misleading summary figures on the main account page.
