Monday, December 10, 2007

More opinions on First Marblehead

I'm finding that many value investors are now focused on First Marblehead as a great investment. For instance, Whitney Tilson highlighted the company in his most recent Financial Times article. In general the gist of these opinions is that while student loan backed bonds might not be selling well right now, the longterm outlook of the industry is quite bright. Further, Marblehead has been tainted at least somewhat unfairly by the mortgage backed security brush.

The problem, however, is that all of us are excited about First Marblehead's value mostly because of the research done by Tom Brown. He could very well be wrong on this stock and so would all of us who have followed his analysis. So rather than having a diversity of opinion, value investors might be trapped by group think. On the other hand, Wall Street analysts seem to be trapped on the other side by Matt Snowling's research. One side is going to be shown correct and for the moment, my money is on Mr. Brown.

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