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“Finding investments is easy, waiting is hard, waiting is the hardest part”

-Clay Baker

​​The Portfolio Performance

The portfolio is up 12.49% YTD

Today's Buys

By the time you read this I will have added a new position to the portfolio. Moments ago I bought 500 shares of LendingClub (LC). I am also considering adding a position in SoFi to fill out our FinTech investments, but LendingClub is just a much better value proposition.

I probably just lost half of my subscribers with that last statement. For disclosure, I'm fully aware that LendingClub is up +261% YTD, and +408% over the last 12-months. So when I say its a great value I'm looking at metrics other than price.

Two quarters ago LendingClub became a bank when it received a banking charter through the acquisition of Radius Bank, something SoFi is still working on. In the past LendingClub has partnered with other companies to offer Buy-Now-Pay-Later services and credit card refinancing. Now that LendingClub has its own bank charter the cost of those transactions will be cheaper and the value proposition much greater. As a bank LendingClub has an incentive to hold onto a customer and cross sell additional products. Currently the primary reason customers come to LendingClub is to refinance credit card debt, as the average savings is 4% on the interest rate. If you have a high interest credit card, I'd suggest running over to LendingClub and lowering your rate. Customers who have tried LendingClub seem happy as they tend to return for auto loans. Any time you have a business that profitably loans money and your borrowers are happy to borrow your money, I'd say you have a good, sticky business model.

LendingClub has roughly 3.8 million customers and about 2/3 have an auto loan. This market seems like an obvious growth area, especially with the demand for new and used cars. In the auto refinancing segment, LendingClub states that they can reduce auto loan interest costs by as much as 5%. Over the course of a 3 to 5 year auto loan that 5% savings will add up.

LendingClub trades at just 20 times forward earnings, less than the market multiple that's around 29.5. LendingClub earnings are expected to finish the year up +108% for the year and a mind boggling 1,161% next year. I'm going to toss that number out and just be happy with growth in earnings, not crazy big growth. Revenues are also expected to grow 42% next year. While the gross profit isn't as high as I think it should be at only 21.25%, and NET profit margins are really thin, the business does continue to generate new loans and grow revenues. LendingClub states that they expect to grow their loan book by $2B to $2.5B each year for the next three years and retain about 15%-25% after selling the rest of the loans to investors. In Q1 LendingClub retained 20%. Assuming LendingClub can and wants to retain a greater percentage of their unsecured loans, NET operating income should increase substantially over the next three years. I think its completely reasonable to see LendingClub stock double over that time frame and still trade at a reasonable valuation.

"Markets don't go to zero, Portfolio's do.

Buy quality, be patient...and look twice for motorcycles."

- Clay Baker

Stay Invested,

Clay Baker


Keep Me Honest 2021

  1. The S&P 500 will achieve year-end earnings of $170-$175 (1-1-2021).

  2. We are likely to have a significant pull-back during the 1st quarter, about 5%-10% (1-1-2021).

  3. Stock picking will outperform algorithmic trading again as it did in 2020 (1-1-2021).

  4. S&P 500 will reach 5,000 by year-end.

Clay's Rules

Rule #1: Don't lose money

Rule #2: See Rule #1

Rule #3: Portfolios go to zero, markets don't, Stay Invested

Rule #4: When good stocks you own drop 10% below your cost basis, add shares

Rule #5: Bull markets aren't sustained without the Transports

Rule #6: When Forward P/E is lower than TTM P/E, expect earnings to increase

Rule #7: When an investment bank sells below book value, buy it

Rule #8: Tips are for waiters. Do your own homework.

Rule #9: Don't sell a stock because you're bored with it. Do your own homework.

RULE #10: Being early and being late is the same as being wrong...move on.

Rule #11: Investing is easy. Waiting is hard, waiting is the hardest part.

Disclosure: I am personally invested long in some or all of these stocks or funds that appear in the Stay Invested portfolio and may purchase or sell shares within the next 72 hours. I am also invested in other stocks and funds that do not appear in the Stay Invested portfolio but may be mentioned or related to this article. It is not my intention to advise or encourage the purchase or sale of any security. I am invested long in these securities mentioned in this post:


I am invested short in these securities mentioned in this post:

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article. This article is not intended to offer investing advice, guarantee 100% accurate predictions, or to be interpreted as providing a personal recommendation.


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