May 31, 2007 – The Motley Fool
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!