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Subject:  Re: First Marblehead @ $32 Date:  4/4/2008  5:23 PM
Author:  hheiserman Number:  1492 of 1817

I have lost money with FMD twice. In each case I thought I was buying a company with (authentic, albeit imperfect) earnings power, a durable competitive advantage, and selling at a discount to intrinsic value. I also liked that three directors had a large ownership interest, and that the company had net cash.

And then the credit markets seized up!

I give credit to Matt Snowling (sp?) and Morningstar, both who warned us that earnings quality was suspect and the competitive advantage was tenuous.

I fear the slowdown in the housing market will spread to other credit markets, including student loans (see my Greenspan's Bubbles post, Apr. 4).

Plus, as others on this site have noted, FMD appears to be changing its business model.

I must say this company takes a lot of work, like parenthood. I have scaled back as FMD is in my "too hard" pile. When I said FMD was an early "Christmas present," I was wrong. If I caused any readers to lose money, I apologize. I thought I was buying a good business on the cheap. Statistically, buying good business on the cheap works over time. But mistakes will occur, despite best intentions.

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