Short: Student Loan Service Firm - Nelnet (Ticker: NNI)

Harvesters,

Over the last several months we have received a number of e-mails regarding our views on the fragility of the student loan market. Given this, we wanted to put forth some additional research; namely, as it pertains to NNI. The student lending market is akin to any other fragile system, although we cannot forecast the collapse, we can develop a greater understanding of the stability (e.g., an avalanche is a random occurrence, however, the build-up of snow and the instability of the system builds on itself over time). 

Put simply, we're borrowing money that we don't have to pay for jobs that we don't need - hardly a sustainable business model. Of course, the inherent incentive model within this sector exacerbates the problem - each moving part (i.e., schools, students, lenders) is rewarded by adding fragility to the system (e.g., for-profits are not unlike that of the for-profit prison system, as long as the 'consumer' comes back, they continue to make money). Like I said, hardly a sustainable business model. 

As always, please feel free to e-mail me at taylor@pinecapitalpartners.com for any and all comments/questions.