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cv91915

Lending Club IPO

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I got this via email yesterday.

 

No idea how many shares I'll be able to buy, or the price or terms at this point, but OF COURSE I opted in. :D

 

ScreenShot2014-11-18at63945PM_zps983ead5

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WOW man that's awesome!!

 

Get in on that one and be out the day of the open. Fidelity is the UW too? Nice!

Not so sure you can do that--and remain in the good graces of Fidelity that is. It's been awhile since I've participated in any of their IPOs but IIRC, you have to "agree" not to sell your shares for a certain period--I want to say 2-3 months but I don't recall exactly. Of course you can legally do so, but if so, do not expect to be able to be allowed to have future allocations for IPOs from Fidelity.

 

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WOW man that's awesome!!

 

Get in on that one and be out the day of the open. Fidelity is the UW too? Nice!

Not so sure you can do that--and remain in the good graces of Fidelity that is. It's been awhile since I've participated in any of their IPOs but IIRC, you have to "agree" not to sell your shares for a certain period--I want to say 2-3 months but I don't recall exactly. Of course you can legally do so, but if so, do not expect to be able to be allowed to have future allocations for IPOs from Fidelity.

 

 

Really? That's the first time I hear that. The only time that happens is if you have "restricted shares". The underwriters are raising the money right now. Once this thing goes public, they'll get the real money from the public. As a single investor, Fidelity doesn't care. Their main targets are the institutional investors. They usually get hit with restricted shares because if they unload a massive amount of shares at the open, the stock will tank. If CV sells, someone will buy his shares. I had gotten into the Visa IPO 4-5 years ago. I wish I could've purchased more at the time but they were focusing on their big customers. I remember the IPO was $40 and I sold it the day of the open at $60. Quick 50% profit. The stock is a monster today. I think the UW then was Wachovia? I could be wrong. Either way, they never gave me a problem. Howard Stern is a great example of why restricted shares exist. I remember when Sirius had went public and he had (for example) 1M UN-restricted shares. He unloaded them all at the open. The stock opened at $7 and closed at $2-3. It never recovered from that. If his shares were restricted, it could've stayed at a higher number which would've attracted the big boys to buy in. Never happened though.

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WOW man that's awesome!!

 

Get in on that one and be out the day of the open. Fidelity is the UW too? Nice!

Not so sure you can do that--and remain in the good graces of Fidelity that is. It's been awhile since I've participated in any of their IPOs but IIRC, you have to "agree" not to sell your shares for a certain period--I want to say 2-3 months but I don't recall exactly. Of course you can legally do so, but if so, do not expect to be able to be allowed to have future allocations for IPOs from Fidelity.

 

 

Really? That's the first time I hear that. The only time that happens is if you have "restricted shares". The underwriters are raising the money right now. Once this thing goes public, they'll get the real money from the public. As a single investor, Fidelity doesn't care. Their main targets are the institutional investors. They usually get hit with restricted shares because if they unload a massive amount of shares at the open, the stock will tank. If CV sells, someone will buy his shares. I had gotten into the Visa IPO 4-5 years ago. I wish I could've purchased more at the time but they were focusing on their big customers. I remember the IPO was $40 and I sold it the day of the open at $60. Quick 50% profit. The stock is a monster today. I think the UW then was Wachovia? I could be wrong. Either way, they never gave me a problem. Howard Stern is a great example of why restricted shares exist. I remember when Sirius had went public and he had (for example) 1M UN-restricted shares. He unloaded them all at the open. The stock opened at $7 and closed at $2-3. It never recovered from that. If his shares were restricted, it could've stayed at a higher number which would've attracted the big boys to buy in. Never happened though.

 

What you're saying makes sense (Fidelity not caring about single investors) but I clearly recall the boilerplate statement from Fidelity I had to agree to. Perhaps it was some kind of pro forma thing at that time? I did not make a huge investment, 1000 shares at $11-12 or so. This was around 2007-2008. I recall being surprised I got that allocation as the demand was heavy. I have not participated in any IPO since then. In any case, if you're free to sell at any time, great!

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I've never participated in an IPO with Fidelity, but I have several accounts there and they care very much about my business. The people who answer the phone are articulate, knowledgeable and empowered. I have nothing but rave reviews for how they handle a variety of accounts.

 

Depending on the terms I may or may not participate, but my intentions would be longer-term than dumping the shares on opening day.

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I've never participated in an IPO with Fidelity, but I have several accounts there and they care very much about my business. The people who answer the phone are articulate, knowledgeable and empowered. I have nothing but rave reviews for how they handle a variety of accounts.

 

Depending on the terms I may or may not participate, but my intentions would be longer-term than dumping the shares on opening day.

I do hear good things about Fidelity. At the same time, I'm sure every place varies. There's probably a good team at your Fidelity. I know this old man, 85 years old and he manages all of his investments. He had one of his accounts with Charles Schwab and I guess for a while he was paying $4k a year for their "elite service". He had some young guys trying to tell him to buy mutual funds for his "future" and to trade in this stock and that stock. He canceled their service. All they want is commission off you trading. All the old man wants is some dividend paying stocks since he's on a fixed income. Not for nothing, in the past 2 years his profits rose 30% (excluding what he was making off dividends).

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Lending Club helped me increase my credit scores by 60+ points, which then allowed me to refi their loan. While thankful, I have realized capitalism is a shell game. But I guess if you play by the rules its all good.

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Essentially, LendingClub disintermediates traditional banking. This places risk on the investors who own the debts. Traditionally, banks own the debts and are more exposed to correlated risks. The results:

 

1. Individual investors stand to make a higher profit but at higher individual risk.

2. Borrowers have access to money at lower interest rates.

3. The entity (LendingClub) has much lower risk at the cost of lower income as a percentage of loans outstanding.

 

One way to think about it is to view LendingClub as a kind of broker who makes money by bringing money buyers and sellers together for a cut of action.

 

Another comparison is to Uber v traditional taxi ops.

Edited by cashnocredit

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Essentially, LendingClub disintermediates traditional banking. This places risk on the investors who own the debts. Traditionally, banks own the debts and are more exposed to correlated risks. The results:

 

1. Individual investors stand to make a higher profit but at higher individual risk.

2. Borrowers have access to money at lower interest rates.

3. The entity (LendingClub) has much lower risk at the cost of lower income as a percentage of loans outstanding.

 

One way to think about it is to view LendingClub as a kind of broker who makes money by bringing money buyers and sellers together for a cut of action.

 

Another comparison is to Uber v traditional taxi ops.

 

I think of them as having flavors of a warehouse lender and of a mortgage broker, neither of which is a perfect analogy.

Edited by cv91915

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Essentially, LendingClub disintermediates traditional banking. This places risk on the investors who own the debts. Traditionally, banks own the debts and are more exposed to correlated risks. The results:

 

1. Individual investors stand to make a higher profit but at higher individual risk.

2. Borrowers have access to money at lower interest rates.

3. The entity (LendingClub) has much lower risk at the cost of lower income as a percentage of loans outstanding.

 

One way to think about it is to view LendingClub as a kind of broker who makes money by bringing money buyers and sellers together for a cut of action.

 

Another comparison is to Uber v traditional taxi ops.

^^^ This is everything. They make their cut up front and that's it. If someone loses, it's the investor, not LC.

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Something that fascinates me is the potential for data mining the LC SEC filings. They are rather unique in that individual notes are detailed in a seemingly unending series of 424B3 filings.

Each debt is broken down in a rather surprising detail including geo area, FICO score, interest, years employed, occupation, rent/own status, etc.

 

Data mining this stuff into a SQL database would be a trivial exercise. There is a huge amount of information there that could disclose all sorts of trend info that hasn't been available to most people.

 

But it's right there now.

 

Wouldn't surprise me to see stuff pop up on Github/Sourceforge. Probably some good MBA papers will be written based on some of this data.

 

Example filing:

http://www.sec.gov/Archives/edgar/data/1409970/000140997014001547/postsup_20141124-095501-0.htm

 

List of LC Filings. Note the huge number of these that come out each week.

http://www.sec.gov/cgi-bin/browse-edgar?action=getcompany&CIK=0001409970&owner=exclude&count=40&hidefilings=0

 

 

The value of this is that it is entirely public data. LC has no claim on the information disclosed to the SEC. People are free to use it in whatever way they wish.

 

One possible outcome is to provide near real time lookup to CBers (or anyone else) to match up their situation (FICO, location, employment, debt/income, etc) with what loans are being made.

Edited by cashnocredit

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The initial offering price estimate of $10-12 per share has been raised to $12-14.

 

I was able to indicate an interest in up to 350 shares, which I have. If they're granted, I'm obligated to pay for these 350 shares, but it isn't much money so it was a pretty easy decision...

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