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IPSU: Begrudging Progress At Port Wentworth Offset by Newfound Mgmt. Optimism - Revising FY11 Estimates

December 30th, 2010

Heading into IPSU's 4Q10 earnings release, we thought a messy quarter would be overshadowed by commentary from management highlighting significant production gains at the company's Port Wentworth refinery.  Our...

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About Your PAA Research Subscription

December 22nd, 2010

First and foremost, we want to wish everyone a joyous Holiday Season and a prosperous and healthy New Year.  We hope that you have enjoyed reading our research throughout the year and that it has significantly enhanced your investment process.  More than anything, we hope we have...

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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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PAA Research SMid Cap Portfolio Update - YTD Up 22.8%, MTD Up 3.0%

December 20th, 2010

We wanted to provide you with an update on the performance of our SMid Cap portfolio, which we introduced on 9/3/09. You can read more about the parameters for the portfolio, our approach to risk management, and return objectives of the PAA Research...

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Closing Out MLHR Short Idea with 15.6% Loss, Introducing Long KNL/Short MLHR Pair Trade - This Is Knoll's Generation

December 15th, 2010

Approximately 9-months ago we introduced MLHR as a short idea.  Many elements of our short thesis have come to fruition: up until recently the recovery in orders for the company and other leading office...

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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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PAA Research SMid Cap Portfolio Update - YTD Up 19.2%, November Up 5.3%

December 6th, 2010

We wanted to provide you with an update on the performance of our SMid Cap portfolio, which we introduced on 9/3/09. You can read more about the parameters for the portfolio, our approach to risk management, and return objectives of the PAA...

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ESI: SEC Correspondence Suggests Heightened Scrutiny of Accounting Treatment of PEAKS

November 30th, 2010

We want to eliminate any potential confusion immediately: As far as we know, ESI is not currently subject to an investigation from the SEC. It is not uncommon for the SEC's Division of Corporate Finance to issue comments on a...

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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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Key Observations from Our Proprietary Survey of Independent Jewelery Retailers

November 22nd, 2010

We recently conducted a survey of approximately 20 independent specialty jeweler retailers. The purpose of our survey was to: Gain greater insight on sales trends in the first few weeks of the holiday season Determine how independent...

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PAA Research SMid Cap Portfolio Update - YTD up 15.6%, November to Date Up 2.2%

November 17th, 2010

We wanted to provide you with an update on the performance of our SMid Cap portfolio, which we introduced on 9/3/09. You can read more about the parameters for the portfolio, our approach to risk management, and return objectives of the PAA...

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IPSU: At Long Last Progress at Port Wentworth, Now IPSU's Earnings Story Begins

November 15th, 2010

In the 15-months since we initially recommended going long shares of IPSU, the stock has been volatile but has only yielded a total gain of 5.0%, compared to a 21.0% return for the S&P 500.  The lackluster performance of IPSU shares is...

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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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KNOT: 3Q10 Revenue Shortfall Belies Significant Topline Acceleration Heading Into 4Q10, 2011

November 4th, 2010

Approximately 5-months ago we introduced KNOT as a long investment idea.  At that time our primary thesis was as follows: KNOT still has leading media and ecommerce franchises serving large end-markets. The company has just...

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GCA: More of the Same, But the Cash Keeps Rolling In

November 4th, 2010

GCA reported 3Q10 results after the close that we can only characterize as "more of the same....".  That is to say, the company's results were hampered by continued weakness in same store transaction volumes, a mix shift towards ATM transactions, both of which had a...

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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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PAA Research SMid Cap Portfolio Update - YTD Up 13.2%, Oct. Up 2.5%

November 2nd, 2010

We wanted to provide you with an update on the performance of our SMid Cap portfolio, which we introduced on 9/3/09. You can read more about the parameters for the portfolio, our approach to risk management, and return objectives of the PAA Research...

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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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ARP: Checks with Independent Reprographers Confirm Weakness Continued into 3Q, Analyzing ARP's Covenant Compliance

November 1st, 2010

As early as April of this year, we argued that the revenue trends in the reprographics industry were on the cusp of stabilization, if not recovery.  Obviously we have been a little bit early in our call,...

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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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ESI: Please Help Us Answer A Few Questions, Examining ESI's Leverage

October 26th, 2010

Long time followers of our research know that we have been bearish on the earnings prospects and consequently the share price potential of ESI for quite some time. In light of our views on the stock, it shouldn't come as a huge surprise that our...

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ESI: Key Observations from 3Q10 Results, the Higher Education "Moonshot" Appears to be Over

October 21st, 2010

ESI's third quarter results and fall term enrollment intake add further credence to our argument that the higher education "moonshot" in demand has come to an end.  Below we discuss some of our key observations from the...

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ESI: Our Estimates

October 20th, 2010

ESI will release 3Q10 earnings tomorrow morning and host a conference call at 11AM.  We wanted to make sure all of our subscribers had our estimates heading into the earnings release.  Here are our key assumptions. THEY DO NOT INCLUDE THE POTENTIAL IMPACT OF GAINFUL EMPLOYMENT.Fall Term Intake We...

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CSGP: 3Q10 Results Should Highlight Growth Acceleration, Validate Our Long CSGP/Short LOOP Thesis

October 20th, 2010

Approximately 7-months ago we introduced a pair trade: long CSGP/short LOOP. Thus far the trade has worked out reasonably well.  Both stocks have appreciated considerably, but shares of CSGP have outperformed those of...

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BGG: Channel Sell Through Slowed Over Past 3-Months, but Earnings Upside for the Quarter Still Seems Likely

October 19th, 2010

We have been recommending a pair trade: long BGG/short TTC for approximately three months.  Thus far the trade has not been a winner, generating a (-4.7%) return compared to a 9.4% gain for the S&P 500.  As...

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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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