It is a pleasure to introduce a new column - Untrue Predictions - No guarantee of the viability of these predictions. I do not have a crystal ball. Nothing written here is any kind of financial advice or recommendation to buy or sell anything. Contact your own advisers for that.
Sallie-Mae fits well with Berkshire Hathaway. Berkshire is an insurance company and a financial player headed by Warren Buffet. Sallie Mae has many pluses for Mr. Buffet:
- Can employ large doses of capital (Berkshire has a lot of capital to employ) over long terms.
- Growing customer base (echo baby boom - goes to college)
- College expenses are growing faster than inflation
- More borrowing for college as savings are down.
- Long term loyal customer base - with cross-selling opportunities.
- Clean - economies of scale in technology, and other profit drivers
- Customer acquisition and servicing costs keep coming down due to technology(web), ala GEICO a major holding of Berkshire.
- Global expansion possibilities as the world populations expand the need for education worldwide - as they urbanize and move to service industries.
