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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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WPO: The Long Retrenchment At Kaplan Begins, Assessing WPO’s Earnings Power Going Forward

February 24th, 2011

Approximately 18-months ago, we scribed a letter to Warren Buffet, Chairman and CEO of Berkshire Hathaway about his sizeable ownership stake in the Washington Post Company. It might have been an audacious endeavor on our part...

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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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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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WPO: FL Judge Rules on Motion to Dismiss in 1 of 3 Qui Tams, Tail Risk Continues to Grow

December 22nd, 2010

For several months now, we have been waiting for an update on the status of three separate qui tam actions outstanding against Kaplan Higher Education in the United States District Court Southern District of Florida.  ...

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WPO - Finally the Story Has Been Written

December 22nd, 2010

We have argued for a long time that the broader media would take a keen interest in the transgressions that have occurred at Kaplan Higher Education given the parent company's perceived status in DC and the history of the Graham family. There have been a few critical articles...

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Higher Learning Commission (HLC) Adopted and Proposed Policy Changes Could Have Wide Reaching Implications on...

December 9th, 2010

Investors have not historically focused a great deal on the actions of the HLC and other accrediting agencies. On the heels of Congressional hearings, Dept. of Education scrutiny, and highly critical...

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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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WPO: More Than One Qui Tam Will Go Forward, "Tail Risk" Continues to Grow

November 10th, 2010

Approximately two and a half months ago, we published a report that argued that the tail risk associated with owning WPO shares continued to increase.  Today we received further evidence that "tail risk" continues to grow for the company.Filing...

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WPO: 3Q10 Revenue and EPS Upside Should Be Overshadowed By Rapid Deterioration in Key Operating Metrics

November 5th, 2010

Admittedly, WPO's headline earnings results for 3Q10 appear to be compelling. The company reported total revenues of $1.189 billion and adjusted EPS from continuing operations of $11.40.  This compares to our...

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WPO: See You at the Crossroads, 17 Questions Heading into 3Q10 Earnings

November 3rd, 2010

On Friday, November 5th, WPO will report 3Q10 earnings.  WPO is at a significant crossroads.  Fundamental demand for the company's primary growth vehicle over the past five years has changed abruptly at a time when secular headwinds facing WPO's...

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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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WPO: Barron's Strikes Again, A More Realistic SOTP Analysis, Tail Risk Growing Rapidly

August 23rd, 2010

Barron's columnist Andrew Bary published a follow up piece this weekend to his initial write-up on WPO in which he argued that the stock could be worth as much as $900/share.  You can read the original article here.  Mr. Bary's...

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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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WPO: 2Q10 Earnings Release Is a "Wake Up Call" to Investors, Yields More Questions than Answers

August 6th, 2010

In our preview of WPO's 2Q10 earnings release we asked: "As the Questions Pile Up, Will We Finally Get Some Answers?"  Today's earnings release provided little in the form of clarity on the questions we asked, but it...

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WPO: As the Questions Pile Up, Will We Finally Get Some Answers?

August 3rd, 2010

Don Graham and other senior executives of WPO laud themselves for their "Berkshire-like" approach to managing the company.  In the world of WPO managment, the numbers speak for themselves.  While we find this approach refreshing in some respects, we...

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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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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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