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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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WPO: 1Q10 Results Do Little To Change Our Short Thesis, Our Revised Estimates

May 10th, 2010

WPO reported 1Q10 results on 5/7.  Overall, the results did little to alter our short thesis on the stock.  The company beat our estimates on the topline but fell short of our EPS forecast due to lower than expected profitability at the...

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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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WPO 10-K Highlights – Program Review at Kaplan University, Kaplan Resolves 25% CDR Issue at a Few Schools

March 12th, 2010

This report was originally published on 3/4/10.We recently discussed WPO (446.15 ↓1.20%)’s 4Q09 results, which have prompted a 5.8% rally in shares.  In our review, we highlighted how we were eagerly...

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WPO 4Q09: Margin Improvement at Newspaper and Broadcasting Divisions Overshadow Sequential Decline in Margins at Kaplan...

March 12th, 2010

WPO reported 4Q09 results this morning. You can read all of the details here.  The company’s revenue and EPS of $1.238 billion and $8.71 beat the lone set of analysts estimates out there of $1.16...

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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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WPO Alters Revenue Recognition Policy for Kaplan Higher Education, More Enrollment Reconcilliation

March 11th, 2010

This report was originally published on 11/8/09.In a recent letter to Warren Buffet, we voiced our concerns about what seem to be growing regulatory issues at Washington Post Company (WPO 444.32 ↓2.02%)’s most...

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WPO’s 3Q09 Results, What is an Enrollment at Kaplan? COCO’s 10-Q Filing

March 11th, 2010

This report was originally published on 10/30/09.We wanted to address a few issues related the for-profit education sector: WPO (445.09↓1.85%)’s 3Q09 results, a few thoughts on COCO (17.28 ↓1.20%)’s 10-Q filing and a playbook for the...

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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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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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Dear Mr. Buffet: About the Washington Post Company….

March 10th, 2010

This report was originally published on September 15th, 2009.Please note, the following is a letter PAA Research recently sent to Warren Buffet, Chairman and CEO of Berkshire  Hathaway, Inc.. We thought our readers might find the analysis of Washington Post and...

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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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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