Alternative investments: article in WSJ on Yieldstreet

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unclescrooge
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Alternative investments: article in WSJ on Yieldstreet

Post by unclescrooge »

One of my biggest concerns over private loan crowd sourcing is lack of performance history in a recession.

Well, now we have some data.

"Recently, YieldStreet disclosed that 14.7% of the money investors plowed into the firm involved loans that wound up in default as of March."

https://www.wsj.com/articles/two-u-s-ag ... 1597224600

The other concerns are lack of transparency, lack of due diligence by the platform and inefficient taxation.
000
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Re: Alternative investments: article in WSJ on Yieldstreet

Post by 000 »

In addition to everything you mention, I have trouble seeing private loans as a great diversifier to a stock/bond portfolio. PLs are fiat bonds just like the rest of the bonds in the portfolio and the PL defaults likely have some correlation with economy health, although of course I guess stocks don't necessarily match the economy.
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Stinky
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Re: Alternative investments: article in WSJ on Yieldstreet

Post by Stinky »

In addition to all the points made above, it sounds like there may be outright fraud relating to some “ship-breaking” loans.
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unclescrooge
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Re: Alternative investments: article in WSJ on Yieldstreet

Post by unclescrooge »

Stinky wrote: Wed Aug 12, 2020 7:46 pm In addition to all the points made above, it sounds like there may be outright fraud relating to some “ship-breaking” loans.
Very true. The platforms don't make a fee on borrowers they turn down, so there isn't an incentive to thoughly vet them.
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unclescrooge
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Re: Alternative investments: article in WSJ on Yieldstreet

Post by unclescrooge »

000 wrote: Wed Aug 12, 2020 7:27 pm In addition to everything you mention, I have trouble seeing private loans as a great diversifier to a stock/bond portfolio. PLs are fiat bonds just like the rest of the bonds in the portfolio and the PL defaults likely have some correlation with economy health, although of course I guess stocks don't necessarily match the economy.
Yes, might as well choose a high yield bond fund instead.
TimeTheMarket
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Re: Alternative investments: article in WSJ on Yieldstreet

Post by TimeTheMarket »

Paywall.

These crowdfunding ideas seemed fun years ago but they aren't working out so well. People keep trying new tricks to chase yield without the associated increase in risk.
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unclescrooge
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Re: Alternative investments: article in WSJ on Yieldstreet

Post by unclescrooge »

TimeTheMarket wrote: Thu Aug 13, 2020 6:45 am Paywall.

These crowdfunding ideas seemed fun years ago but they aren't working out so well. People keep trying new tricks to chase yield without the associated increase in risk.
I highlighted the most important section. Default rate is almost 15%.

You're right about crowdfunding. It seems to be enticing novice investors who didn't understand the risks involved.

One by one, all the different platforms seem to be folding. Let's see how long YS lasts.
Chicken Little
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Re: Alternative investments: article in WSJ on Yieldstreet

Post by Chicken Little »

Paywall

I would love to diversify with private loans, I just don’t want any part of diversifying with the private loans I could make.
calwatch
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Re: Alternative investments: article in WSJ on Yieldstreet

Post by calwatch »

I'm doing some due diligence before investing in the notes (apparently through shell LLCs purpose built for a particular transaction, as a bridge until full funding) and noted the following:

On September 9, 2020, four accredited investors filed a complaint against the Manager, its parent,
YieldStreet Inc., and certain of its affiliates, including YS ALTNOTES I LLC, YS ALTNOTES II LLC
and Michael Weisz (collectively, “Yieldstreet”), alleging inadequate disclosure of the risks of a potential
borrower default attendant to certain offerings undertaken by certain affiliates of Yieldstreet, and also
seeking to represent a putative class of “all persons” who participated in such offerings since 2018,
Michael Tecku, et al. v. Yieldstreet Inc., et al., No. 20-cv-07327 (S.D,N.Y.) (the “Tecku Matter”). The
Company is not named as a defendant, nor is it otherwise a party to, the Tecku Matter. The complaint
filed by plaintiffs in connection with the Tecku Matter is based in large part on a fraud undertaken by
certain marine borrowers (the “Lakhani Borrowers”) that Yieldstreet discovered and brought to the
attention of the High Court of Justice in the United Kingdom (Queen’s Bench Division), which then
granted a $76.7 million Worldwide Freezing Order in favor of the SPVs managed by Yieldstreet on April
2, 2020. Yieldstreet is aware of several lenders who, taken together with Yieldstreet, loaned over $230
million to the same group of borrowers under similar circumstances. One of these lenders, Njord Partners
(“Njord”), an Apollo affiliate, has obtained judgment in the High Court in London against one of the
principals of the Lakhani Borrowers on his guarantee of Njord’s loans, which Njord had been advancing
to affiliates of the Lakhani Borrowers for more than a year before Yieldstreet. Njord is also suing another
of these principals in the same High Court action for his part in the fraud. The complaint attributes key
allegations to Four Wood Capital Advisors and Global Marine Transport Company (“Four
Wood/GMTC”), the originator who introduced and vetted the Lakhani Borrowers, and then enabled and
covered up the fraud. Yieldstreet terminated and sued Four Wood/GMTC in April 2020, YS GM Marfin
II LLC, et al. v. Four Wood Capital Advisors, LLC, et al., 1:20-cv-03320-PGG (S.D.N.Y.). The Tecku
Matter complaint seeks damages, and requests that attorneys’ fees and costs be awarded to attorneys who
filed the lawsuit. Yieldstreet believes the complaint lacks merit, and intends to defend the lawsuit
vigorously.


And here are the allegations: https://brokerwatch.com/wp-content/uplo ... 9.9.20.pdf

This comes up because of this $500 bonus for depositing $10,000 with them: https://www.doctorofcredit.com/yieldstr ... ing-10000/ It does not appear that you have to invest, only deposit, so I will continue to do my due diligence until they pay my bonus without investing.
grok87
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Re: Alternative investments: article in WSJ on Yieldstreet

Post by grok87 »

Don't reach for yield. take your risk on the equity side
RIP Mr. Bogle.
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