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For-Profit EDU: OIG Report on Online Fraud Rings Could Have Serious Implications for the Sector

September 29th, 2011

Earlier this week, the Department of Education’s Office of Inspector General published an investigative program advisory report on “Online Education Fraud Rings”.  The report was sent to Federal Student Aid (FSA) and...

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INVITE: For-Profit EDU, Wed. 10/5 at 2:30PM, PAA Research Conf. Call with Industry Expert on Student Loans and the...

September 26th, 2011

PAA Research will host a conference call at 2:30PM ET Wednesday October 5th with Deanne Loonin of the National Consumer Law Center, one of the best known and most influential non-profit consumer...

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COCO: The World WE Live In

August 23rd, 2011

Approximately 5-6 weeks ago, we published an industry report on the for-profit postsecondary education industry entitled “12 Reasons Why We Remain Bearish; Observations from Our Proprietary Paid Search Analysis”.  The subject matter of the report is somewhat self-explanatory.  Now that...

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COCO: What Options Are Left?

August 22nd, 2011

We are 24-hours away from what might be the single most important earnings release and conference call in the history of Corinthian Colleges, Inc.  The (-50.7%) decline in COCO shares over the past month, even in the context of the broader market decline has been nothing short of...

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For-Profit EDU: The Simple vs. the Complex, Checks with Private Institutions Indicate Further Deterioration in...

July 20th, 2011

For the past six weeks, we feel like we have been “spitting into the wind” when it comes to our bearish call on stocks in the for-profit postsecondary education sector.  Despite our best efforts...

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For-Profit EDU: 12 Reasons Why We Remain Bearish; Observations from Our Proprietary Paid Search Analysis

July 12th, 2011

In the 6 trading days following APOL’s earnings release, the shares of publicly traded for-profit postsecondary education companies have rallied anywhere from 10-20% compared to a modest sell-off of (-0.2%) for...

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COCO: ASFG Arrangement a 90/10 Workaround? Maybe. A Real Private Lending Program Most Definitely Not, Cutting FY12...

June 30th, 2011

COCO Announces New “Private Loan” Facility, And We Use That Term Loosely This morning, COCO announced a new “private loan” facility with ASFG LLC, presumably a subsidiary of American Student...

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For-Profit EDU: Did the Dept. of Education Really Blink?

June 2nd, 2011

Details of the Department of Education’s Gainful Employment regulation were released this evening.  The full regulation will likely be published tomorrow on the Department of Education’s website here or here, or ultimately in the Federal Register by Friday...

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For-Profit EDU: Proposed Cuts to IL MAP Funding Could Establish an Alarming (and Increasingly Common) Precedent

May 16th, 2011

In a move that has received little attention among investors in the for-profit postsecondary education space, approximately 10-days ago, the Appropriations Higher Education Committee in the House of...

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COCO: Questions for the Call, Fixed Charge Coverage Covenant Looms Large

May 3rd, 2011

Questions We Would Like to Hear on the CallHere are some of the questions that we would like to hear management answer on COCO’s upcoming 3Q11 conference call: In light of the substantial tuition price increases, why did revenue per student...

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For-Profit EDU: Checks with Private Institutions Indicate Enrollment Slowdown Continues to Gain Steam

April 20th, 2011

For an industry that has distinguished itself in the equity markets as a consistent source of trading opportunities, the “whip-saw” action in the for-profit education sector in the first four months of the year has...

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For-Profit EDU: The Cal Grant Precedent

April 19th, 2011

In a move that has been largely overlooked by most investors in the for-profit postsecondary education space, Governor Jerry Brown (CA-D) signed Senate Bill 70 into law on March 24, 2011.  While SB 70 includes many other elements aimed at reducing unwieldy budget deficits in...

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For-Profit EDU: What’s at Stake in the Pell Grant Debate – The Potential EPS Impact is Bigger than You Might Think

April 13th, 2011

There was a time not too long ago when investors in the for-profit postsecondary education sector viewed those institutions that generated a high percentage of their revenues from Pell Grant funding...

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For-Profit EDU: Why the Amended Complaint Against DV Might Be Worth Reading

March 8th, 2011

From what we can gather, few investors if any have paid close attention to the progress of the various securities class action suits filed against almost every one of the publicly traded for-profit postsecondary education companies.  We are...

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COCO: Potential Cal Grant Cuts Could Exacerbate COCO’s Mounting “90/10” Challenges

February 26th, 2011

Yesterday afternoon, the California Student Aid Commission voted unanimously to support a drastic reduction of Cal Grant awards to for-profit education institutions in the event that cuts to the program are needed to help solve...

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Winners and Losers from the FY08 3-Year CRD Data – The Usual Suspects

February 4th, 2011

The Department of Education released “trial” 3-year cohort default rate data this morning on an national level and institution by institution basis. Before we get into a discussion of the national level data and some of our findings on a school...

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COCO: Tuition Price Increases to the Rescue! Not So Fast, COCO Runs from One Regulatory Wall to Another, Financial...

February 1st, 2011

COCO reported 2Q11 earnings results this morning and will host a conference call at 12PM EST today. You can read the company’s earnings release here.  The stock is trading higher based on four...

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COCO: Can COCO Remain Profitable in the Face of Fundamental Headwinds AND Escalating Regulatory Risk?

January 31st, 2011

On Tuesday, February 1st, COCO will report 2Q11 earnings and potentially provide initial guidance for 3Q11 results.  At the start of 2011, COCO finds itself at a critical impasse.  The company faces ENORMOUS...

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For-Profit Education: 4Q10 FAFSA Data Confirms Enrollment Slowdown Across ALL of Higher Education

January 24th, 2011

Today the US Department of Education released data on the number of Free Applications for Federal Student Aid (FAFSA) submitted during 4Q10-11 (calendar fourth quarter of 2010).   In our view the FAFSA data provided by...

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For-Profit Postsecondary Education: Checks with Private Institutions Indicate STRA Was Not an Anomaly, the Slowdown Is...

January 19th, 2011

For an industry that has distinguished itself in the equity markets as a consistent source of trading opportunities, the “whip-saw” action in the for-profit education sector in the first few...

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For-Profit Education: What is "It"? The Implications of STRA's Pre-Announcement and APOL's Upcoming Earnings Release

January 10th, 2011

At the risk of dating ourselves, we couldn't help but think of Faith No More's edgy rock tune from the late 1980's "Epic" when STRA's negative pre-announcement hit the tape late Friday afternoon."What is...

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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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