The key to this thing is to avoid leverage, at least above fair value... This is a sleeper.
You Lucky Bastards: FMD
- Thread starter ByLoSellHi
- Start date
The key to this thing is to avoid leverage, at least above fair value... This is a sleeper.
Many of you expected that this would dump down and snap back up in a classic "bounce" trade like some of the homebuilders earlier in the year. Well...it didnt happen, sorry, now lets go to the tape...
"Student-loan services provider First Marblehead Corp. said Thursday it swung to a fiscal third-quarter loss as the company remained unable to complete a single securitization transaction -- previously its major source of revenue."
"First Marblehead like many companies in private student-loan industry has been left scrambling for capital in the credit crunch. The company depends on securitizations of student loans for most of its revenue, but it hasn't been able to put together a new package of loans since September."
I know the word "bankruptcy" sounds shocking, but I think this might be a reality. If it doesnt sell its loans, then this will bounce into bankruptcy. However, if it does sell its loans then it might get that bounce.
I was shocked too when Delta Airlines went bankrupt. How could a company that employs so many people and fly all these big planes go bankrupt? Well, I will now introduce you to FMD. Lets see what happens...
"Student-loan services provider First Marblehead Corp. said Thursday it swung to a fiscal third-quarter loss as the company remained unable to complete a single securitization transaction -- previously its major source of revenue."
"First Marblehead like many companies in private student-loan industry has been left scrambling for capital in the credit crunch. The company depends on securitizations of student loans for most of its revenue, but it hasn't been able to put together a new package of loans since September."
I know the word "bankruptcy" sounds shocking, but I think this might be a reality. If it doesnt sell its loans, then this will bounce into bankruptcy. However, if it does sell its loans then it might get that bounce.
I was shocked too when Delta Airlines went bankrupt. How could a company that employs so many people and fly all these big planes go bankrupt? Well, I will now introduce you to FMD. Lets see what happens...
I won't try and paint the news as anything other than it was but did anyone really expect anything different given what we already knew? This is a trade that has the same potential it had when I first bought, perhasp better considering that loan vol is up 19% ie demand for loans that bridge the gap between federal aid and tuition cost is still high and FMD is likley increasing its market share. This is a bet on the insdustry leader that has enough cash to wait out the inevitable, the return of invetsors to a lucrative and high volume market. Do you realize that FMD books 6% of each of the loans it makes upfront as an origination fee? AMBK came out the other day saying that it is committed to the student loan area, others will be too and you can expect another round of help from congress or the Dept of ED becfore schools starts in the Fall. The way to play this is buy both FMD and SLM and wait until the fall. Either the loans are going to all be federal in which case SLM is going to make a killing or the privater lenders are going to come back strong and FMD is going to back at several multiples of what it is now. One thing's for sure tuition is not coming down in a year and kids are stil going to go to school this Fall and will probably need to borrow more money than ever. Those with patience should be rewarded, those without will certinly not be. I am grateful to ByLo for this thread as I wouldn't have even thought about this FMD and SLM trade if he hadn't posted.
Truth hurts, doesn't it? What kind of idiot are you to think anyone can guarantee anything 100% of the time? I never made any STUPID FUCKING claims-YOU DID. Trolls like you love to start threads posting these grandiose GAMBLES, hoping and praying their longshot dogshit goes in the direction they predicted so their ego can be stroked by people like themselves who they will never meet.
FUCKING LOSER
It just goes to show how fundamentals in this market continue to be trumped by technicals. I made the greatest fundamental justification of why SWHC was going to 20 last fall (privately, mind you--not on the Internet) and lost my a$$ based on their corrupt management. Shit happens and money management is key.
A good entry point for FMD is 0.00
This is the best advice on this board. If they cant sell their loans, then they just might go to zero or come very close while listed on the pink sheets.
When will they start selling their loans and then to who? Will they start selling them tommorrow? Next month? Six months?
Im betting that they cant get it straightened out at least until 2009 and, by then, First Marblehead will be trading somewhere south of $1.00 if its not on the pinks. Just then and only then will this thing become a buy once more if it doesnt fall into bankruptcy.