The First Marblehead Corp (FMD)

SureBeatsWorking (79.06) Submitted: 4/29/07 8:53 PM : Start Price: $36.34 FMD Score: -64.84

Will admit I don’t really know how Sallie Mae acquisition will affect this company going forward. Even if BOM and JMP leave which is not foregone conclusion it appears FMD should still do ok. People like Tom Brown still buying after Sallie Mae sale! With private equity and 2 large banks investing so much in student loans they must thinks there is money to be made in this sector!

There is the potential for 30% annual growth in private student lending over next decade.

Tuition prices are rising, yet government wants to cut student aid. Students will need more loans.

They are doing a good job of diversifying from it’s 2 major clients, they are down from 80% to 40% of business from them over the last few years and their last conference call talked about 12 new customers!

They still have a high growth despite all the negativity associated with them. They generated $91 million in revenues in 2003, $199 million in 2004, $418 million in 2005 and $563 million in 2006. This is still only a small chunk of a $120B growing student loan market.

Good financials 290m in cash – 11m in debt

People seem to think the TERI database gives them competitive advantage and some sort of moat.

Management seems shareholder friendly and trying to move on from the issues caused previous management. They have been buying back shares.

Lot of bright people on HG boards who help with valuation on this company seem very upbeat.

A bought a second position after the recent drop and intent to keep holding for 5 years plus.

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