You Lucky Bastards: FMD

I forgot to add that whatever additional amount Goldman Sachs tenders will be added to First Marblehead's cash reserves.

So, if they end up tendering an additional 150 million, for example, FMD will then have 500 million in cash on hand, and no debt.

It has taken me a long time to separate fact from fiction based on the erroneous information that a lot of articles on this situation contain. Reporters are much more sloppy than I ever realized before.

But I'm glad I took the time to do so in retrospect. I will add to my position anytime, if ever, FMD falls below $4, through either calls or outright purchases.
 
I bought today a small position. Good risk vs reward. If FMD survives, we could see at least 10 points upside in less than a year for a 200% roi.
 
FMD currently has $3.74 per share of cash on hand, while trading around $4.18. It's not just less than book (approx .68 book value and 1.95 p/e ratio), it's close to trading at liquidated cash value.

Goldman now will be injecting anywhere from 100 million to 200 million dollars, depending on market cap of FMD on the date that their additional investment becomes due.

GS will be purchasing convertible, preferred notes.

FMD will then have 450 to 550 million of cash on hand.

With a float of 93.5 million shares, cash levels per share should soon exceed anywhere from $4.74 to $5.74 per share, at the time Goldman Sachs makes its contribution. A good approximation would be $5.25 per share assuming FMD stays at its current range.

So, yes, I think the panic that has set into the financial markets has distracted people from analyzing this company on its stand alone merits in a rational manner. The General Electric problems that were announced today seemed to add to the background noise, panic and confusion.

I don't come across many companies that are trading anywhere near their actual liquidated cash value, let alone less than that value. In fact, I believe this is a first.
 
Hi buylo

When is the date that Goldman must step up to the plate with the share purchase.

Very interesting play by the way,good find ...cudo's

TY
 
Quote from lloyd111:

Hi buylo

When is the date that Goldman must step up to the plate with the share purchase.

Very interesting play by the way,good find ...cudo's

TY
More...

Good question; I'm trying to pin the exact date down.
 
I bagged myself another 1000 shares. It's my gamble play so you can all laugh in my face if this goes to $1. I saw 3.99 this morning and added....too bad its there now again. Thought something was "up" on that little run to 4.37 but just covering. I saw SLM running too and thought the sector might have a little run but everything just takes an asspounding across the board.

I'll be content if this POS can hold $4.

Hope theose bastards working there are figuring something out.
 
Quote from pumpanddumper:

I bagged myself another 1000 shares. It's my gamble play so you can all laugh in my face if this goes to $1. I saw 3.99 this morning and added....too bad its there now again. Thought something was "up" on that little run to 4.37 but just covering. I saw SLM running too and thought the sector might have a little run but everything just takes an asspounding across the board.

I'll be content if this POS can hold $4.

Hope theose bastards working there are figuring something out.
More...

I was hoping on a day like today it would have dropped to $3.12, as it did yesterday, but it hasn't.

I should have added more shares yesterday.
 
Quote from ByLoSellHi:

I was hoping on a day like today it would have dropped to $3.12, as it did yesterday, but it hasn't.

I should have added more shares yesterday.
More...


Yeah, I know. It was a good trade for those that caught it and bailed on the rally to mid 4's.

This baby is a double or $1. My target is $5-$6. How about a gap up and runner Monday?

Btw, look at SLM go....
 
Trying to read this balance sheet (its a tad opaque for me since I'm not familiar with some of the structure and design of cashflow in their business), but here

http://www.sec.gov/Archives/edgar/data/1262279/000104746908001106/a2182489z10-q.htm

States effective last yr loans held for sale of 358m. I assume that is their direct risk (easily offset by their cash holding), assuming they've securitized none of that.

Anyone know how they go about securitization, collection of revenue, etc.. their whole structure ?

I assume they are dependent on the auction rate securities market (dead in the water temporarily since bond insurers/teri/etc plumetting in ratings and/or bankrupt) to raise cash. I obviously don't understand the structure of this business though, since a securitized and sold product is entirely off the books ... are they directly selling on the ARS market? or is there an intermediary?

someone can just explain this whole structure.. give me a step by stop how their business normally operates, then how it is currently operating. i'm interested to learn .. same goes for SLM .. i haven't a clue.

But it looks from my superficial knowledge that they have enough cash to ride out a halted cycle regardless of default levels, are trading at around cash value, and more likely than not the govt will step in. After all, if the fed could bail bear stearns assets on the market, it isn't a stretch to assume the house/congress does something to assure kids can get loans to go to school. This is main street in a big way. Additionally, on the bright side, if they are dead in water, they still have cash and just can lay off most of the work force and go into capital preservation (servicing existing loans) mode .. run lean and have barely any opex. A 1:1 leverage model gives FMD liberty to even be pleasant to not 'default' its debtors ... short of going into bankruptcy, student debtors probably have lower default rates than credit card holders or even 100% cashed out refi heloc debt holders. New bankruptcy laws should provide some help to them (FMD)... Doesn't look like barely any risk for potentially double/triple/quadruple once we come out of this period.
 
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