UNTRUE_PREDICTIONS

Investments _ USA

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.
  

Sallie Mae is being re-priced and may be upto offers again. Rumor has it that Mr. Buffet is going after a position in Bear Stearns, while JC Flowers is abandoning Sallie Mae at the alter. If Mr. Buffet is reading this, a favor of some credit for the mention would be appreciated. As to Sallie Mae being a bargain or not, I will leave that judgement to the buyers or buyers to be. Bye, Bye. I do not guarantee any reply or moderating on this blog.