Seeking Alpha

More on First Marblehead earnings

  • First Marblehead (FMD) FQ4 loss comes in greater than anticipated.
  • Revenues were $7.7M, lower than revenues of $8.9M in the prior year period.
  • The company also commented on the IRS audit currently underway, saying that it expects to receive Notice of Proposed Adjustment that would seek to disallow the loss that generated tax refunds previously received as well as require the company to include in its tax returns any taxable income of the Trust Residuals from the March 31, 2009 sale date through June 30, 2011.
  • The disallowance of the loss, coupled with the additional taxable income after the sale date, creates a proposed adjustment estimated to be approximately $300M plus interest.
  • Shares -28.7% AH.
Comments (2)
  • DeepValueLover
    , contributor
    Comments (9779) | Send Message
     
    Ouch!!

     

    Along with the coming student loan bubble debacle this is NOT good.
    15 Aug 2013, 07:54 PM Reply Like
  • Nitin B. Sharma
    , contributor
    Comments (183) | Send Message
     
    Indeed, ouch. I traded in-and-out of this stock earlier this year. I got really nervous when I noticed three things with this company:

     

    (1) Last year, I saw some investor presentations from this company, which touted lower delinquency rates. Earlier this year, I saw a similar presentation, but a mellowed down version with no update on student delinquency rates (in fact, it inched up a little in one of the charts). That was my first sign.

     

    (2) Their last quarter earnings were below my expectations. I was already out of the stock, but I still heard the conference call and was not very pleased with their performance, especially with Cology. The revenue growth is just not there.

     

    (3) The student loan bubble started to get prime time coverage. It is just a matter of time before a taxpayer bailout will be needed. FMD is right in the middle of it.

     

    Best, Nitin
    15 Aug 2013, 09:36 PM Reply Like
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