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02-23-2016, 03:57 PM #15
Reputation points: 8723
- Join Date
- Apr 2015
- Posts
- 159
ONDK will go up in smoke in 18 months...
1) Average annual coupon on entire portfolio was 108% prior to going public. In an effort to gain more business and turn a profit for public shareholders, they lowered prices. Average annual coupon in 2015 was 38%.
2) Also in an attempt to gain more business and turn a profit for public shareholders, they increased payouts to brokers, further squeezing margins.
3) They only have 8% on balance sheet funds. They've built the business with OPM (other peoples' money). At the slightest uptick of danger in the economy, their default rate will go up and lender/marketplace capital will get spooked.
Not to mention, they lie about performing vs. non performing loans by ACH'ing $1 out of accounts from borrowers in default. This way they can keep the loans on the books as "performing" instead of "non-performing".
The market FINALLY is pricing this in.
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