Sunday, May 20, 2007

Hit #165 (Sallie Mae)

Sallie Mae (SLM) is being bought by a consortium that includes Bank of America, J.P. Morgan Chase and J.C. Flowers, for $25 billion in cash. The offer, of $60/share, makes for a profit of 58.9% over my average cost of $37.75. The deal may yet be in trouble, as noted here, but in the worst case the offer price will be reduced, and the sale itself is not likely to fall through.

The student loan sector is under a cloud with investigations into various practices. That still did not prevent a spike in competitor Student Loan Corp. (STU) 's shares. STU may receive a bid of its own, but the stock looks expensive now.

Another lender that has its share of troubles is First Marblehead (FMD). A bit risky than the rest, given that this is not seen as a takeover target, this could well be a better long-term bet than STU. I have added FMD to my watchlist, and will be waiting patiently for the right moment to open a position.

Previous hit - First Data (#164)


Post a Comment

<< Home