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Author Topic: New angle on social (P2P) lending at PertuityDirect  (Read 3033 times)

HollowOak

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New angle on social (P2P) lending at PertuityDirect
« on: September 17, 2009, 10:34:13 am »

I noticed that PertuityDirect does not accept lenders anymore. They now refer all their investors to a mutual fund, the National Retail Fund, to whom they claim they sell all their loans. However, they do not provide a link on their site to the NRF, "as a regulatory protective measure."  Talk about arms-length dealing.

Interestingly enough, the NRF talks about investing in "consumer notes." What are the odds that Prosper's notes may make an appearance there? Any well-managed mutual fund surely would like to diversify?

Oh  yea, and it is entertaining to dig a little deeper into who is behind the NRF, and so forth. Purely as entertainment, of course, since we are surely not again going to invest in "social lending," right?
« Last Edit: September 17, 2009, 10:36:40 am by HollowOak »
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DakotahFury

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Re: New angle on social (P2P) lending at PertuityDirect
« Reply #1 on: September 17, 2009, 11:08:21 am »

Sounds interesting...I may be interested in giving it a try somewhere down the road, but...
Quote
Currently, the first year expense estimate is 1.63%
Ouch...

From the prospectus:
Quote
Net Expenses ................................................................................................ 3.17%
Double ouch!!
« Last Edit: September 17, 2009, 11:11:46 am by DakotahFury »
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Investar

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Re: New angle on social (P2P) lending at PertuityDirect
« Reply #2 on: September 17, 2009, 11:32:22 am »


Interestingly enough, the NRF talks about investing in "consumer notes." What are the odds that Prosper's notes may make an appearance there? Any well-managed mutual fund surely would like to diversify?

Very little chance of that. Shareholders of National Retail Fund III voted to close up shop August 11, 2009. The lending side of Pertuity is defunct. National Retail Fund III was a recent roll-together of Fund I and Fund II when it became clear there was not enough investor interest to sustain both. Apparently there wasn't enough to sustain either one.

http://www.sec.gov/cgi-bin/browse-edgar?NOaction=getcompany&CIK=1431328

edit/add But hmmmn... I didn't see the "roadblock" screenshot shown by this blogger when I clicked today. What's up now?

Pertuity Direct Shuts Down Unexpectedly
http://www.p2plendingnews.com/2009/08/pertuity-direct-shuts-down-suddenly/

Oh wait, there it is...
https://account.nationalretailfund.com/Join/Join.aspx
They sure didn't spend much time shutting the gates before they left. From your page link it lets you click to join!
« Last Edit: September 17, 2009, 11:49:15 am by Investar »
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HollowOak

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Re: New angle on social (P2P) lending at PertuityDirect
« Reply #3 on: September 17, 2009, 01:50:20 pm »


Very little chance of that. Shareholders of National Retail Fund III voted to close up shop August 11, 2009. The lending side of Pertuity is defunct. National Retail Fund III was a recent roll-together of Fund I and Fund II when it became clear there was not enough investor interest to sustain both. Apparently there wasn't enough to sustain either one.

http://www.sec.gov/cgi-bin/browse-edgar?NONOaction=getcompany&CIK=1431328


That makes it even more interesting. The SEC voting proxy you link to says the fund will be liquidated and the assets distributed to the investors. Now the way I understand this, it means some investors may end up holding consumer loans/notes? Wow.
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Investar

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Re: New angle on social (P2P) lending at PertuityDirect
« Reply #4 on: September 17, 2009, 02:36:19 pm »


Now the way I understand this, it means some investors may end up holding consumer loans/notes? Wow.

I dunno. There is so little money involved I'd guess the principals will just take them. They're all bankers — these are the loans they picked. Looking at the ratio of money market cash vs actual notes held by the fund (in the only shareholder's report ever issued), looks like they were amassing cash in advance of their move to offer liquidation. Either that or they were very picky and this could have been a good thing, had it worked. But I think it was the former.
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nonattender

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Re: New angle on social (P2P) lending at PertuityDirect
« Reply #5 on: September 18, 2009, 08:37:08 pm »

Dead in the water, this one, I believe...  The people I spoke to there, aside from the founder, are history.

-t
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jazzpianist

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Re: New angle on social (P2P) lending at PertuityDirect
« Reply #6 on: September 20, 2009, 02:14:30 am »

As a part of experimenting in the P2P market and diversifying I did a test investment with Pertuity Direct / National Retail fund. 

Early in the year I bought $1000 of the National Retail Fund III in four $250 investments to see what the returns would actually be.  All four investments were done in the same quarter.   The money was transferred via ACH same as Prosper and LendingClub to National Retail Fund and used to purchase shares at that days' price.  The price/share was highest at the end of a quarter right before they issued a payment and lowest early the next quarter right after.  There was no historical data published to allow the investor to know in advance how the price/share had historically changed over time and know it was to their best advantage to purchase early in the quarter.  Last month I received a surprise letter stating that they had not attracted the amount of investor capital their business model forecast, were not making the money they expected, and recommended I, as  a shareholder in National Retail Fund III, vote in favor of the board's of directors' recommendation they liquidate the fund and shut down.  The vote was taken and they shut down.  A few weeks later my balance of $1011.51, representing principal + two quarters interest, was transferred via ACH back to my bank.  The return was low, but I did not loose money.

The fate of the loans and how the Pertuity Direct lenders loans will be serviced through their term did not impact investors in National Retail Fund III.

They set up their operation as two businesses - Pertuity Direct that dealt with borrowers, and National Retail Fund that dealt with investors.  National Retail Fund could invest in Pertuity Direct loans or other.   When you bought into the fund you had no visibility on a loan by loan basis, or what % of the fund was in loans and what % was in queue in other investments (example T-Bills) when there were not enough Pertuity Direct loans to use up all the cash available in the fund.

jazz
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