SLM - SLM Corp.

[elevator_pitch]

I recently wrote-up a brief thesis on student lender SLM Corp. (does business as Sallie Mae) in the first edition of The Elevator Pitch.  I think it can be a triple over the next three years, even if it will probably be a volatile stock over the near term.  The SLM overview is located below the BATS overview in the below link.  I'd be interested to hear your thoughts.

 

Link: https://elevatorpitch.substack.com/p/-cigarettes-and-student-loans-

[Edward]

Hello Mr. Elevator,

 

Nice pitch, keep 'em coming.

 

Just one thing regarding SLM - they're going to announce a major GAAP loss in Q1 of around 800M$ (150M$ normal quarterly profit minus 950M$ writedown), page 31:

https://www.salliemae.com/assets/investors/webcasts/SLM_investor_presentation_ABS_Vegas_Feb_2020.pdf

 

This major loss is going to be announced in the Q1 earnings release on the 22st of April after hours:

https://news.salliemae.com/press-release/banking/sallie-mae-release-2020-first-quarter-financial-results-april-22/

 

This is probably going to be quite shocking to the market considering analysts are still expecting a profit. In my opinion, by the time the market would realize this is just an accounting loss, the stock would already be down 30-40%. So you could probably buy the company at 4$ and change instead of 6$ given that a third of the equity will be wiped out.

 

So the time to buy would probably be on the 23rd. And then you could also clearly see Q1 actual loss reserves and make a more informed decision.

[elevator_pitch]

Stock is up ~25%.  Q1 commentary was pretty positive given market expectations.

 

Update with management comments on delinquency trends: https://elevatorpitch.substack.com/p/-updates-on-vlo-slm-and-bats-