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HenryTo
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Location: Houston, Texas & Los Angeles, California
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 Posted: Sun Dec 09, 2007 2:27 pm Post subject: |
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The Motley Fool on FMD:
http://www.fool.com/investing/general/2007/12/06/first-marblehead-showing-cracks.aspx?source=iflfollnk0000003
| Quote: | Those figures would have the company booking revenues of $480 million (including $228 million in cash). Grossed up for processing fees and such, this would be more like $600 million ($348 million in cash). At 35% net margins -- well below recent years' figures -- on 95 million shares, that works out to diluted earnings per share of $2.53. More than $1 per share of that would be cash, taking deferred taxes into account.
This analysis assigns zero value to FMD's existing portfolio of residuals and structural advisory fees, which the company recently valued at $928 million, on what look like reasonably conservative assumptions. No class of securities is yet in distress, but just to hedge against rising defaults, let us apply a modest 50% valuation discount to management estimates. That would make FMD's portfolio worth $4.88 per share. Backing that figure out of yesterday's closing price of $19.93 leaves just more than $15, producing a P/E of 6.
I don't know about you, but to me, that sounds very, very cheap. First Marblehead enjoys a leading market position and serious competitive advantages in an asset class with high secular growth trends. Even if First Marblehead's thus-far-phenomenal growth is beginning to slow, those trends aren't going anywhere. |
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rffrydr
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Location: Sunny California
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| Posted: Sun Dec 09, 2007 8:08 pm Post subject: |
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That analysis leaves out the non plus ultra of the student loan business: "till death do you part."
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HenryTo
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| Posted: Fri Dec 21, 2007 8:48 am Post subject: |
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Goldman with a $260.5 million injection into FMD - and most notably, will provide a $1 billion warehouse facility for funding purposes. The terms of the latter are still unknown at this stage, however.
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First Marblehead Sells Stake in Company
Friday December 21, 9:39 am ET
First Marblehead Agrees to Sell Portion of Company to Goldman Sachs Unit for $260.5 Million
BOSTON (AP) -- Student-loan services provider First Marblehead Corp. said Friday it has reached an agreement to sell a 16.7 percent stake in the company for $260.5 million to GS Capital Partners, a unit of Goldman Sachs Group Inc.
GS Capital Partners will initially invest $59.8 million to acquire securities convertible to 5.3 million shares of common stock. The conversion price is $11.24 per share, the price at which First Marblehead closed at Thursday.
GS Capital Partners will then spend $200.7 million to acquire additional securities convertible for up to 13.4 million shares of common stock at a price of $15 per share. Once converted, the shares will represent 16.7 percent of First Marblehead's outstanding common stock, but GS Capital Partners will not hold more than 9.9 percent of the company's voting shares at any time.
First Marblehead will allow GS Capital Partners to nominate one member to the company's board of directors as part of the deal.
Goldman Sachs will also provide a $1 billion warehouse facility to allow First Marblehead to access a new source of funding.
Shares of First Marblehead rose $4.76, or 42.4 percent, to $16 after the opening bell. Shares have traded between $11.01 and $57.56 during the past year. |
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rffrydr
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HenryTo
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