First Marblehead Corp (NYSE:FMD)

CAPS Rating: 2 out of 5

The Company with its subsidiaries offers national, regional financial, educational institutions, as well as businesses, education loan marketers & other organizations, a suite of outsourcing services for private education lending in the U.S.

Recs

5
Player Avatar MKArch (99.72) Submitted: 5/17/2011 10:25:46 AM : Outperform Start Price: $18.20 FMD Score: -125.49

An old favorite hidden gem that I bailed on in my personal portfolio a couple of years ago when it looked to me like securitizing student loans was gone for good and managment didn't seem to be considering any other options. I cleared it out of my CAPS portfolio a few months ago when I needed room for something new and was looking for dead wood to prune away. They have been developing some fee businesses lately including an acquisition but nothing that had me thinking they have a viable business model.

Last night's earnings announcement changed my mind enough to add them back in CAPS anyway. Forget the different statements that show nothing more than a non business slowly burning cash. The announcement that they will not be selling their tiny bank franchise (one branch I think) and will start originating student loans from the bank in 2012 has me interested in the FMD story again. I'm no financial expert however it would seem to me that the tiny size of their bank and stricter lending regulations would make it difficult for them to build a student loan focused lending operation up any time soon. However FMD fans will probably recall that Goldman Sach's invested several hundred million dollars in FMD in the early days of the financial crisis at prices of ~$12.00-$15.00/ share. There was speculation at the time that G.S. would assist FMD in becoming a spread lender and in fact offered a warehouse loan that seemed to fit that bill that FMD ultimately declined to accept. I'm thinking G.S. might be in the background looking to salvage their investment here and it's at least worth another CAPS thumbs up bet.

Member Avatar ViDLuV (59.17) Submitted: 8/17/2011 7:09:18 PM
Recs: 1

wonder if it will go below 1.00 before making a comeback. Id dump it at $10 if it ever makes it that high!

Featured Broker Partners


Advertisement