Lending Club (LC 7.75%) was touched by hot stock market hand Cathie Wood on Friday. As a result, its shares were on fire throughout the day, ultimately closing 18% higher.
Wood's ARK Fintech Innovation (ARKF 12.39%) exchange-traded fund (ETF) snapped up roughly 228,500 shares of Lending Club the previous day.
Lending Club is a value stock play at the moment. The company, which operates a peer-to-peer loan platform, has been trying to pivot its business since a scandal involving top management's falsifying of documents broke in 2016.
Since then, the company has focused more on prime lenders than previously and on the funding side, has drafted more reliable institutional lenders (banks, insurance companies, etc.). The strategy seems to be working, with a notable 37% rise in loan originations from 2017 to 2019.
As with many other finance-sector companies, Lending Club has struggled in the face of the economy-withering coronavirus pandemic. That said, in its recently reported fourth quarter, its originations were well above those of the preceding quarter; net revenue was up slightly; and net loss narrowed (albeit marginally).
Meanwhile, Lending Club turned a new page in February by acquiring e-lender Radius Bank. This effectively gives it an in-house banking arm, which at a stroke should save money because of synergies. It will also give it a cheap funding source -- the bank's deposits.
So at the end of the day, this looks like a clever and opportunistic buy from famous stock picker Wood.