First report on the test cases

I finally managed to find enough notes to meet the target size for the test cases. Following is the table that I will use to report the performance of each.

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Description	Current	Other	Fully Paid	Charged Off	Index
Test 1 End in 2017	20%	2%	75%	3%
Test 2 End in 12 months	90%	0%	10%	0%
Test 3 LC Picks	97%	3%	0%	0%
Test 4 Zip Grade	60%	40%	0%	0%
Test 5 By Percent	88%	10%	3%	0%
Test 6 By Funded	60%	40%	0%	0%
Test 7 Random	53%	45%	3%	0%

The table measure is the breakdown of notes in each test case by their status. For instance, 20% of the notes in test case 1 have a status of current, 75% have been fully paid off, and 3% have been charged off. The other 2% are in various stages of being late as of today. Some will catch up and move back to current, while others will move through the stages of late and may be charged off.

Some of the later test cases have a high percentage in the other status. Most of these have been issued but the first payment isn’t due yet. These numbers will fall as they become current.

One can see the difficulty in comparing the performance of notes in each test case. As the notes age, these numbers will become more significant. By 2020 they will be a good comparison measure. In the meantime, I am working on developing an index for each note. It’s based on what the lender expects, which is timely monthly payments for the term of the loan. So, we’ll start with and index of 100 meaning the borrower is up to date on repaying the loan. If they fall behind, the index will be lower. For notes that have been closed, either fully paid or charged off, the index will be the ratio of the total payments received divided by what would have happened had the borrower paid monthly through the term of the loan. The average of the these will be reported in the index column.

I’ll let you know when I’ve completed the program calculations for this index and post an updated table. Follow me on Twitter @billlanke the be notified when this occurs.

Final tally of note sale

 My last update was Friday evening and the number of notes sold was 58 out of the 120 offered. The discount rate had been increased to 2%. I decided not to change this discount and let the sale run its course. When you offer a note for sale on FOLIOfn, the offer is only good for a period (10 days I believe). Only 1 more note sold over the next 6 days. Clearly notes sell when first offered or when the discount is changed.

The final tally for the 120 notes; 59 sold, 27 had the offer expire, 32 were cancelled because they entered a payment period, and 2 went into default. For the 59 sold I received 91.8% of their outstanding principle. A loss of $31.49. I also lost future interest. But these losses could easily be offset by future charge offs.

I’ve learned quite a bit from this sales experience. I still have 61 live notes expiring in 2021. I’ll offer these again in about a week.

Meanwhile, I’ll turn my attention back to the test cases. I’m still 2 short of my goal for those purchased based on Zip-Grade. I check 4 times a day to see if any of the new notes meet my criteria. I seem to find about 2 a week.

I will produce my first report in the middle of next week. Follow me on Twitter @billlanke the be notified when this occurs.

A good week selling notes

Wednesday evening I moved the discount from 1% to 2% and a few more notes started selling. In the batch of notes that I was selling, there were a few that were not current. I decided to mark these down drastically to see if anyone was willing to take a chance on them. One note was in the grace period. I offered it for sale at $15. Two were 16-30 days late. I marked these down to $10. Finally, five were in the 31-120 days late state. I marked these down to $5.

By then end of Thursday a few more notes had sold, but not the bad ones. I increased the discount by another 1% (including the bad ones). Nothing happened overnight , but during the day Friday, 4 more sold and another 5 were cancelled due to payment processing. Two of 31-120 days late sold. I guess someone decided to take a chance.

	Mon PM	Tue AM	Tue PM	Wed PM	Thu PM	Fri AM	Fri PM
Offered for sale	110	98	76	68	52	52	43
Principle	$2,236	$1,995	$1,550	$1,393	$1,069	$1,069	$881
Asking Price	$2,239	$1,998	$1,554	$1,397	$933	$933	$795
Discount	100.14%	100.17%	100.29%	100.27%	87.34%	87.34%	90.20%
Cancelled	6	6	8	12	14	14	19
Sold	4	16	36	40	54	54	58
Total Sold Price	$72	$313	$714	$788	$1,070	$1,070	$1,121

It was a pretty good week, 54 notes sold. Since some notes keep selling, I’ve decided not to increase the discounts. Rather I’ll just let the notes stay for sale. The offers will expire next week. There is plenty of time to sell these 2021 notes. I’ll use Twitter to indicate when I make new posts, @billlanke.