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The Catalysts in the For-Profit Education Sector Over the Next 6-8 Weeks - It's Not All About Gainful Employment

September 23rd, 2010

Volatility has always been a hallmark of the publicly traded for-profit education companies.  In the ten+ years we have been following the sector, the number of trading opportunities have been seemingly...

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COCO Runs Itself Into Regulatory "Maelstrom", Expect Full Year Operating Losses for the Next Several Years

August 20th, 2010

Our short thesis on COCO has never been predicated on a change in the regulatory landscape governing the for-profit postsecondary education sector.  While the outcomes of NegReg 2009 and potential legislation by...

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We Thought the Repayment Rate Data Would Be Bad, It Was Worse - After "Black Monday" What Will Be the Lingering...

August 16th, 2010

On July 23rd, stocks in the for-profit education sector "ripped" after the release of the Department of Education's initial proposal on "gainful employment".  At that time, many investors thought...

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"Repayment Rate" Provision of Gainful Employment Is Not Nearly as "Toothless" as You Might Think

July 23rd, 2010

At long last the details on the Department of Education's proposal for its "gainful employment" were released. You can read an excellent summary of the proposal as well as responses from Senator Harkin, Harris Miller (CCA),...

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A View From Privately Held For-Profit Postsecondary Institutions

July 21st, 2010

Even though we are only 24 hours away from the first earnings report of the season from a publicly traded for-profit education provider, investor focus remains firmly on the eventual outcome of the Department of Education's "gainful employment" proposal....

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Solving the Credit Crisis..... In Higher Education

June 18th, 2010

Over the past 48 hours a significant change has occurred in the operating landscape for proprietary higher education institutions.  While most investors and sell-side analysts debate the eventual outcome of the Department of Education's "gainful employment" proposal,...

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COCO's 3Q10 Results Might Signal the Last Days of Margin Expansion, The Questions that Should Be Asked, Establishing a...

May 4th, 2010

COCO reported 3Q10 earnings results this morning.  You can read the full release here.  Overall, we would characterize the results as more or less inline, but they will likely be viewed as a...

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A "Must Read" Report for Any Investor in the For-Profit Education Sector Heading Into 1Q10 Earnings Season

April 14th, 2010

In the for-profit postsecondary education sector, controversy never dies and it seems like trading opportunities are omnipresent. After a one-month period during which news flow within the industry slowed to a...

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Surprising Observations From the ACICS Key Operating Statistics Report for 2009

April 9th, 2010

Earlier this week, the Accrediting Council for Independent Colleges and Schools (ACICS) finally released its Key Operating Statistics report for FY09 (6/30/09).  You can find the full report here.  The report includes a comprehensive...

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Chart of the Week: Do Your Remember When APOL Was Known For Enrolling High Quality Working Adults?

March 12th, 2010

This report was originally published on 2/21/10.Our entry for chart of the week is sure to send a painful reminder to shareholders of APOL(63.11 ↓0.52%) about Friday’s sell-off.  APOL provided initial guidance for...

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COCO Continues to Struggle With High Cohort Default Rates – “Self Regulation” Is Not Only Likely, It’s Necessary

March 12th, 2010

This report was originally published on 2/9/10.In an 8-K filing this morning, COCO (17.72 ↑1.72%) disclosed its draft 2-year cohort default rate (CDR) data for FY08, which was released to...

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Quick Comments on COCO’s 2Q10 Results: Higher Retention Sparks Revenue Upside, Starts Fall Short, EPS Beat Driven by...

March 12th, 2010

This report was originally published on 2/2/10.COCO reported 1Q10 results this morning.  You can read the full press releasehere. Overall the company delivered upside to consensus on both the top...

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PAA Research For-Profit Education Survey Suggests Enrollment Growth for the Winter Term Remained Robust, Some Slowdown...

March 12th, 2010

This report was originally published on 1/26/10.We recently conducted a survey of privately-held for-profit postsecondary education institutions.  Our goal was to gain a better understanding of...

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The Dept. of Education Fires A Shot Across the Bow of the Higher Learning Commission (HLC)

March 11th, 2010

This report was published on 12/17/09.The education stocks are trading off today following the release of a memorandum from the Department of Education’s Office of Inspector General (OIG).   You can find the memorandumhere. ...

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Unofficial FY07 3-Year Cohort Default Rates Come In-line With Expectations, Now Comes the Hard Part for COCO and WPO

March 11th, 2010

This report was originally published on 12/14/09.The Department of Education released unofficial 3-year cohort default rate data this morning.  You can find the DOE’s press release here, which also...

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Preparing for the Release of Unofficial 3-Year Cohort Default Rate Data – Follow the Script, At the Very Least...

March 11th, 2010

This report was originally published on 12/9/09.We have expressed our concerns in the past about the impact the transition from a 2-year to a 3-year cohort default rate calculation could have on the...

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Details of Department of Education Negotiated Rulemaking Proposals Leak Out – Incentive Comp and Program...

March 11th, 2010

This report was originally published 12/1/09.The U.S. Department of Education (DOE) distributed its first round of proposals to the negotiated rulemaking panel on Monday on Program Integrity Issues...

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Apollo Group’s 4Q09 Results Send Shockwaves: Could the SEC Inquiry Relate to Accounting for Student Withdrawals? APOL...

March 11th, 2010

This report was originally published 10/28/09.Readers of our research know that we have been bearish on the for-profit education sector for the past few quarters based on our concerns about growing...

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COCO’s Upcoming 1Q10 Results: More Bad-Debt Expense “Slight of Hand”? How Long Can Lead Cost Deflation Last?

March 11th, 2010

This report was originally published on 10/27/09.Corinthian Colleges, Inc. will report 1Q10 results on Thursday before the market opens.  Overall we expect the company to post inline results highlighted...

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COCO Takes a Bigger Bite in California – Analyzing the Heald Capital (Heald College Acquisition)

March 11th, 2010

This report was originally published on 10/20/09.Corinthian Colleges (COCO 17.39 ↓0.57%), Inc. announced it has reached an agreement to acquire Heald Capital, the owner of Heald Colleges for a total consideration of...

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At Least For Now For the Bulls In For-Profit Education “It Just Doesn’t Matter”, Next Up Earnings and “NegReg”

March 10th, 2010

This report was originally published 10/14/09.A hearing was held today by the House Committee on Education and Labor entitled: “Ensuring Student Eligibility Requirements for Federal Aid”.  You...

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SF Weekly Article Harshly Criticizes COCO’s Business Practices

March 10th, 2010

This report was originally published on 9/30/09.SF Weekly has published an article today about Corinthian Colleges and the broader for-profit education sector.  You can find the article here.  Overall the article appears to villify the for-profit...

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A Question of Recourse – The GAO Report Might Not Have Been As Bad As Feared, but It Still Confirmed Our Short Thesis

March 10th, 2010

This report was originally published on 9/22/09.For those of you that have followed our research since inception, you are probably intimately familiar with our concerns about the for-profit education...

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The Winners and Losers from the FY07 Cohort Default Data

March 10th, 2010

This report was originally published on 9/15/09.Yesterday, the Department of Education released student loan cohort default rate data for the 2007 fiscal year.  Overall, the national student loan cohort default rate (CDR) increased from 5.2% to 6.7%.  As we...

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Preparing for the Release of the Final FY07 Cohort Default Data – Which Stocks Could Be Impacted

March 10th, 2010

This report was originally published on 9/11/09.On Monday or Tuesday of next week, the Department of Education will release final cohort default data for FY07.  Before we get into company specific discussions, we wanted...

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COCO’s Bad-Debt Expense Slight of Hand, 25%+ Cohort Default Rates Are Coming, It Appears Regulatory Headwinds Could...

March 10th, 2010

This report was published on 8/27/09.We have written extensively about our concerns about the for-profit postsecondary education space and ITT Educational Services, Inc. in particular.  Our primary...

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Current Ideas

CTC

SHORT

$101

ATGE

SHORT

$15

AYI

SHORT

$108

HCG.TO

SHORT

$0

RON.TO

SHORT

$9

BIG

SHORT

$28

ESI

SHORT

$0

BGG

PAIR - LONG BGG/SHORT TTC

25%

TTC

PAIR - LONG BGG/SHORT TTC

25%

Z

SHORT

$14.00

NA.TO

SHORT

$22

ING.PA

SHORT

$35

ZU

SHORT

$15

TRLA

SHORT

$20

MCRS

SHORT

$31

APOL

SHORT

$35

OPEN

SHORT

$30

BCO

LONG

$35

WWE

LONG

$25

KNL

PAIR - LONG KNL/SHORT MLHR

25%

XOXO

LONG

$20

CSGP

SHORT

$100

GCA

LONG

$8

IPSU

LONG

$20

MLHR

SHORT

$22

ARC

LONG

$12.50

LOOP

PAIR - LONG CSGP/SHORT LOOP

40%

THQI

LONG

$35

WPO

SHORT

$275

COCO

SHORT

$0

HNI

SIG

RGR