Thursday, November 09, 2006

One Election Loser: Sallie Mae Stock

By Bryan O'Keefe

While CCAP does not expect huge changes in higher education with the Democrats now in charge, at least one higher ed related company has already experienced a huge financial loss because of the coming change of political power.

Sallie Mae’s stock (SLM) is down more than 5 percent in the past two days – which is a loss of about a billion dollars for the company. One theory goes that investors are unloading the stock because they fear that the Democrats will promote student loan programs that deal directly with the government and eliminate middlemen, like Sallie Mae. We at CCAP will have more to say about this issue in the future. For the time being however it’s worth noting what the markets are predicting will happen in higher education financing – and it’s not pretty for Sallie Mae.

1 comment:

TC said...

Mr. O -

IMHO I don't think CCAP wants to go down this road. SLM has been in a down cycle since it peaked in January of this year. It's Total Debt/Equity (mrq) of 21.871 is dismal at best. If you look at the fundamentals there is good reason why investors have sold their positions. With that said, SLM was upgraded in August from overweight to hold. And the best news of all is the old supply and demand - buy low, sell high.