? for Ted

[LadyHawk108]

Ted,
What do you think about Sallie Mae stock? It trades on the NYSE as SLM. The board just voted for a 3-1 split effective mid June. Just curious as to what you think about the quality and potential for earnings.

[EagleTed]

I know nothing about it. Sorry, wish I could help.

[EagleTed]

Standard & Poor rates it an "Avoid" in a May 20th report. They cite the high possibilities of government regulations, the high evaluation of the stock price (compared to most finanicial companies), and the low possibility of it maintaining it's growth rate long-term.

Frankly, I avoid financial companies, even though I own one, because of the complexity of their accounting. However, if you feel secure that SLM can avoid the pitfalls of government regs, and maintain it's growth, then by all means buy.

"Growth" stocks have high evaluations, but as long as they keep growing profits, the stocks keep going up. If earnings take a hit, the stocks get the double whammy of less profits and lower P/Es (and BTW, that's when I like to buy 'em).

Best to you.

[LadyHawk108]

Thanks, Ted. I'll keep you posted.

[EagleTed]

Sure, anytime. I always enjoy learning about different companies I know nothing about.

I used to scour the list of companies hitting their 52 week lows. You find a lot of dogs in that list, but every once in a while you find a gem. It's a good exercise, and starting point, if nothing else.

[LadyHawk108]

OK, I'll come clean. That is the company I work for. I have made a very decent amount of money off the stock from my company. I get options and buy the stock every chance I get. I would encourage anyone to take a look at the history in the last few years. Although we are subject to gov regs every 4 years, Clinton's attempt to defeat us with Direct Lending is failing more every day. It's a sure bet in my book. Stock splitting next month is only going to help the price rise. Other than the disgruntled employees on Yahoo finance, it's really hard to find anything negative. Of course, I could be crying the blues by next month too, hard to say as quickly as things turn these days.

[EagleTed]

Obviously, you have a special knowledge into the company, and it pays to invest in what you know. One of Buffett's basic tenets to investing is "invest only in what you know."

Best to you.

[EagleTed]

Did Sallie Mae take a hit in sympathy with Freddie Mac today? FRE has deep problems, and unfortunately, I don't know how deep the fraud went, so I'm avoiding (even if I did like financials).