Why the selloff in First Marblehead (NYSE:FMD)?
Perhaps the stock is still expensive. It is certainly closer to our price target (circa $20) set late 2006 and no longer carries the moniker (provided by us) of the most expensive stock in the financial sector.
Meantime, that loud sucking sound called liquidity seems louder than the boo-yah of the cheer-leading section populated by the usual suspects. Perhaps they are selling and not telling, or perhaps the logic of the business model and valuation no longer seems so air-tight.
My sense is that the stock will see a 20 handle rather quickly, and selling into strength in the mid thirties is a virtual lock bet.
We will revise our target price (probably lower) following the next liquidity crunch.