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Strategies & Market Trends : Value Investing

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To: gcrispin who wrote (22264)	10/14/2005 12:27:35 AM
From: Spekulatius	Read Replies (1) of 78530

re FMD - there are several red flags. The most important issue with tthe stock is that "cash earnings" are less than 1/2 of stated earnings (I calculated 40-50% but i think the actual number is more 33%!). So the question is what do you pay for 1-1.40$ in cash earnings?Please see my earlier post as well as the rebuttal for a balanced viewpoint: Message 21584900 FMD securitizes student loans and cashes out some premiums paid by the lender. Those premiums and some other fees are "cash earnings". FMD then calculates the projected cash flows od these loans (please note that students don't pay principal and interest for 4+ years), discounts them back using their models derived from their proprietary database. Those are the non cash earnings. Sounds a lot like Enron to me, except that FMD does not have large debt that could sink this company. I am be wrong but i would not pay much for "non cash earnings" valuation wise.

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