In October, I had a great pleasure to be interviewed by two of my favorite Motley Fools: Philip Durell advisor to Motley Fool Inside Value newsletter and Bill Mann co-advisor to Motley Fool Hidden Gems newsletter. In this in depth interview I discuss everything: economy, stocks I like, international investing, practical application of QVG framework, absolute P/E model and of course my book – Active Value Investing: Making Money in Range-Bound Markets.
I’ve been a big fan of First Marblehead’s (FMD) stock for couple months now, and it looks like an incredible value today, trading somewhere around 7-8 times earnings. Though I have to mention this stock is not for the light hearted, as it has a lot of myths surround it. Tom Brown, who I am [...]
In this article I made an argument that despite high uncertainty surrounding First Marblehead’s (FMD) business at nine times earnings, it is a very attractive opportunity. Here are some additional points that I omitted in the article:
May 31, 2007 – The Motley Fool
By Vitaliy Katsenelson, CFA
Investors love certainty. Their affection for uncertainty ranks with their fondness for a visit to the dentist for a root canal on Christmas Day.
However, great investment opportunities are created when certainty takes a vacation. In the case of First Marblehead (NYSE: FMD), certainty took an extended sabbatical. The stock dropped over 20% when two of its largest customers — JPMorgan Chase (NYSE: JPM) and Bank of America (NYSE: BAC), together representing roughly 44% of sales — announced with a private equity firm their intention to buy Sallie Mae (NYSE: SLM), First Marblehead’s largest competitor. Uncertainty brings fear, which in turn brings opportunity — First Marblehead is trading at about eight to nine times earnings!