The shorts were really wrong on this one. Tom Brown of BankStocks.com was not.
Bank of America's contract with First Marblehead (FMD) was set to expire in May. And, the FMD bears must have figured there was serious risk to an extension, since they did not cover their shares. In fact, short interest in FMD increased going from February to March.
And, now the news is in.
From this afternoon's press release:
The First Marblehead Corporation announced today that it has signed an agreement with Bank of America to provide certain Direct-to-Consumer private student loan services through May 31, 2008, provided that either party may terminate this agreement on or after June 1, 2007 upon 90 days notice.
FMD currently trading up 8.3% afterhours at $48. This, after ticking up 2.2% during the normal trading session. FMD, Go Go Go!