First Marblehead
Question: The CEO quit. Is this a case of short now and ask questions later?
It’s not clear if he bribed somebody or had a mistress or who knows what. He gifted 32K of his own money to an employee of a customer. http://biz.yahoo.com/ap/050928/ceo_resigns.html?.v=4
OTOH, the trailing P/E is about 9. I figure Student Loans are a growth business. Maybe it is cheap now.
I’m tempted to buy, but I don’t see any sort of support levels, so I don’t have a clue where to set my bid.
Answer: I thought about offering 21.25 based on a 1-day chart, but I chickened out and lost the chance to make a quick 20%. Rats.
More info came out. The giftee was a female senior VP at BAC, who was fired for it *an entire month ago*. BAC is a huge customer, maybe 1/4 to 1/3 of revenue for FMD. BAC pulled out of one current deal, but that deal just got delayed 1 month to bring in someone else. BAC has not publicly stated that it is cutting all ties with FMD, so hopefully future business is not affected too much.
FMD announced a 5M share buyback. Usually, buybacks send me running, but I am not opposed when the P/E is below 10 and earnings are increasing. There is also some silly fund manager who bet too much on FMD. These ought to provide support at 21, unless the fund manager gives up, in which case no chart-based support will be meaningful.
My limit buy got filled this morning at 21.60. I thought I saw support at 21.50 on the intraday charts, and this time I placed my bet. Actually, it might be more correct to say there is support at 11:00 AM Eastern.
Related Posts
Filed under: School Loan
Leave a Comment
XHTML: You can use these tags: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>
TrackBack URL | RSS feed for comments on this post.