Well so far things are looking decent in terms of performance on Folio. I have been buying up a range of notes since Prosper has come back live and have pasted my data below. I have been listing all notes after 2-3 weeks from origination date at a 0% discount. (As of 10/26/09, I am listing immediately after origination for a 2.0% premium on AA notes with a lender yield over 8.99%)
This entitles me to receive Principal lent + interest accrued - 1% servicing fee if the note sells at that 0-2% rate. If the rate is bid up and winds up at a 3-4 % premium, I am obviously making more. Take a look at the below table for more details on how I have done so far.
If you hold off on your bids until the final day of auction, allow 6 days for Prosper to clear the notes, 14-30 days before listing, and then 7 days for listing time, the maximum time for your cash to be tied up is 45 days. On many of these notes, I am listing them on FolioFn on the origination date (the first date it becomes a "note" 1 month prior to first scheduled payment).
Data Compilation:Prosper Rating Total Notes Sold Net Share Net Profit Avg Duration (days)* ROI Annualized Yield**
AA 16 $718.79 $8.40 21 1.17% 20.31%
A 14 $475.00 $2.67 30 0.56% 6.84%
B 3 $150.00 $1.64 43 1.09% 9.28%
C 0 $00.00 $0.00 0 N/A N/A
D 1 $25.00 $0.55 50 2.20% 16.06%
E 2 $50.00 $1.00 31 2.00% 23.55%
HR 6 $597.92 $20.39 67 3.41% 18.58%
That taken into consideration:
Key Summary Statistics$2016.71 principal invested
$34.65 net profit1.72% ROI
15.55% annualized return
Edit 11/25/09 - I have begun to purchase all AA Prosper Rated notes with a credit score greater than 820 and a lender yield greater than 8.49%, in lots of $50.00 and sell them the day they become notes (origination date). I am now listing at 2.5% premium and ending the auction as soon as it has a bid. I am looking to maximize return, by getting the capital re-invested ASAP to repeat the process again. Remember, I am only bidding on AA Prosper Rated notes with lender yields greater than 8.49%. It looks like approximately 1 per day of these go through on average, with a Prosper wait time of less than 96 hours on average (so far, data is still small). This makes for a 6-10 day turn around for a 1.17% profit margin. If this continues to work, I'm looking at being able to churn $500 a month 3 times into $22.50 net profit. A whopping 5% monthly gain which will create an annualized yield of 60%!!! I just hope the folks that are buying these notes don't stop, as historically per Ericscc.com they have a default rate over 13%...
BAEVentures
P.S. I will try to keep this updated regularly as to my progress. If only I had more time and spare capital to throw around I would try virtually every AA listing that becomes a note with a closing lender yield greater than 8.99% as those seem to be selling in the highest frequencies (as of 10/27/09 I am doing this, however with a limited capital base of $250, so I can only be churning 5 notes at a time, at least until more regular payments come in). Most of these loans historically have a high chance of default so I'm not sure why they sell so well, and am a little hesitant that the 3-4 buyers of these may stop purchasing, leaving me stuck with them, but crossing my fingers for the moment.
*Avg Duration (days) was calculated with the following formula. Date of Sale - Date of Purchase + 6 days. These 6 days signify an average wait of 5 days for Prosper to approve the note to become a loan, and then an additional 1 business day before your funds are returned to you, after the auction finishes on Foliofn.
**Annualized Return concerns ideal circumstances that there would be an unlimited number of notes to trade (IE as soon as your funds are returned from a sale, they are immediately bid on another note ending that same day.
