Ashleigh Rogers
Long/short equity, growth at reasonable price, value, banks

Nelnet: Regulatory Headwinds Look Priced In, But Market's Are Not Showing Enthusiasm

Executive summary:

  • After hitting an all-time high late last year, Nelnet has sold off on political risks.
  • Federal budget cuts and lower collection fees are hurting the company, but increased sales of loans by big banks help even if they fall short of a panacea.
  • The stock offers significant value, but controversy and concerns about student loans will keep that value from being recognized by the market in the immediate future.

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After hitting an all-time high ~$45 a share in late 2013, student loan processor Nelnet (NYSE:NNI) has fallen back to around $37 a share. While earnings are likely to struggle over the next few years, for reasons I will discuss in a moment, the company is...

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