Jim:      Yep... panic ensues... and then you get a company that sells, literally, 54 points lower than the price where someone most recently offered to buy the whole company...

Then, on top of all that because, of course, it had to get even worse... the credit rating agencies... whose laziness is unparalleled... as they will often just take their cue from a falling stock... just slashed their views on Sallie Mae's debt, which further pulverized Sallie Mae's pathetic equity...

So, should we be writing the obituary for this once titan, the largest issuer of student loans? Nope. Not at all. In fact, the reports of Sallie Mae's death are premature.

So what then? I'm not kidding. I am saying it right here...

I think you should be buying it! That's right, you heard me correctly... you should be buying Sallie Mae, the $6 stock... a company that many are convinced will utterly be wiped out off the face of the earth.

Not only am I telling you that I think Sallie Mae's a buy... not only am I telling you to date her... but, would you believe me if I said I am naming this stock, SLM, my "Speculative Stock of the Year." That's right, Sallie Mae is my Speculative Stock of the Year.

Have I lost my mind?...

Of course, believe me... years ago...

There's nothing crazy about this speculation though. Not after all the information we got over this last week... that I'm sure you didn't know, and I know, because the stock didn't move.

Yes, the speculation of the year...

Now, two days ago, Albert Lord, the once Wall of Shame denizen who came down after he made Cramer-fave and huge moneymaker, Tony Terachiano, chairman... the guy's unbelievable... gave a talk at an important banking conference... it's called the Keith Boyett and Wood shindig... and it was blow away... at least to the 10 people who listened to it... In his talk, Lord laid out the compelling case that, even if Obama gets his way, and the government destroys most of the student loan originating industry... in other words, who originates the student loans... the government will still need to have someone act as a servicer of the loans and a collector of the bad debts. These are already both huge businesses for Sallie Mae and they're the best at it... far better than the government could ever be, so they'll save the taxpayer money, even if Obama does manage to kill off the private student lending origination business.

I still think that, even without that, Sallie Mae would make out all right as a servicer and a debt collector. And the stock would be worth more than it is now...

But it's a better story than that...

More important, the word on the hill is that most colleges love Sallie Mae as a way to save money, and they are simply nowhere equipped to be able to handle a change to direct lending by the government that Obama wants. They're just not prepared. And, given the great relationships, you have to wonder if they ever will be.

So what does that mean?...

Okay, in the worst-case scenario that I see, is that Sallie Mae has at least $2 of earnings power. The stock is at $6 bucks people... This stock is selling at 3x earnings...

3x earnings...

Now, meanwhile, what's really happening?... Forget all the politics, forget the ratings agencies... let's get back to what matters...

Sallie Mae is doing a huge amount of current business... just enormous... Plus, the programs that the Fed has put into place to free up commercial paper and student loan markets have allowed Sallie Mae to borrow at a very low cost to make loans that they couldn't even make last year...

How about this?...

The default rate on its loans is lower than just about every other single form of credit. You don't hear about that but it's true. People don't like defaulting on their student loans.

And, even if Sallie Mae never originated another loan again, it still has about $14-15 worth of runoff value... meaning that, if just closed, the stream of revenue that would come in from these loans is worth $14-15, double what the stock is worth now... even if it closes.

Oh, and did I mention that the insiders are buying like mad?...

The executives... what are they saying?... Okay, let's pull from the presentation that no one saw...

This one is, and I think most investors think there are too many "ifs" in our picture... "I can tell you that management is far more optimistic than most of our investors." That was Lord speaking this week... "far more optimistic"... This is not the usual hype... not when these managers are buying tens of thousands of shares, right into the downgrades and the rhetoric...

▼   ▼   ▼   ▼   ▼