FMD Conference Call (take #2)
The call was fantastic and management gave a lot of excellent information. Here are the key points:
1) Four new clients were signed up in the quarter, including ING Direct!
2) Astrive is up to 12% of overall volume and is performing great
3) They are rolling out two additional brands to compliment Astrive
4) 4th quarter securitization was $864 million with $91.6 million in up-front cash
5) They received a favorable tax ruling and will receive a $56 million tax refund in the first half of 2008. Taxes are now paid when cash is received on residuals.
6) The application and loan pipeline heading into Q1 is “very strong”
7) Management is improving transparency and disclosures on all trusts!
8) 1.3 millions shares were repurchased in the quarter! Over 8 million shares left on repurchase plan
9) The BBB sector is in disruption (because of the subprime mortgage crunch) but accounts for only 5% of transaction structure. If management can’t get an attractive price on the BBB securitization, then they will look at alternatives which could include placing the loans of the balance sheet of Union Federal (S&L subsidiary) or Citizens. Banks don’t mind holding these loans on the balance sheet b/c the coupons are good. Then, when credit market conditions improve, they could securitize.
10) Sallie Mae has not been increasing their direct to consumer channel marketing
11) They are looking to get customer concentration down to 35%-40% in 2008.
12) Non big 3 customers grew at 80% in fiscal 2007
What’s not to like? You are getting very strong growth and a 3% dividend yield for 8 times earnings!
1) Four new clients were signed up in the quarter, including ING Direct!
2) Astrive is up to 12% of overall volume and is performing great
3) They are rolling out two additional brands to compliment Astrive
4) 4th quarter securitization was $864 million with $91.6 million in up-front cash
5) They received a favorable tax ruling and will receive a $56 million tax refund in the first half of 2008. Taxes are now paid when cash is received on residuals.
6) The application and loan pipeline heading into Q1 is “very strong”
7) Management is improving transparency and disclosures on all trusts!
8) 1.3 millions shares were repurchased in the quarter! Over 8 million shares left on repurchase plan
9) The BBB sector is in disruption (because of the subprime mortgage crunch) but accounts for only 5% of transaction structure. If management can’t get an attractive price on the BBB securitization, then they will look at alternatives which could include placing the loans of the balance sheet of Union Federal (S&L subsidiary) or Citizens. Banks don’t mind holding these loans on the balance sheet b/c the coupons are good. Then, when credit market conditions improve, they could securitize.
10) Sallie Mae has not been increasing their direct to consumer channel marketing
11) They are looking to get customer concentration down to 35%-40% in 2008.
12) Non big 3 customers grew at 80% in fiscal 2007
What’s not to like? You are getting very strong growth and a 3% dividend yield for 8 times earnings!
posted by Never-Limp at 6:25 AM
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