No need to panic on FMD

JPM downgraded FMD today on worries about the company's ability to keep high margins on its BBB student loan asset backed securities (SLABS). Credit spreads are widening a lot because of the subprime mortgage mess and re-pricing of risk, so I wouldn't be surprised to see a little pressure, but these SLABS are still performing well to the best of my knowledge. The downgrade seems short-sighted because there is still incredible value in this name compared to the earnings and cash flow. Maybe growth will slow a little because of the margin compression, but I don't think it will be much, and perhaps it will be made up by higher margins from Astrive.