Well, I just finished rambling about video games, and just as soon as I submitted the post, I heard on Bloomberg that Sallie Mae (SLM) has agreed to a $25B cash buyout ($60 per share). I'm interested to see what this means for a two of the portfolio holdings, Student Loan Corp. (STU) and First Marblehead (FMD).
Student Loan is a much closer comp to Sallie, but I would imagine that all companies dealing with student loans, both private and federally funded, would be affected in one way or another. Interestingly, the two largest FMD customers (JP Morgan Chase and Bank of America) are also taking part in this buyout. Probably not a good thing for us FMD holders.
I guess we'll see how the market reacts to this news tomorrow. Also on a different note, over the weekend, Barron's published a letter that FMD's CEO sent to their editor in response to the recent article bashing the company... the same one that Tom Brown slammed after its publication. And, Student Loan reports earnings in the morning.
*** Edit #1 ***
Okay, it's now 5:30am, and FMD has tanked hard (it's down about 20%). I made an impulse buy at 34.95 in the pre-market, which adds roughly 20% to my existing position. I agree that the uncertainty has greatly increased, but I am not convinced that the partial joint ownership of Sallie Mae by both B of A and JP Morgan Chase should necessarily result in a substantial decrease in volume for FMD. I could be very wrong here. Would definitely want to hear others thoughts on this.