BlueDome

First Marblehead: Hostage to the Credit Market

One thing people should remember, doesn't matter (for investors) if FMD was screwed unfairly. It's still screwed.

I'm selling all at a big loss.

Reasons:
1. FMD must have known that TERI was about to file bankruptcy.
Bet they have already tried and can't find another guarantor.
If they find one the terms will be bad.

2. The reason TERI filed bankruptcy is that the loan portfolios
that FMD securitized were (are) underperforming. They were all
downgraded by Fitch and then a bank forced TERI to set aside more capital to cover the losses, which it couldn't do. Whether all this was caused just by recession or by fault of FMD will never be known,
but it looks bad for FMD.

3. FMD is being sued left and right because of #2.

4. FMD's big moat is a database of historical data that is supposed to prevent exactly what is happening right now.

5. Goldman sachs pulls out of big $1billion bailout.

It looks like FMD burns the rest of its cash over 3 quarters then fails. Or, it gets bought for pennies on the dollar by
someone huge. Even if everything turns around, the terms of any
deals they can make will be horrible for awhile til they restablish
a reputation.

Funny how this played out over a couple of months yet nobody pushing the stock (like Motley Fool - Rule Breakers and Inside Value newsletters) was following closely enough to warn suckers like me. The Fitch downgrade should have been a big red flag.