Saturday, May 17, 2008

First Marblehead - Fire Sale Prices

Our economic cycles are filled with Boom and Bust cycles and spread across different industries at different times. This has been going on since the start of capitalism and will continue into the future as well. The only change we have really seen in this cycle is the length of time in between cycles has increased and the recovery time has decreased, both factors are a net plus for investors.

With this in mind, I bring to your attention First Marblehead Corporation which is the largest
issuing agent of student loans.

Now I realize that currently any company with anything to do with the credit markets is considered taboo and as you can plainly see by the stock chart, the investors feel the same way. However, this to shall pass and FMD will survive both the current credit crisis as well as the class action lawsuit that investors have filed based upon the stock plummeting. With this recovery will come a stock price that will very easily increase 10 fold and investors who really see the value in this company will be very handsomely rewarded.

Is there risk involved with this purchase? Of course there is risk, there is always risk, but with the companies finances and the stock price hovering just above $3 per share, the potential rewards far out weigh the risk and as far as I am concerned warrant a very aggressive accumulation phase in portfolios.

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