goopy
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Post by goopy on Feb 24, 2016 12:51:43 GMT
The risk of letting on how much is in the prefunding pot is that we will start to see games again. We are tempted to do the "bottom up" allocation over all the loans going forward which should be quite fair and stop people playing the system. Appreciate thoughts on that? , I previously supported leaving the pre-funding mechanism alone until the next few loans had gone live and then reviewing. Based on the allocations over the recent new loans, on balance I now support switching to filling all loans bottom-up as you suggested. The post-Xmas famine is clearly now over, the maximum bottom-up allocation on PBL082 was surprisingly reasonable and the level of "gaming" on loans over £1m is now reaching silly proportions. I don't believe my ultimate allocations in PBLs 77-81 would have been wildly different by either route, but the level of confidence (on both sides) of the likely outcome would have been much higher. Given the large number of upcoming loans in the pipeline and the wide range of loan sizes, I reckon you must be in need of clear, reliable indications of forthcoming lender demand if you're to commit to so many borrowers' draw-down timescales. The current pre-funding mechanism no longer gives you that and leads to regrettable abuse of your goodwill in some quarters (as evidenced by your recent need to return substantial unpaid holdings to the after-market). This is all well and good but it is a major advantage to the smaller investor, they will get everything they want while the larger investor will have to make do with fractions. I think a fairer way to stop the 'gaming' would be to stop trading in new loans for at least 72 hours after they have gone live, also there could be some kind of sanctions for investors who don't pay on time?
Just a thought....
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Post by GSV3MIaC on Feb 24, 2016 13:54:15 GMT
The larger investor is going to have to make do with fractions HOWEVER you cut it!
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sl75
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Post by sl75 on Feb 24, 2016 14:17:48 GMT
The larger investor is going to have to make do with fractions HOWEVER you cut it! Sure, but telling an investor who was looking to invest (say) £200k that they'll have to make do with (say) £100k is VERY different to telling them they'll have to make do with (say) £2k. The latter is such a small fraction they might as well not bother. For a medium-sized investor, a bottom-up allocation system will be gamed anyway... someone looking to invest (say) £10k per loan in an environment where £2k per loan is the typical cap would simply sign up their spouse, children, limited companies, (and dog, cat and budgie if necessary), in order to get multiple allocations under their control.
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SteveT
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Post by SteveT on Feb 24, 2016 14:40:08 GMT
Maybe so, but at least SS would have a decent idea of how much their lenders really are willing to invest. At the moment there may be indicated pre-fund demand for £5m+ in pretty much every loan but, if £20m of new loans were launched in quick succession, how much would the lender base really be in a position to pay for? There is no perfect allocation system but the bottom-up approach works well enough for AC and hasn't led the big hitters to take their toys away en masse.
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SteveT
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Post by SteveT on Feb 24, 2016 16:50:44 GMT
savingstream, obviously if you do decide to change to allocating all loans from the bottom up, please make sure to tell everyone a few days in advance (in case anyone is surprised at how much they've been allocated!)
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Post by GSV3MIaC on Feb 24, 2016 16:58:23 GMT
The larger investor is going to have to make do with fractions HOWEVER you cut it! Sure, but telling an investor who was looking to invest (say) £200k that they'll have to make do with (say) £100k is VERY different to telling them they'll have to make do with (say) £2k. The latter is such a small fraction they might as well not bother. For a medium-sized investor, a bottom-up allocation system will be gamed anyway... someone looking to invest (say) £10k per loan in an environment where £2k per loan is the typical cap would simply sign up their spouse, children, limited companies, (and dog, cat and budgie if necessary), in order to get multiple allocations under their control. I have trouble coming up with any reasonable model of investors/demand which results in a 2k vs 100k allocation for a £2m loan. Maybe savingstream could plug in the numbers on the last biggie (81?) and see what the effect on the BVHs would be (no names, no packdrill) if they'd bottom up allocated the lot, or even just the first million.
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Post by GSV3MIaC on Feb 24, 2016 17:58:54 GMT
Ooops, replying to myself .. however I've swapped emails with SS and it seems like 'bottom up for everything' is not likely to happen - the issue is not the minnows who want £200 eating into the BH budget (BH being six figures and up), it's the 'middle hitters' who want £10k who would cause a BH drought on any completely bottom up system. I don't see why we couldn't have bottom up on the first million though, which'd be consistent with smaller loans. Nor is it clear that the BH is immune from gaming by middle hitters bidding £50k when they only want £10k.
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SteveT
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Post by SteveT on Feb 24, 2016 18:07:14 GMT
Ooops, replying to myself .. however I've swapped emails with SS and it seems like 'bottom up for everything' is not likely to happen - the issue is not the minnows who want £200 eating into the BH budget (BH being six figures and up), it's the 'middle hitters' who want £10k who would cause a BH drought on any completely bottom up system. I don't see why we couldn't have bottom up on the first million though, which'd be consistent with smaller loans. Nor is it clear that the BH is immune from gaming by middle hitters bidding £50k when they only want £10k. Oh well, continued gaming it is, then. You've got to feel sorry for those poor BHs (if that isn't a contradiction in terms)
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ablender
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Post by ablender on Feb 24, 2016 18:46:57 GMT
The larger investor is going to have to make do with fractions HOWEVER you cut it! Sure, but telling an investor who was looking to invest (say) £200k that they'll have to make do with (say) £100k is VERY different to telling them they'll have to make do with (say) £2k. The latter is such a small fraction they might as well not bother.For a medium-sized investor, a bottom-up allocation system will be gamed anyway... someone looking to invest (say) £10k per loan in an environment where £2k per loan is the typical cap would simply sign up their spouse, children, limited companies, (and dog, cat and budgie if necessary), in order to get multiple allocations under their control. Let us say that there is a loan of 400k and there are three BH each wanting £200k apart from all the rest of us. How would you see this divided in a fair way?
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mikes1531
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Post by mikes1531 on Feb 24, 2016 19:35:54 GMT
Sure, but telling an investor who was looking to invest (say) £200k that they'll have to make do with (say) £100k is VERY different to telling them they'll have to make do with (say) £2k. The latter is such a small fraction they might as well not bother.For a medium-sized investor, a bottom-up allocation system will be gamed anyway... someone looking to invest (say) £10k per loan in an environment where £2k per loan is the typical cap would simply sign up their spouse, children, limited companies, (and dog, cat and budgie if necessary), in order to get multiple allocations under their control. Let us say that there is a loan of 400k and there are three BH each wanting £200k apart from all the rest of us. How would you see this divided in a fair way? IMHO, the current SS system is about as fair as I can imagine. Sub-£1M loans are allocated by a method that favours smaller investors, and larger loans are allocated by a method that favours larger investors. BHs will learn to ignore the smaller loans. SS can't please all the people all the time, and this seems like a reasonable compromise. For this to work, of course, there has to be a mix of loans coming out of the pipeline. And actually, if smaller investors are willing to play the game, they probably can be happy the great majority of the time -- as long as the SM stays liquid enough that they easily can dispose of surplus parts on those occasions when allocation factors turn out to be much larger than they were expecting.
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webwiz
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Post by webwiz on Feb 24, 2016 19:43:02 GMT
The larger investor is going to have to make do with fractions HOWEVER you cut it! What about top down? SS are to be commended for not doing this and looking out for the S&M investors.
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ablender
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Post by ablender on Feb 26, 2016 14:10:39 GMT
The larger investor is going to have to make do with fractions HOWEVER you cut it! What about top down? SS are to be commended for not doing this and looking out for the S&M investors. I read through your posts at it seems to me that you are mis-understanding what bottom-up means. It does not meant that people who bid less will have 100% of what they want before we move to the next person. It only means that we start sharing £1 or £10 per lender and then move on to the next money (if the lenders want more) until all money is used . In this way a top-down method cannot work as you cannot start by assigning 100% of the loan to each lender.
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sam i am
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Post by sam i am on Feb 26, 2016 14:13:51 GMT
What about top down? SS are to be commended for not doing this and looking out for the S&M investors. Why should SS look out for the sado-masochist investors?
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jonno
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Post by jonno on Feb 26, 2016 14:17:02 GMT
What about top down? SS are to be commended for not doing this and looking out for the S&M investors. Why should SS look out for the sado-masochist investors? We could always have a whip 'round 
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Post by GSV3MIaC on Feb 26, 2016 14:22:11 GMT
Back on topic (ish) I see PBL084 now has a number, although it is still only at stage1. Documents available .. I wonder when it might hit the market?
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