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SLM Corporation Message Board

  • as32164 as32164 Feb 26, 1998 11:26 AM Flag

    What's going on??

    can anyone explain what's going on ??

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    • I've got my seatbelt and shoulder harness both on tight! Check out the graph and you'll see my point.I think I'll even buy more.
      Is Gore still in politics?:-) and if so,does he "count"?:-)!

    • Rolling? Yes, backwards. Many would hope your documented optimism is better grounded than the rational herd behavior that seem to be prevailing. Investors in the know seem less inclined to share your optimism, especially those familiar with SLM's history of omnipresent political risk. I'm not bailing yet but my fingers remain crossed.

    • The Street does not like any compression of profit margins. I do consider this change to be minimal and short term. My angle
      is that since margins are retracting due to regulatory, not internal, reasons the street will lower their forecasted EPS for
      the upcoming quarters. Also, lenders are purporting that with lower margins they will no longer find this to be a profitable
      business, hence moving on to bigger and better things. The Washington Post has a short but informative article referencing the change.
      This is good for SLM, because they are penetrating the loan origination segment of the market, as well as the servicing of
      student loans. This may increase the amount of loans securitized, and with the low interest rate environment the company will derive
      more from floor income. I believe anything below 6% is good for floor income. However, with the share repurchase program it seems
      that the company is somewhat supporting the stock during broad market downturns. Case in point, when the Dow took major losses
      during late January and early February the stock maintained a constant price level. In conclusion, yes the market will discount
      earnings and the stock price, but long term this will not hender the company from maintaining a certain level of profitability.
      Another case of react first evaluate later. I think that since the company is expanding into other areas of the business the growth
      of servicing or an increase in direct lending business may somewhat nullify the effect of a .8% reduction in margins, but only
      time will tell. Remember the rate change will go into fruition in July, and you can always call Investor Relations to get
      information from the horse's mouth, besides you are either a shareholder or prospective shareholder. The company will talk to both
      parties.

      P.S.: I have found that the annual reports have a wealth of information about where/how the company generates its revenues. By reading annual reports and 10K's you can get a good idea of how situations like these will affect the company, hence possibly generating an opportunity to add to your current position while everybody else is liquidating.

    • The Street does not like any compression of profit margins. I do consider this change to be minimal and short term. My angle
      is that since margins are retracting due to regulatory, not internal, reasons the street will lower their forecasted EPS for
      the upcoming quarters. Also, lenders are purporting that with lower margins they will no longer find this a profitable business,
      hence moving on to bigger and better things. The Washington Post has a short but informative article referencing the change. This
      is good for SLM, because they are penetrating the loan origination segment of the market, as well as the servicing of student
      loans. This will increase the amount of loans securitized, and with the low interest rate environment the company will derive more
      from floor income. I believe anything below 6% is good for floor income. However, with the share repurchase program it seems that
      the company is somewhat supporting the stock during broad market downturns. Case in point, when the Dow took major losses during
      late January and early February the stock maintained a constant price level. In conclusion, yes the market will discount earnings
      and the stock price, but long term this will not hender the company from maintaining a certain level of profitability. Another
      case of react first evaluate later. I think that since the company is expanding into other areas of the business the growth of
      servicing or an increase in direct lending business may somewhat nullify the effect of a .8% reduction in margins, but only time will
      tell. Remember the rate change will go into fruition in July, and you can always call Investor Relations to get information from
      the horse's mouth, besides you are either a shareholder or prospective shareholder. The company will talk to both parties.

      P.S.: I have found that the annual reports have a wealth of information about where/how the company generates its revenues. By reading annual reports and 10K's you can get a good idea of how situations like these will affect the company, hence possibly generating an opportunity to add to your current position while everybody else is liquidating.

 
SLM
8.99+0.13(+1.47%)Sep 2 4:15 PMEDT

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