Sallie Mae posts
FeedPosted Mar 18th 2010 9:50AM by Zac Bissonnette (RSS feed)
Filed under: Recession
As the battle over student loan reform heats up with news that the proposal will be included with health care legislation, the Sallie Mae PR/lobbying machine is ratcheting up its criticism of the plan.
According to the bill, the United States government would save taxpayers and borrowers billions of dollars by eliminating middlemen in the federal student loan program -- and offering the loans exclusively through the United States government. The savings could be used to increase financial aid for low-income students.
Continue reading Who Cares If Sallie Mae Employees Lose Their Jobs?
Posted Oct 2nd 2008 9:35AM by Jim Cramer (RSS feed)
Filed under: Market Matters, SLM Corp (SLM), Cramer on BloggingStocks, Financial Crisis
TheStreet.com's Jim Cramer says he doesn't want to make a move until he sees the action. We aren't oversold enough anymore, and we are up too much. Meanwhile, the next run is on the insurers, as we can tell from the erratic nature of the way that group is trading.
Oh, and what's the deal with
Sallie Mae (NYSE:
SLM) (
Cramer's Take)?
There's not a lot of respite here in part, again, because of Lehman and the default of so much Washington Mutual paper.
We just aren't ready for what is happening yet, and we keep getting surprised about where the paper is. The rescue bill will help, but the pork attachments are so horrible that I believe, ex-FDIC, they have made it tougher to pass, not easier.
Continue reading Cramer on BloggingStocks: The next run is on the insurers
Posted Jul 2nd 2008 12:43PM by Steven Halpern (RSS feed)
Filed under: Newsletters, SLM Corp (SLM), Stocks to Buy
"Since the market started its downturn early this year, I have avoided all financial stocks and resisted the temptation of value plays," says Dave Dyer.
In his Dave Dyer's Newsletter, he explains, "Well, it is now time to violate both of those prohibitions at once." Here, he looks at a new buy for SLM Corporation (NYSE: SLM), commonly known as Sallie Mae, the nation's largest provider of college loans and savings programs."
"There must be some financial areas that have predictable, growing demand, willing customers who actually have low default rates, and securitization processes that do not involve the type of financial engineering that is only intended to hide risk.
"Well, there is such an area, and it even involves a product that it makes sense to finance since it will actually increase in value over time. I'm talking about student loans.
Continue reading Sallie Mae (SLM): At the head of the class
Posted Feb 12th 2008 3:15PM by Joseph Lazzaro (RSS feed)
Filed under: Citigroup Inc. (C), JPMorgan Chase (JPM), Goldman Sachs Group (GS), SLM Corp (SLM)
Undergrad and graduate students may soon be feeling the pinch of the subprime mortgage default-induced credit crunch.
Securities tied to student loans have failed to generate investors' interest, leaving roughly $3 billion in a sort of limbo,
The Wall Street Journal reported Tuesday (
subscription required).
Typically, the banks involved in the deal -- in this case
Goldman Sachs (NYSE:
GS),
J. P. Morgan Chase (NYSE:
JPM) and
Citigroup (NYSE:
C) -- would step in to buy the securities when demand is weak. However, because the major banks are already flush with loans and bonds they're trying to get rid of, they have been allowing the auctions to fail,
The Journal reported.
Student loan manager Sallie Mae (NYSE: SLM) fell 42 cents to $19.73 on the news in Tuesday morning trading.
Bond demand is weak
The auction process is similar to those held for municipal bonds, corporate debt and other debt securities. However, Wall Street is not obligated to step in and buy student loan-backed securities when demand is weak.
Continue reading Students loan rates could rise as credit crunch hits student loan-backed bonds
Posted Feb 4th 2008 4:34PM by Zac Bissonnette (RSS feed)
Filed under: Rumors, Products and Services, Recession
The
Wall Street Journal's "Heard on the Street" column(subscription required)
presents a strong bearish case for the for-profit educational providers -- companies such as University of Phoenix operator
Apollo Group (NASDAQ:
APOL) and
ITT Educational Services (NYSE:
ESI).
Sallie Mae (NYSE:
SLM), a major provider of student loans, has tightened up its lending practices, and that could make career education less affordable for a lot of students.
According to the
Journal, "The problem is that the schools will likely struggle to sustain their growth rates because of the tight lending environment and the slower-growing economy. If students have a tougher time borrowing, they may need to pay more out of their own pockets. But if their job prospects are looking rocky, or if they are worried they could be laid off from existing jobs, they won't want to shell out the tuition themselves."
But there may be another element to this that could make the outlook even more bleak for these companies, many of which have a lackluster reputation due to run-ins with regulators and questions surrounding their reporting and the value of the services they provide. Students attending career colleges are also thought to be at greater risk for default.
But here's another rub: Massachusetts' Democratic Governor Deval Patrick
has proposed making two-year colleges free for all students -- a move like that would be devastating to the for-profit colleges. If that comes to pass in Massachusetts, or if other states make similar, less radical efforts to lower the cost of two-year colleges, for-profit colleges could see enrollment plummet.
Investors in these stocks will want to keep a close high on the political climate.
Posted Jan 18th 2008 8:00AM by Eric Buscemi (RSS feed)
Filed under: Newspapers, Magazines, Apple Inc (AAPL), iPhone, SLM Corp (SLM)
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MAJOR PAPERS:
- UBS AG (NYSE: UBS) is launching an initiative to reduce proprietary risk taking by its investment banking division, the Financial Times reported. In an internal memo, UBS CEO Marcel Rohner wrote that the bank would cut by 50% the number of its employees in its real estate and securitization division, and move its troubled mortgage investments into a separate unit.
OTHER PAPERS:
Posted Jan 8th 2008 3:45PM by Zac Bissonnette (RSS feed)
Filed under: Deals, Management, Competitive Strategy, Private Equity, SLM Corp (SLM)
Having recently returned to the CEO's role in the wake of a failed leveraged buyout, Sallie Mae (NYSE: SLM) Chairman and CEO Albert Lord will give up the chairman's.
According (subscription required) to the Wall Street Journal, "Anthony P. Terracciano, 68 years old, with a history of finding capital for troubled companies -- and a reputation for helping to sell them -- will serve as chairman of SLM, also known as Sallie Mae, as he seeks to bolster its credit rating and investor confidence."
Additionally, former executive Jack Remondi is returning to the company as vice chairman and CFO.
Part of the reason for Lord's departure from the Chairman's role may be his exceptionally poor handling of a recent conference call that culminated in his rejoicing that they could "get the (expletive) outta here" because there were no more questions.
But questions still surround Mr. Lord. Why was he so eager to sell the company? Was he aware of troubles on the horizon and sought to dump the mess on someone else?
Investor perception of the company would probably strengthen considerable if Mr. Lord left entirely. But for now, separating the chairman and CEO jobs is always a good move for corporate governance.
Investors liked the news, sending the stock up more than 8%.
Posted Jan 7th 2008 1:00PM by Brent Archer (RSS feed)
Filed under: Sallie Mae, $25b, 2007
SLM Corp. (NYSE:
SLM) shares are trading higher today after the company
announced that banking veteran Anthony Terracciano will serve as chairman, and former Sallie Mae executive John Remondi as chief financial officer. If you think that the company won't fall by too much in the coming months, then now could be a good time to look at a bullish hedged trade on SLM.
After hitting a one-year high of $58.00 in August, the stock hit a one-year low of $16.35 on Friday. SLM opened this morning at $18.12. So far today the stock has hit a low of $17.55 and a high of $19.20. As of 11:00, SLM is trading at $18.95, up $2.28 (13.7%). The chart for SLM looks bearish and steady. while
S&P gives the stock it a positive 4 STARS (out of 5) buy rating.
For a bullish hedged play on this stock, I would consider a February
bull-put credit spread below the $15 range. A bull-put credit spread is an options position that combines the purchase and sale of put options to hedge risk in case the stock doesn't do what you think but still leverage nice returns. For this particular trade, we will make a 13.6% return in just six weeks as long as SLM is above $15 at February expiration. Sallie Mae would have to fall by more than 20% before we would start to lose money.
SLM hasn't been below $16 at all in the past year and has shown support around $16.50 recently. This trade could be risky if the stock continues its recent precipitous fall, but even if that happens, this position might be protected by bargain hunters who think this stock has fallen too far.
Brent Archer is an options analyst and writer at Investors Observer. At publication time, Brent neither owns nor controls positions in SLM.Posted Jan 7th 2008 12:19PM by Brent Archer (RSS feed)
Filed under: Major Movement, Good news, Management, Options, Technical Analysis, SLM Corp (SLM)
SLM Corp. (NYSE:
SLM) shares are trading higher this morning after the company
announced that banking veteran Anthony Terracciano will serve as chairman, and former Sallie Mae executive John Remondi as chief financial officer. If you think that the company won't fall by too much in the coming months, then now could be a good time to look at a bullish hedged trade on SLM.
After hitting a one-year high of $58.00 in August, the stock hit a one-year low of $16.35 on Friday. SLM opened this morning at $18.12. So far today the stock has hit a low of $17.55 and a high of $19.20. As of 11:00, SLM is trading at $18.95, up $2.28 (13.7%). The chart for SLM looks bearish and steady. while
S&P gives the stock it a positive 4 STARS (out of 5) buy rating.
For a bullish hedged play on this stock, I would consider a February
bull-put credit spread below the $15 range. A bull-put credit spread is an options position that combines the purchase and sale of put options to hedge risk in case the stock doesn't do what you think but still leverage nice returns. For this particular trade, we will make a 13.6% return in just six weeks as long as SLM is above $15 at February expiration. Sallie Mae would have to fall by more than 20% before we would start to lose money.
SLM hasn't been below $16 at all in the past year and has shown support around $16.50 recently. This trade could be risky if the stock continues its recent precipitous fall, but even if that happens, this position might be protected by bargain hunters who think this stock has fallen too far.
Brent Archer is an options analyst and writer at Investors Observer. At publication time, Brent neither owns nor controls positions in SLM.Posted Jan 7th 2008 9:15AM by Paul Foster (RSS feed)
Filed under: Options, SLM Corp (SLM)
SLM (NYSE: SLM) closed $16.67 Friday, a seven-year low.
SLM disclosed last week it will decrease the production on loan origination and purchases because of a new federal law that reduces subsidies to commercial lenders to distribute federal loans to students.
SLM January option implied volatility is 101; February is at 95; above its 26-week average of 49 according to Track Data, suggesting larger price movements.
Daily Options Update is provided by Stock Specialist Paul Foster of theflyonthewall.com
Posted Dec 27th 2007 9:28AM by Paul Foster (RSS feed)
Filed under: Options, SLM Corp (SLM)
SLM (NYSE: SLM) is recently at $20 in pre-open trading below its close of $22.13.
SLM said it will sell $2.5 billion in stock and other securities to raise cash needed to settle contracts under which it effectively bet that its own stock would not decline by a large amount in price.
Thomas Weisel lowered its price target on SLM from $31 to $25.
SLM January option implied volatility is at 79; February is at 85; above its 26-week average of 47 according to Track Data, suggesting larger price movements.
Options Update is provided by Stock Specialist Paul Foster of theflyonthewall.com
Posted Dec 27th 2007 8:30AM by Zac Bissonnette (RSS feed)
Filed under: SLM Corp (SLM)
Sallie Mae (NYSE: SLM) is raising $2.5 billion through a secondary stock offering to pay off bets it made on its own stock price. Sallie Mae said it has already paid the money to Citibank. According to the New York Times, "Under the agreement with Citibank, SLM will pay $1.99 billion to buy back 44,039,890 shares of stock. It had signed contracts requiring it to buy back the stock over the next several years, but the company's falling stock price last week gave the banks the right to force immediate purchase of many of the shares. SLM negotiated the deal with Citibank to delay the purchase."
There are some issues here that the company's board of directors need to be looking at: First and foremost, why did the company feel a need to repurchase its stock in such an unusual manner? Was it appropriate to create the risk of a large loss by repurchasing shares with a forward purchase contract? What was the point of this deal? Having to raise money through a public offering to cover a bet on your own share price is pretty unusual.
Continue reading Sallie Mae to raise $2.5 billion -- to pay off bet on its own stock!
Posted Dec 21st 2007 1:33PM by Michael Rainey (RSS feed)
Filed under: Bad News, SLM Corp (SLM)
I didn't think the news could get worse for
SLM Corp. (NYSE:
SLM), the parent of student loan giant Sallie Mae. As we
noted on BloggingStocks earlier today, CEO Albert Lord put on a bizarre performance during a conference call on Wednesday, cursing and telling bad, violence-tinged jokes while providing no substantial information to analysts. This morning, TheStreet.com
called Lord's "
stunning performance" one of the five dumbest things on Wall Street this week, as it helped send the stock down 10% on the day.
But that's not the only bad news for SLM today.
The New York Times is
reporting that Sallie Mae now faces a $1 billion loss related to its falling stock price. Seems that SLM was making bets on its own stock price, entering into "equity forward contracts" that require it to buy its shares at set prices in the future. That was all fine and well as long its stock was rising -- which it did for years, from $10 a share in 2000 to $57 just this past July. But since then, the stock is down over 50%, which makes those forward contracts a money losing proposition.
According to
The Times, SLM was facing a payment this week of $1.95 billion for stock worth only $909 million. Yesterday, it managed to delay that purchase by two months. But that hardly solves the problem. SLM has forward contracts in place to buy 44 million of its own shares, at an average price of roughly $44. Some of the contracts do not take effect for years -- unless the share price falls too far. When the share price reaches the $19.58 to $24.75 range, banks can demand immediate payment. Yesterday, the stock closed at $20.53.
So it looks like Sallie Mae is going to need to find a lot of money in a hurry. The deal it made yesterday removed some of the repayment triggers, but also moved the contracts forward to a February termination. That means that SLM needs to raise billions of dollars in two months. I hope Mr. Lord has the phone numbers of some deep-pocketed Chinese investors.
Posted Dec 21st 2007 11:31AM by Zac Bissonnette (RSS feed)
Filed under: Management, SLM Corp (SLM)
Sallie Mae (NYSE: SLM)'s earnings conference call went a little off-kilter. Reminiscent of former Enron CEO Jeff Skilling's "a**hole" comment, the Washington Post tells the story. After a bad quarter that sent the stock plummeting, CEO Albert Lord offered few details of his plans for the company on the conference call.
William Kavaler, a managing director of the French bank Societe Generale: "We're trying to figure out what your stock is going to be worth, and you've got to give us some guidance, you've got to give us some numbers."
Lord: "You should give Steve (head of investor relations) a call."
Kavaler: "But you're the CEO. You're the guy who just took over the company."
Lord: "Yeah ... that's exactly right. I'm the CEO. You should give Steve a call. Next question."
Continue reading Sallie Mae CEO: 'Let's get the $%$% outta here!'
Posted Dec 21st 2007 10:13AM by Michael Rainey (RSS feed)
Filed under: Bad News, SLM Corp (SLM)
Thursday, Sallie Mae -- known more formally as
SLM Corp. (NYSE:
SLM) -- lost $2.36 a share, closing at $20.53. The cause of this dramatic loss, over 10% on the day, was the failure of the firm's new CEO, Albert Lord, to reassure analysts that he is in control of Sallie Mae and has a plan for turning things around. In fact, during an analyst conference call on Wednesday, Lord was downright bizarre, refusing to provide any income projections and, worse, making bad jokes and cursing audibly.
Yesterday wasn't the first bad day for Sallie Mae, not by a long shot. In the last few weeks, news about Sallie Mae has been universally bad. In October, the private equity firm J. C. Flowers
lowered the value of its buyout offer by 20%. The ensuing struggle over the buyout, as well as changes in federal law that may make students loans less profitable, helped send the stock down from the $50 range to the $30s. And it's been all downhill ever since.
In Wednesday's conference call, Lord repeatedly refused to answer analyst questions about 2008, despite the fact that SLM lowered guidance last week. He invited analysts to a meeting in New York next month,
saying that they should "get there early because I can assure you, you will be going through a metal detector." Then, to make matters worse, at the end of the call he was heard to say, "There's no questions, let's get the [expletive] out of here."
With leadership like that, it looks like Sallie Mae has a long way to go before investors feel secure enough to jump back in.
[
Update: There have been more developments this morning, which I will elaborate on soon enough.]
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