I'm not very strong on finance at all, but if the hedge funds have pulled their money out of the Lendingclub platform then shouldn't that reduce the amount of money that Lendingclub has to lend and therefore drive up the cost of taking a loan from them, assuming demand for their loans hasn't dropped as well? Like a basic supply and demand thing?
Yes, exactly. What I think the poster was suggesting is that, in theory, now is a good time to be investing in LC loans -- because the rates will be driven up due to the lower availability of capital on the platform. If he was suggesting something else then I'm in the same boat as you, hehe. ;-)
I do tend to think that the institutional investors/hedge funds are quite likely to "know more than you do" however, which could instead mean that this is an early signal & would be a foolish play.
Yeah. The Lending Club loan would still need to compete in the broader market, which means that there is a point where the borrower would opt to not take the more expensive loan.
