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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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OPEN: Competition Continues to Eat Away at OPEN’s Total Addressable Market (TAM)

June 24th, 2011

Approximately 12-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 electronic reservation booking system...

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MLHR: MLHR Finally Delivers Some Earnings Upside, Still Recommending Long KNL/Short MLHR

June 23rd, 2011

Approximately 6-months ago we introduced a pair trade – Long KNL/Short MLHR.  Thus far the trade has returned approximately 11.8% compared to a 2.2% gain for the S&P 500.  In our original report, we established the...

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ESI: Connecting the Dots on ESI’s Increasingly Worrisome Off-Balance Sheet Exposure – The Potential “Daisy...

June 21st, 2011

In the two years since we initially introduced ESI as a short idea a great deal has changed for both the company and the for-profit postsecondary education sector at large. We would summarize the...

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THQI: E3 Post View, Evaluating THQI’s Digital Strategy While We Wait for Space Marine and Saints Row

June 15th, 2011

In the 7 trading days since the start of the annual E3 video game convention, THQI shares have declined 16%.  The E3 convention has historically served as an opportunity for video game developers and publishers to...

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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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IPSU: Decision to Allow Wholesome Sweeteners Option to Expire Is a Surprise, but Not Necessarily a Disappointment

May 31st, 2011

On Friday, May 26th after the close, IPSU announced that it would not exercise its option to acquire the remaining ownership stake in Wholesome Sweeteners from Edward Billington and Son Ltd, a UK based food...

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ESI: Durbin (and others) Proposal on Private Student Loans Could Negatively Impact ESI’s PEAKS Prospects and Alter...

May 27th, 2011

In a move that has received little fanfare thus far, yesterday Senators Durbin (D-IL), Franken (D-MN), and Whitehouse (D-RI), along with Representatives Cohen (D-TN), Davis (D-IL), Miller (D-CA), and...

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PAA Research SMid Cap Portfolio Update – YTD Down (-3.4%)

May 17th, 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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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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IPSU: The Long Awaited Breakout

May 11th, 2011

In our 2Q11 earnings preview for IPSU we argued that we were excited about the company’s pending earnings release even though we did not expect the quarterly results themselves to be particularly compelling.  As a reminder our enthusiasm heading into the quarter was based on the...

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IPSU: Finally a New IPSU?

May 10th, 2011

In the 21-months since we published our initial report recommending that investors go long shares of IPSU, quite a bit has changed.  One thing that has not: IPSU’s share price.  The stock has declined 1.5% since we published our original report, compared to a 34.5% gain in the S&P 500...

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KNOT: Ecommerce Issues Aside, Revenue Growth is Accelerating

May 6th, 2011

Make no mistake, KNOT’s 1Q11 results provide further evidence that the company’s efforts to improve monetization of their major media platforms have started to result in accelerated revenue growth.  However, KNOT reported 1Q11 results that fell short of...

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ARC: Our Revised Estimates

May 4th, 2011

Our Revised EstimatesARC’s 1Q11 results were more or less inline with our expectations after adjusting for accelerated amortization of trade names and costs associated with elimination of the company’s interest rate swaps as a result of the company’s debt refinancing.  Recent...

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THQI: The Setup

May 4th, 2011

In many respects, THQI’s 4Q11 earnings report and subsequent conference call was everything longs could have hoped for: The company reported EPS upside (even though revs were slightly below consensus) Quarter ending cash was higher than expectations Homefront has achieved profitability The...

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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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OPEN: Unassailable OPEN? We Don’t Think So, 1Q11 Preview

May 3rd, 2011

Approximately 8-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 electronic reservation booking system (ERB) in many respects...

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THQI: What Do We Know?

May 2nd, 2011

In the six weeks ago since we penned a report entitled: “Homefront’s a Hit, the EPS Implications” we have been asking ourselves the same question over and over (and perhaps many of our clients have been saying the same thing) – What do we know? The 30% decline in THQI’s shares over the...

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BCO: Latam Growth Engine Overshadows Competitive Pressures in North America and Europe

April 29th, 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 relatively uninspiring 14% while the S&P 500 has surged 44% higher over the same time...

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BGG: 3Q11 Yields a Solid Beat, Mgmt. Sets a Low Bar for the Rest of the Fiscal Year

April 28th, 2011

BGG shares rallied modestly today, despite the significant outperformance posted by the company on both the top and bottomline for 3Q11. We attribute the tepid stock price response to the relatively muted outlook for 4Q11 provided by...

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BGG/TTC: Survey Results from Outdoor Power Equipment Dealers Adds Credence to Our Long BGG/Short TTC Pair Trade

April 27th, 2011

We have been recommending a pair trade: long BGG/short TTC for approximately 6-9 months.  Thus far the trade has not been a winner, generating a modest gain 1.5% compared to a robust 26.5% increase for the...

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ESI: 1Q11 Evokes Many Questions, Headline EPS Beat Almost Entirely Share Repurchase and Bad-Debt Expense Driven

April 21st, 2011

ESI report 4Q10 earnings and the results of their spring term enrollment intake.  Overall the company reported revenues and EPS of $383.2 million and $2.91 compared to consensus of $383.3 million and...

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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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KNL: Generation and Antenna Product Lines are Just Getting Going – Long KNL/Short MLHR

April 15th, 2011

Although the company’s results were relatively inline with consensus we would argue KNL’s 1Q11 operating results and significant YOY increase in backlog further validated our thesis that the company will be the fastest growing...

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KNL: Proprietary Survey of Office Furniture Dealers Adds Further Credence to Our Long KNL/Short MLHR Thesis – This is...

April 14th, 2011

Approximately four months ago we introduced a pair trade idea: Long KNL/Short MLHR.  You can read our original report here.  Our pair trade thesis is predicated on the following...

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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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PAA Research SMid Cap Portfolio Update – March up 2.4%, YTD Down (-0.9%)

April 4th, 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...

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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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Current Ideas

HCG.TO

SHORT

$0

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

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NA.TO

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ING.PA

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ZU

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TRLA

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MCRS

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APOL

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OPEN

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BCO

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WWE

LONG

$25

KNL

PAIR - LONG KNL/SHORT MLHR

25%

XOXO

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CSGP

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$100

GCA

LONG

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IPSU

LONG

$20

MLHR

SHORT

$22

ARC

LONG

$12.50

LOOP

PAIR - LONG CSGP/SHORT LOOP

40%

THQI

LONG

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WPO

SHORT

$275

COCO

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HNI

SIG

RGR