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KNOT: Evaluating the Financial Impact of KNOT’s Entrance into the Group Buying Space

March 29th, 2011

In August of 2010, KNOT introduced daily deal offerings on its weddingchannel.com site in 7 markets. Generally speaking the KNOT’s Daily Deals offering includes products and services related to the preparation for (dance lessons,...

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IPSU: Refined Sugar Spreads Continue to Widen, Asset Value Exceeds $20/Share, and Yet…..

March 25th, 2011

As IPSU muddles along all too close to its 52-week lows, we thought it might be interesting to consider the following: US Refined/raw sugar spreads are close to record levels. List bulk industrial refined sugar prices through...

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For-Profit EDU: Keyword Price Inflation Continues Unabated, 5 Critical Observations from our Proprietary Paid Search...

March 23rd, 2011

At 12PM on the third Friday of every month for the past 5-months we have been gathering data from Google on essential keyword terms that are likely targeted by both higher education institutions and...

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MLHR: Another EPS Shortfall, Still Recommending Long KNL/Short MLHR

March 17th, 2011

Approximately 3-months ago we introduced a pair trade – Long KNL/Short MLHR.  Thus far the trade has returned approximately 15% compared to a 2% gain for the S&P 500.  In our original report, we established the following thesis for our long...

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OPEN: Evaluating OPEN’s Competitive Challenges in Europe – Is Market Leadership in Europe “Fait Accompli”?

March 17th, 2011

Approximately 2-weeks ago, we introduced OPEN as a short idea.  You can read our original 40-page report by clicking here.  The principal elements of our short thesis are as follows: 1. OPEN’s...

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THQI: Homefront’s a Hit, the EPS Implications

March 14th, 2011

As long time followers of PAA Research know, we have been recommending the shares of THQI for quite some time now.  Over the past three years, THQI has transformed itself from a company almost entirely focused on the publication of video games based on key licenses in...

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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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THQI: Evaluating a Potentially Massive March

March 6th, 2011

THQI shares have declined 9.7% compared to a 1.3% gain for the S&P 500 since the company reported 3Q11 results and lowered its 4Q11 guidance. We were as perplexed as everyone else about the company’s decision to lower 4Q11 guidance a few weeks prior to what could...

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OPEN: The “TAM” Fallacy and the Implications of a Solution without a Problem – Time to Get Short

March 2nd, 2011

Let’s get this out of the way early on – we are firm believers in the concept that valuation is not a short thesis, or more simply stated valuation is not a thesis.  Ask any hedge fund manager who has relied on...

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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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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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ARC: At Long Last Some Cyclical Tailwinds for the Reprographics Industry?

February 22nd, 2011

After slogging through three brutal years of weak demand for non-residential construction services, it appears that ARC might finally start to benefit from a recovery in project activity in 2011. Suddenly signs of life in the commercial real...

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ESI: 10-K Observations and Plenty of Lingering Questions

February 21st, 2011

Call us crazy, but we have been eagerly anticipating the release of ESI’s 10-K filing for several weeks now.  The company finally released its 2010 10-K filing on Friday, 2/18/11 after the market close.  We have to admit, we are somewhat disappointed.  On...

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TTC: Near Term Earnings Upside Appears Priced In, Still Favor Long BGG/Short TTC

February 17th, 2011

TTC reported 1Q11 results today that were well above consensus expectations.  You can read the full release here.  Despite the large upside delivered for 1Q11, the upward revision to FY11 guidance, and communication of a FY14 operating...

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PAA Research SMid Cap Portfolio Update – YTD Down (-0.6%)

February 16th, 2011

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 SMid Cap...

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KNOT: 4Q10 Results Highlight Growth Acceleration

February 10th, 2011

KNOT reported 4Q10 results that were more or less inline with our expectations and above consensus estimates. The company’s 4Q10 results further validated our thesis that KNOT reached a critical inflection point in 2H10 and is poised to generate accelerated revenue...

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KNOT: 4Q10 Results Should Highlight Acceleration in Growth, Exceed Consensus Estimates

February 9th, 2011

KNOT will report 4Q10 earnings results after the market close on Thursday, February 10th.  We expect the company’s 4Q10 results will further validate our thesis that KNOT reached a critical growth inflection point in the second...

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Closing out Long CSGP/Short LOOP Pair Trade with 35% Gain

February 9th, 2011

Approximately 12-months ago in a report entitled "When the Castle Is Under Siege It Helps To Have a Wide Moat: Long CSGP/Short LOOP" we introduced a pair trade idea: long CSGP/short LOOP.  Our thesis at that time was as follows: CSGP (CSGP 42.3 ↑0.74%) has...

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IPSU: 1Q11 – More of the Same, When Will Investor Patience in IPSU Be Rewarded?

February 8th, 2011

IPSU reported 1Q11 results this morning that can be best characterized as more of the same.  The company reported an operating loss as a result of ongoing production issues at its Port Wentworth refinery, which were further exacerbated...

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KNL: Strong 4Q10 Results, Backlog Growth Validate Our Pair Trade Thesis – Long KNL/Short MLHR

February 4th, 2011

Approximately 6-weeks ago we introduced a pair trade – Long KNL/Short MLHR.  In our report, we established the following thesis for our long KNL/short MLHR pair trade: Order trends have improved materially for...

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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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BCO: Flexing Its Emerging Market Muscles, Operating Momentum Finally Emerges

February 3rd, 2011

We first introduced BCO as a long idea in June of 2009. Admittedly, this has not been one of our best stock ideas.  The stock has returned a measly 4% while the S&P 500 has surged 39% higher over the same time frame – not exactly the...

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THQI: Solid 3Q11 Offset by “Sandbagged” 4Q11 Guidance; Concerns About Kids Movie Based Licenses Unfounded

February 3rd, 2011

THQI reported 3Q11 earnings results after the close yesterday.  You can read the full earnings release here.  The headlines are that the company beat consensus expectations for the December quarter, but...

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THQI: Our Title by Title Based Estimates for 3Q11 and 4Q11, Key Issues for THQI Management to Address Surrounding...

February 2nd, 2011

THQI will report 3Q11 earnings after the close on Wednesday February 2nd.  Since the release of THQI’s drawing based peripheral for the Wii on November 14th (uDraw), the stock has rallied 41%. ...

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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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BGG: 2Q11 Earnings Not As Impressive As Headline Results Suggest, Waiting for Signs of Spring

January 28th, 2011

BGG reported 2Q11 results that we would characterize as far less impressive as the headline numbers would suggest.  In general, it appears that relatively strong demand in Australia and Asia combined with slightly earlier...

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BGG: Survey Results from Outdoor Power Equipment Dealers and 2Q11 Preview

January 26th, 2011

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 modest loss (-0.3%) compared to a whopping 21.3% gain for the S&P 500.  As a reminder, the...

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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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ESI: Headline 4Q10 EPS Beat Driven Entirely by Share Repurchases – A New Paradigm for Marketing Cost Per Student...

January 20th, 2011

ESI report 4Q10 earnings and the results of their winter term enrollment intake.  You can read the full earnings release here.   We would characterize the company’s earnings results and winter...

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Current Ideas

AYI

SHORT

$129

RON.TO

SHORT

$9

BIG

SHORT

$28

ESI

SHORT

$0

DV

SHORT

$15

BGG

PAIR - LONG BGG/SHORT TTC

25%

TTC

PAIR - LONG BGG/SHORT TTC

25%

Z

SHORT

$14.00

NA.TO

SHORT

$22

HCG.TO

SHORT

$20

ING.PA

SHORT

$35

ZU

SHORT

$15

TRLA

SHORT

$20

MCRS

SHORT

$31

APOL

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$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