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Implications of Explosive Keyword Price Inflation on the For-Profit Education Sector

November 23rd, 2010

Over the past several months there has been a growing bifurcation in the for-profit postsecondary education industry between those companies that have enacted significant "self regulation" measures in order to improve compliance with...

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COCO: Management's Strategy Appears to be "It's Not Our Fault", Debt Levels Now Appear to be a Major Problem

November 2nd, 2010

In our 1Q11 earnings preview for COCO, we argued that the company's first quarter earnings could represent a seminal event.  As we stated in our preview:"The decisions management makes over the next 3-6 months...

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COCO: The Burden of Proof Falls on Management, Re-Examining the Value of Heald

November 1st, 2010

COCO will report 1Q11 earnings before the market opens on Tuesday, November 2nd.  In our view, the company finds itself in an extraordinarily precarious position irrespective of what happens with the Dept. of Educationa's Gainful Employment...

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3Q10 FAFSA Volumes Provide Further Confirmation That Enrollment Trends Are Rolling Over

October 26th, 2010

Over the past few weeks, three large, publicly traded for-profit postsecondary education companies reported earnings.  The general feedback from each company (APOL, CPLA, and ESI) has been fairly similar: 1) new student starts have...

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The Credit Hour Issue Escalates

October 18th, 2010

For the past 6-7 months we have argued that the definition of a credit hour could become a significant regulatory issue in the higher education space, one that has generally overlooked by most investors.  As a reminder, upon the passage of NegReg 2009 the Department of Education will...

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A View from Privately Held For-Profit Postsecondary Education Institutions - Here Comes the Enrollment Slowdown

October 8th, 2010

Investing in the for-profit education sector over the past 2-3 months has been almost entirely about one's ability to tap into various DC lobbying groups, read the "tea leaves" from public statements from...

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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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