Have some patience for goodness sakes, all the catalysts that will restore value to FMD are things that will take some time to put together, measured in weekly not 3 minute charts I had an order in to buy another 10K at 3.50 and would have ponied up the extra 3-4c to get a fill but was away from the trading turret at close. I plan to buy more this week, at least another 10000 either in stock or 100 Jan 09 7.50 calls. The RR on this trade is very good given the probability that FMD will survive.
Pardon for butting in but this looks like buying a falling knife in a bear market. Against all odds. Susana
Okay, I'm just saying there is no sure thing. I have been in a stock where it all makes sense to add on the dips, balance sheet is good, etc and you ride it down and it never recovers no matter how good the potential for a bounceback is. You end up with a 30k bad beat and bagged in a penny stock. Look at the TMA people most recent example. Or daytrade/position trades that turn into LONG term. Then you are holding a stock so beat up and holding and wishing....Hell I bet there are longs in this from the December GS "infusion" Sure, I would buy another shitload more shares if I knew something was going down the night before and dump the gap up. Too bad I'm not "in the know". Actually would just load up on calls. Cough CC The stock mighhhhhhht get a spark on the Congress student loan pump and then fade.
You are right Susana, it does look that way. This is a special situation, however, that does not occur very often. The risk to reward is unusually favorable in this situation. But yes, there is risk. Read all of the posts and the FMD SEC filings and i think you will then agree that FMD is very attractive right now for someone willing to take on the risk of bankruptcy (which i think is a relatively low probability) and be patient. FMD's assets are not worthless, but they lost their insurer and consequently their liquidity and therefore in the immediate market the assets have greatly reduced value. Those investing in FMD now are counting on that reduction in value being only temporary. Companies usually go bankrupt because they have current ratios well below 1 and they can't borrow enough money to pay their immediate liabilities. That is not the case with FMD, however, as they seem to have more than adequate liquid assets (cash). The real danger here, as i see it, is of rising loan defaults in a possible deep recession where unemployment rises steeply and lasts a long time. If FMD were forced to become their own insurer under those conditions they could indeed be in trouble. Because these are student loans however, one assumes that the government will step in.
Thank you for the fundamental explanation. I do wonder if "seem" is good enough though. There is lack of demand and an abundance of supply for a reason. That right there, its indisputable. Good luck with the long guys, hope you all kill it. Susana
Goldman Sachs deal for a quicky boost to $15 followed by a short squeeze then cash out! Come on snake eyes!!! Even without it, the probability for a good return is still high factoring in high cash, no debt, long company history and connections, possible student loan bailout, and rock bottom share prices.
I could be wrong but I think part of the reason why the selling has been overdone and price action has given a worse picture of FMDs prospects than is warranted is because a lot of shares were held by mid and large cap funds. These types pf holders will have had to divest now that FMD is neither and probably doesn't qualify to be held. I also know that other funds are restricted from holding stocks that trade under $5. These are the type of things that can exacerbate a stock's decline, but by the same token can ramp it on the way up.
I have seen blogs/chats/articles of people who have bought this stock at various times up from February. Ever since the earnings report, there has been no news from FMD of whats going on besides after TERI bankruptcy which is vague at best. Followed by the fact that the stock is steadily bleeding and bleeding over 2 months can really tear up the nerves of anyone holding it hoping and hoping for that miraculous jump up just like all those other dying stocks. The bankruptcy of TERI no doubt triggered capitulation in many except the most determined and disciplined long term investors who truly understand the value proposition in FMD. You really need to do a lot of research to figure it out, you can't just look at the news or take a cursory view of the situation. Even buying after the TERI buyout, just watching the slow decline is scary especially with the falling knife cutting everyone around and you start to wonder "is this one of those too?" I am long 8000@3.78 average but I just happened to be lucky to get in at a relatively good time. If I had been aware of this stock when it was 7+, I would have jumped in then and would be in the hair pulling situation many of you are in now. I applaud anyone here with the steel resolve who bought early and is able to stick in day by day as this stock sheds blood. Of course, the reward at the end of tunnel isn't guaranteed but it is worth the risk IMO Hang in there! Wait until at least the Goldman deal is resolved, whether positive or negative.