Stock Analysis
First Marblehead Shouldn’t Be Jealous of Sallie
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!
Laws of Economics
The laws of economics are pretty much intact in the rest of the world; a global low interest rate environment has driven an increase in debt consumption and rising interest rates will have their impact globally.
Barney Frank Keep Your Hands Off (please)
Barney Frank’s plan to shift legal liability to the investors who buy mortgage-backed securities is one of the stupidest decisions that came out of Capitol Hill since… well, ever.
Love Serenades and New Flings
I sang love serenades for Abbott Labs' (ABT) stock for a long time. Call me materialistic, but my love for stocks is not ‘til death do us part,’ it is conditional of fundamentals staying intact and of valuation - it has to be undervalued.
Russia? Think Again
As you look at the high-flying Russian stock market, you may feel like you want some of it. But before you dive into Russia consider this: as it is, Russia is a dysfunctional play on high oil prices as well as commodities. It is no less bureaucratic than it was some fifteen years ago.
Between the Lines
I was very amused by the interview given by the CEO of Countrywide (CFC). If you read between the lines of what he said he was pleading for the Fed to lower rates.
China – Does It Really Matter?
The reaction to the possibility of slowdown in the Chinese economy was an excuse for a correction. This correction has caught many with their pants down, due to the euphoria of the cyclical bull market.
Don’t Let Bull Market Convince You That You Are Smart
Lately I've been getting this powerful feeling that everything I touch turns to gold. Every time I buy a stock, it goes up. Did I finally figure out the stock market game? Did I find a secret to Will Rogers' advice? Buy stocks that go up, and if they don't go up, don't buy them.
The Future of Corporate Profits. The “E” in the P/E Equation
As margins revert to the historical average, corporate earnings growth will either decelerate — disappointing Wall Street expectations of 8% earnings growth for the S&P 500 over next five years — or decline, driving earnings, the “E” in the P/E equation, down.
Market Timing and Discipline
I am not a market timer, I have no idea when the market will turn - it is too difficult to execute market timing strategy on a consistent basis, in my opinion.
Abbott or GE – who is smarter?
I am not a buyer of Abbott Labs (ABT) at this price, as the margin of safety has been depleted by the latest stock appreciation. But I like its latest transaction with General Electric (NYSE GE).
Oil Service Stocks vs. Big Oil Stocks
I'm not a big fan of large oil companies as most of them have little or no organic production growth and they are completely at the mercy of oil prices, but I am getting interested in oil service stocks for several reasons:
Howard Stern’s $83 million Bonus
I have tremendous respect for The Financial Times. It is a great newspaper and I am privileged to write for it on occasion. But when I see FT write “Sirius Satellite Radio is paying “shock jock” Howard Stern an $83m bonus despite a 50 per cent (their spelling not mine) share price fall since he joined the fledging media group,” I get frustrated.
Post Scriptum
Since I (unintentionally) became a member of Defend Bob Nardelli Club, I've received many emails telling me that Bob Nardelli didn't do a great job managing Home Depot (HD).
Blame Home Depot’s Board, Not Nardelli
The ousting of Bob Nardelli sent a wrong message to American CEOs: it taught them an incorrect lesson – manage the stock, not the company.
CEO’s Responsibility
I wrote an a short post Great Job Bob!, this is a responce to to reader's comments on that post.
CNBC Interview: Oil, diapers and US economy
In this CNBC interview I discussed what I wrote for FT Oil, Diapers and US economy.
Great Job Bob!
Herb Greenberg wrote a wonderful column and said something I've wanted to say for a long time, that blaming Bob Nardelli for the lackluster performance of Home Depot's (HD) stock is just plain silly.
Pfizer: Blockbuster success is a double-edged sword
I wrote this article for FT in 2005, but after reading news on Pfizer it feels like I could have written it today.
Wal-Mart So Far So Wrong
My thesis for buying Wal-Mart (WMT) was very simple: once it improves its store appearance and merchandise, existing customers will spend more money and new customers will start spending new money on higher margin merchandise.
