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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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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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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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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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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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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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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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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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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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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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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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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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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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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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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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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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ESI: Thoughts on Upcoming 4Q10 Results, Winter Term Enrollment

January 18th, 2011

Before we get into our discussion of our expectations for ESI's upcoming 4Q10 earnings results we wanted to highlight a few changes that we have made to our publishing process that should result in an improved experience for you, our valued...

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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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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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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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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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Current Ideas

EXPI

SELL/SHORT

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HUSQ.B

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