tonyr
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Post by tonyr on Jan 13, 2015 22:55:56 GMT
I don't think you can assume that under the old system you would have been first in to pick up a big chunk ahead of everyone else (is that fair?) - reality is in this low liquidity market you are just as likely to have got zero. IMHO, someone who wanted to obtain large chunks of loans under the old system, and had the time to keep a close eye on the website, would be able to place pre-bids as soon as the loans appeared on the website, and probably would have been able to get what they wanted. And if they had shadow bidding privileges, their pre-bid would have been converted to a shadow bid automatically when the auction went live, and they wouldn't have had to supply the funds until shortly before drawdown. There's a couple of problems with this argument. * the FSA regulations changed so that you've got to have funds to support your shadow bids - so negating the advantage of shadow biding * it's completely uneconomic for FC to be chasing a lot of small shadow bids. I believe they have a really good business and the majority of startups need financing in the first few years, but we are all stuffed if AC don't have a viable business so we can't expect them to get on the phone/email to chase small shadow bids.
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mikes1531
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Post by mikes1531 on Jan 13, 2015 23:12:43 GMT
Have you thought of asking AC if they need any more unwriters? You seem to have the readies and a good head for investment... I suspect the answer may be in a previous comment... Underwritng is expensive, you've got to have all the money you pledge and it can stay hanging around as cash for a long time. There's no underwriter I'm talking to that thinks it's clearly better to be underwriting than being a retail investor and there is a lot of feeling that being a retail investor gives a lot more flexibility and much less work for about the same rewards. Underwriters have to have instant access to large sums on money so that they can cover their bids at short notice. I presume they are paid some sort of 'commitment' fee for doing this. Once they've put up their funds and the loan draws down, I presume they earn the standard interest on the loan, plus probably a bit more. But they then have to offer a big chunk of their units on the Aftermarket. With a small, popular, loan their units may sell quickly. With other loans, they may still be holding units months later. (Think of Loan #87, where 55% of the loan is available now on the Aftermarket, more than seven months after drawdown.) Not knowing how long it will take to sell their units must affect how much they can bid on future loans. And if units sell quickly they could find themselves sitting on a pile of idle cash waiting for other loans to be ready to draw down. I used to think that being an underwriter sounded like an attractive proposition. Now, I'm not so convinced. So far, I've been able to reinvest any proceeds I've received back into other AC loans quickly enough that I haven't had that much funds sitting idle in my account waiting for something to invest in. Having said that, though, the diversification of my loan book isn't as good as I would like, and my AC account has been taking more of my time to manage than I would like. I'm hoping both of those aspects will improve with time, but I don't know whether that really will happen or whether that's just wishful thinking.
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Post by batchoy on Jan 13, 2015 23:31:05 GMT
I sense that the direction of travel of ACs model will, if they stick with it, logically take them on a progression ever closer to a Wellsley/RS model: stated returns with the underlying investments entirely handled by the platform. I think that will be a mistake as it removes a differentiator. My investment in AC has been pretty much static now for months. Whereas I had intended to increase it significantly. This is not ACs fault, they may well have offset and more any withdrawl or hold back from prior lenders with new lenders. But its a different model, and probably not what many of this forum really wanted as an outcome I suspect. I sense a slightly different direction with AC moving towards profile based investment accounts. the current MLIA is a stepping stone of which they had to roll back some aspects because it strayed too far from the 'manual' aspect of its name, the GEIA is at the extreme end of where AC are headed where there is no lender control over how money is invested once it is added to the account. All of which is gearing the platform to the less sophisticated regular saver, rather than the more sophisticated and HNW investor looking to make large investments in individually selected loans.
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mikes1531
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Post by mikes1531 on Jan 13, 2015 23:32:02 GMT
IMHO, someone who wanted to obtain large chunks of loans under the old system, and had the time to keep a close eye on the website, would be able to place pre-bids as soon as the loans appeared on the website, and probably would have been able to get what they wanted. And if they had shadow bidding privileges, their pre-bid would have been converted to a shadow bid automatically when the auction went live, and they wouldn't have had to supply the funds until shortly before drawdown. There's a couple of problems with this argument. * the FSA regulations changed so that you've got to have funds to support your shadow bids - so negating the advantage of shadow biding * it's completely uneconomic for FC to be chasing a lot of small shadow bids. I believe they have a really good business and the majority of startups need financing in the first few years, but we are all stuffed if AC don't have a viable business so we can't expect them to get on the phone/email to chase small shadow bids. : I take your points. (Did you mean to refer to FC in your second one?) I wouldn't have thought that chasing shadow bids would be a huge problem. If investors needed chasing, I'd put them on notice of withdrawal of their shadow privileges rather quickly, and if they value those privileges they wouldn't require chasing again. And I'd arrange for a bit of underwriting to cover failed shadow bids, so that they don't actually affect drawdown timing, and pass the cost of that onto anyone who needed chasing more than once. On a related point... having worked with the new system for a few months now, I'd say I prefer it to the old one. Not having to worry about drawdown delays is such a benefit that it overwhelms any drawbacks the new system has, but that's JMHO.
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sl75
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Post by sl75 on Jan 14, 2015 0:08:58 GMT
What I'm saying is that yes, the loan is coming soon. It would be great if AC put a draw down date on the "upcoming loans" tab but I do know that as my money has been taking it is coming soon. So it's as "coming soon" as this thread ever used to get when AC asked for fund in order to be able to draw down. The point I'm making is nothing to do with being able to see a drawdown date - I cannot see the loan at all. There are just 6 loans in the "upcoming loans" section: #135, #147, #148, #149, #150, #151. I learn from this thread that #111 may be about to draw down soon. My natural response may be to review and/or set my target on that loan, except I cannot because it is not in the list, so there is no way to access the loan and nowhere to set a target. It is most definitely not "as "coming soon" as this thread ever used to get", because all previous loans were visible on the list. It raises the question of how many other loans may similarly be expected to draw down shortly, but similarly hidden from retail investors who are similarly unable to set targets... and also the question of why AC wish to "hide" this and possibly other loans from the majority of their customers (surely they'd want those customers to have their targets set and ready, in order that UW funds can be freed up as soon as possible after drawdown, and re-allocated to other loans in the pipeline?)
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mikes1531
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Post by mikes1531 on Jan 14, 2015 0:36:19 GMT
It raises the question of how many other loans may similarly be expected to draw down shortly, but similarly hidden from retail investors who are similarly unable to set targets... and also the question of why AC wish to "hide" this and possibly other loans from the majority of their customers (surely they'd want those customers to have their targets set and ready, in order that UW funds can be freed up as soon as possible after drawdown, and re-allocated to other loans in the pipeline?) I suspect #111 is different because it's another tranche of a loan that has four earlier tranches that have plenty of availability on the Aftermarket. (£1.00M at the moment out of loans that total £1.75M.) Since all tranches of this loan rank equally, why would anyone who wants more of this loan choose to set a target for #111, make funds available and leave them idle, and wait for drawdown, when they could invest in one of the existing loans and start earning interest immediately? Since the original loan drew down over six months ago, and the underwriters still are holding about 55% of it, I think units will be available on the Aftermarket for some considerable time longer. Which, I'm afraid, is a powerful reason to avoid these loans, IMHO, because any investor who tries to sell units in the future may find that takes quite a while.
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sqh
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Before P2P, savers put a guinea in a piggy bank, now they smash the banks to become guinea pigs.
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Post by sqh on Jan 14, 2015 1:04:45 GMT
What I'm saying is that yes, the loan is coming soon. It would be great if AC put a draw down date on the "upcoming loans" tab but I do know that as my money has been taking it is coming soon. So it's as "coming soon" as this thread ever used to get when AC asked for fund in order to be able to draw down. The point I'm making is nothing to do with being able to see a drawdown date - I cannot see the loan at all. There are just 6 loans in the "upcoming loans" section: #135, #147, #148, #149, #150, #151. I learn from this thread that #111 may be about to draw down soon. My natural response may be to review and/or set my target on that loan, except I cannot because it is not in the list, so there is no way to access the loan and nowhere to set a target. It is most definitely not "as "coming soon" as this thread ever used to get", because all previous loans were visible on the list. . You can view loan #111 if you log in and select loan #109. Then change the 4 to 5 in the browser header and it will bring up loan #111. You can't place a bid, but you can get drawdown updates and ask questions.
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bg
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Post by bg on Jan 14, 2015 8:08:06 GMT
I don't think you can assume that under the old system you would have been first in to pick up a big chunk ahead of everyone else (is that fair?) - reality is in this low liquidity market you are just as likely to have got zero. IMHO, someone who wanted to obtain large chunks of loans under the old system, and had the time to keep a close eye on the website, would be able to place pre-bids as soon as the loans appeared on the website, and probably would have been able to get what they wanted. And if they had shadow bidding privileges, their pre-bid would have been converted to a shadow bid automatically when the auction went live, and they wouldn't have had to supply the funds until shortly before drawdown. I disagree. If you have 5 people wanting to buy £50k each of a £100k loan someone will miss out.
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tonyr
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Post by tonyr on Jan 14, 2015 8:45:08 GMT
There's a couple of problems with this argument. * the FSA regulations changed so that you've got to have funds to support your shadow bids - so negating the advantage of shadow biding * it's completely uneconomic for FC to be chasing a lot of small shadow bids. I believe they have a really good business and the majority of startups need financing in the first few years, but we are all stuffed if AC don't have a viable business so we can't expect them to get on the phone/email to chase small shadow bids. : I take your points. (Did you mean to refer to FC in your second one?) I wouldn't have thought that chasing shadow bids would be a huge problem. If investors needed chasing, I'd put them on notice of withdrawal of their shadow privileges rather quickly, and if they value those privileges they wouldn't require chasing again. And I'd arrange for a bit of underwriting to cover failed shadow bids, so that they don't actually affect drawdown timing, and pass the cost of that onto anyone who needed chasing more than once. On a related point... having worked with the new system for a few months now, I'd say I prefer it to the old one. Not having to worry about drawdown delays is such a benefit that it overwhelms any drawbacks the new system has, but that's JMHO. (Yes, I meant AC not FC - thanks). I suspect that chasing shadow bids has already proved to be a big problem and that either some people were threatened with removal of shadow bidding or the change to the new system was forced on AC anyway so they just persevered until they could get the problem fixed. Let's make some guess, say staff costs are £20 per hour, there's a problem with one in 100 bids, the bid size is £100 and AC profit margin is 0.5% in total. So that's £50 profit so they can only spend 2.5 hours on chasing, explaining to lenders and borrowers explaining why things have been delayed and doing the paperwork to kick that shadow bidder out in future as well as the opportunity cost when they could have been doing something more profitable with their time. It's in all of our interests that AC becomes profitable as soon as possible, I think we should work with them on this.
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tonyr
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Post by tonyr on Jan 14, 2015 8:50:18 GMT
What I'm saying is that yes, the loan is coming soon. It would be great if AC put a draw down date on the "upcoming loans" tab but I do know that as my money has been taking it is coming soon. So it's as "coming soon" as this thread ever used to get when AC asked for fund in order to be able to draw down. The point I'm making is nothing to do with being able to see a drawdown date - I cannot see the loan at all. There are just 6 loans in the "upcoming loans" section: #135, #147, #148, #149, #150, #151. I learn from this thread that #111 may be about to draw down soon. My natural response may be to review and/or set my target on that loan, except I cannot because it is not in the list, so there is no way to access the loan and nowhere to set a target. It is most definitely not "as "coming soon" as this thread ever used to get", because all previous loans were visible on the list. It raises the question of how many other loans may similarly be expected to draw down shortly, but similarly hidden from retail investors who are similarly unable to set targets... and also the question of why AC wish to "hide" this and possibly other loans from the majority of their customers (surely they'd want those customers to have their targets set and ready, in order that UW funds can be freed up as soon as possible after drawdown, and re-allocated to other loans in the pipeline?) I have a spreadsheet with all the loan numbers in it (you can download the same info from the AC site), and there are no missing loan numbers. Loan 151 was the most recent, I think you can see everything that there is with the exception of 111 and I don't think you are missing anything there.
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niceguy37
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Post by niceguy37 on Jan 14, 2015 9:18:50 GMT
It is a challenge for AC balancing the preferences of different investors (I think they try hard). But I think we all agree that it would be helpful to have estimated drawdown dates, preferably updated weekly or on new information, as and when the AC loan manager reviews the loans he/she is responsible for.
It is a shame for larger investors that shadow bidding is no longer available, as I think this strengthened the crowd due diligence, as well as reward those prepared to commit to a loan with a larger share of it. I wonder if there is some way that larger investors could commit to funding upcoming loans without having to have their funds tied up for too long during protracted drawdowns.
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sl75
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Post by sl75 on Jan 14, 2015 9:37:07 GMT
I suspect #111 is different because it's another tranche of a loan that has four earlier tranches that have plenty of availability on the Aftermarket. (£1.00M at the moment out of loans that total £1.75M.) Since all tranches of this loan rank equally, why would anyone who wants more of this loan choose to set a target for #111, make funds available and leave them idle, and wait for drawdown, when they could invest in one of the existing loans and start earning interest immediately? My own approach so far had been to spread my exposure across the tranches - so when tranche 4 was close to drawdown, I set a target on that, and reduced my target on the others. It takes a while for the drawdown, but it also takes a while for the reduced exposure to kick in on the other tranches. I'm fairly ambivalent about which order that happens in. Still in two minds about whether to repeat the exercise for 5, or leave it until closer to the time when the first tranche falls due for repayment. However, the main point was not about this loan, but about how far in advance we should expect to "know about" loans in general... in addition to the known and visible pipeline that we can see the above-ground end of (in the form of the "coming soon" loans, of which there are far fewer than there used to be), is there an additional "hidden pipeline" of loans we don't know about, and won't know about until they erupt out of the ground just in front of us?
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bugs4me
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Post by bugs4me on Jan 14, 2015 9:46:32 GMT
It is a challenge for AC balancing the preferences of different investors (I think they try hard). But I think we all agree that it would be helpful to have estimated drawdown dates, preferably updated weekly or on new information, as and when the AC loan manager reviews the loans he/she is responsible for. It is a shame for larger investors that shadow bidding is no longer available, as I think this strengthened the crowd due diligence, as well as reward those prepared to commit to a loan with a larger share of it. I wonder if there is some way that larger investors could commit to funding upcoming loans without having to have their funds tied up for too long during protracted drawdowns. Drawdown delays were a problem but knocking those delays into some sort of context it really wasn't a great financial deal when considering the term of the loan IMO - it was more frustrating and I'm sure AC shifted heaven and earth to minimise them. Think we all wanted the FCA involved but that AFAIK killed off SB. The cost of Go-Cardless and it's removal doesn't help but so far everything has been reinvested in MLIA so cannot complain as I have zero fluidity in the account - everything invested. I hope this continues once a couple of my larger ones mature and repay otherwise it may be a look elsewhere although I hope it doesn't come to that as I like the AC concept and certainly their DD appears to be far more advanced than other platforms. Guess we're in a wait a see mode over this. The crowd DD was invaluable but that's now a thing of the past. All progress I suppose.
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Post by bracknellboy on Jan 14, 2015 9:53:43 GMT
(Yes, I meant AC not FC - thanks). I suspect that chasing shadow bids has already proved to be a big problem and that either some people were threatened with removal of shadow bidding or the change to the new system was forced on AC anyway so they just persevered until they could get the problem fixed.... I was pretty sure it was causing cost to the business. It was compounded IMHO by the lack of a faster payments facility (which in turn would have had cost). I had a few times where I received a phone call even though I had responded to email notification PDQ and already initiated transfer (and in some cases also replied by email to let them know I had done the transfer to try and save them the inconvenience of calling to chase). I also had an instance where a transfer had arrived in their bank account but the reference had got mashed in some way and so it had not got assigned: from what I understand I was not alone in having that happen.
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pikestaff
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Post by pikestaff on Jan 14, 2015 10:52:40 GMT
...The net of the current situation is that for all intents and purposes deadtime has not been reduced... I don't think that's true. It's not necessary to reserve cash to cover all of your targets unless you think that they will all appear on the market at once. At the moment I'm holding no free cash on the platform, and I'm not holding abnormally high levels of accessible cash off platform either. As for the ability to get funds invested once the flow of new completed loans resumes, I'm suspending my judgement for now.
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