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For-Profit EDU: OIG Report on Online Fraud Rings Could Have Serious Implications for the Sector

September 29th, 2011

Earlier this week, the Department of Education’s Office of Inspector General published an investigative program advisory report on “Online Education Fraud Rings”.  The report was sent to Federal Student Aid (FSA) and...

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INVITE: For-Profit EDU, Wed. 10/5 at 2:30PM, PAA Research Conf. Call with Industry Expert on Student Loans and the...

September 26th, 2011

PAA Research will host a conference call at 2:30PM ET Wednesday October 5th with Deanne Loonin of the National Consumer Law Center, one of the best known and most influential non-profit consumer...

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WPO: Time Is On Our Side – Thoughts from WPO’s 2011 Shareholder Day

September 13th, 2011

On Friday, WPO management hosted its bi-annual shareholder day.  If ever we had any doubts about our long term secular short case for WPO shares, they were all but removed following a series of management presentations.  Based on the tenor and...

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OPEN: The North American “Moat” Looks to be Increasingly Under Siege

September 8th, 2011

OPEN shares traded off sharply today in response to GOOG’s announcement that it had acquired Zagat, a worldwide publisher of ratings and reviews of restaurants and other businesses.  The Zagat restaurant surveys, launched more than 30 years...

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COCO: The World WE Live In

August 23rd, 2011

Approximately 5-6 weeks ago, we published an industry report on the for-profit postsecondary education industry entitled “12 Reasons Why We Remain Bearish; Observations from Our Proprietary Paid Search Analysis”.  The subject matter of the report is somewhat self-explanatory.  Now that...

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COCO: What Options Are Left?

August 22nd, 2011

We are 24-hours away from what might be the single most important earnings release and conference call in the history of Corinthian Colleges, Inc.  The (-50.7%) decline in COCO shares over the past month, even in the context of the broader market decline has been nothing short of...

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TTC: Now Comes the Hard Part, Still Favor Long BGG/Short TTC

August 18th, 2011

For the first time in a long time, TTC reported quarterly results that fell short of expectations.  While some investment firms and analysts are willing to look past the company’s “product rework” expense in the quarter as a “one-time” item, we...

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BGG/TTC: BGG, What the Market Is (Or Isn’t) Telling Us About Value

August 11th, 2011

Admittedly, BGG’s 4Q11 results and initial FY12 EPS guidance were well below our expectations. Our channel checks indicated that sell through of outdoor power equipment weakened from 1Q11 to 2Q11 and that trends in June and July were modestly worse...

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BGG/TTC: BGG 4Q11 Preview, Highlights from Proprietary Outdoor Power Equipment Dealer Survey, Still Favor Long...

August 10th, 2011

We have been recommending a pair trade: long BGG/short TTC for approximately 9-12 months.  Thus far the trade has not been a winner, generating a modest (-3.0%) loss compared to a relatively healthy...

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IPSU: Too Much Asset Value to Ignore, It Was More a Crime of Execution (Temporary) Rather than the Marketplace...

August 8th, 2011

Admittedly, IPSU’s stunningly poor 3Q11 earnings results still have us somewhat shell-shocked. Even the company’s greatest skeptic probably could not have painted an earnings scenario for 3Q11 as...

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WWE: Time to Muscle Up; Getting Long with $16 Price Target

August 3rd, 2011

There are few franchises in the broader entertainment industry that have achieved the type of enduring resonance with consumers as the WWE has.  For more than three decades now the company has developed a universe of characters that continues to capture the...

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OPEN: The Growth Story Is Cracking Sooner Than Expected, Lowering Price Objective to $48

August 2nd, 2011

Approximately 5-months ago, we introduced OPEN as a short idea based on the following thesis: 1. OPEN’s electronic reservation booking system (ERB) in many respects is a solution without a problem 2. Restaurants view the...

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OPEN: 2Q11 Preview, Competition Matters

August 1st, 2011

If you happen to be looking at OPEN for the first time, you might be wondering: what’s the big deal about the stock from a pure performance perspective?  Year-to date the stock has gained a measly 0.5%, compared to a 2.8% gain for the S&P 500.  Obviously, OPEN has been...

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IPSU: List Price Spreads Widen to Katrina-Like Levels, Raising Price Objective to $32.50; 3Q11 Preview

August 1st, 2011

Even the most ardent bulls on IPSU shares (ourselves included) could not have predicted the violent rally in the stock over the past three months.  IPSU have gained an astounding 71% since the company reported a big...

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BCO: Don’t Let the Headline EPS Numbers Fool You, BCO Continues to Truck Along

July 28th, 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 an anemic 2% while the S&P 500 has surged 29% higher over the same time frame – not exactly...

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THQI: Asymmetric Return Potential Remains High; Catalysts Aren’t THAT Far Off

July 28th, 2011

In our preview of THQI’s 1Q12 earnings results we wondered aloud as to when the “summer of discontent” for shareholders would come to an end.  Well it appears based on the company’s 1Q12 results, revised outlook for FY12, and stock...

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THQI: When Will the Summer of Discontent for THQI’s Shareholders Come to an End? 1Q12 Preview

July 25th, 2011

The summer of discontent for THQI shareholders has admittedly lasted far longer than we could have ever imagined. Shares now trade at 1.0x book value and a meager 10.0x CONSENSUS estimates for FY12, both of which represent...

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ESI: Here Comes the Earnings Reset

July 21st, 2011

Key Observations from ESI’s 2Q11 Results and Summer Term Enrollment IntakeESI reported a headline revenue and EPS beat for 2Q11, but we think most investors are likely to be focused on the rapid deceleration in new student starts witnessed in the Summer term.  Despite the revenue...

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For-Profit EDU: The Simple vs. the Complex, Checks with Private Institutions Indicate Further Deterioration in...

July 20th, 2011

For the past six weeks, we feel like we have been “spitting into the wind” when it comes to our bearish call on stocks in the for-profit postsecondary education sector.  Despite our best efforts...

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ESI: 2Q11 Preview, What Questions Could and Should Be Asked On the Conference Call

July 19th, 2011

Approximately one-month ago, we published a report entitled “Connecting the Dots on ESI’s Increasingly Worrisome Off-Balance Sheet Exposure – The Potential Daisy Chain of Events”.  Apparently our comprehensive and detailed...

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KNL: Proprietary Survey of Office Furniture Dealers Suggests Slowdown, Closing out Long KNL/Short MLHR Pair Trade with...

July 15th, 2011

Approximately seven 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: 12 Reasons Why We Remain Bearish; Observations from Our Proprietary Paid Search Analysis

July 12th, 2011

In the 6 trading days following APOL’s earnings release, the shares of publicly traded for-profit postsecondary education companies have rallied anywhere from 10-20% compared to a modest sell-off of (-0.2%) for...

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Do Our Investment Ideas Generate Alpha? Other Ways We Measure our Performance; PAA Research SMid Cap Portfolio Update

July 6th, 2011

At PAA Research we strive to differentiate ourselves from other firms based on the rigor of our research AND the veracity of our investment ideas.  The firm was founded based on five principal...

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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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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

$14.00

NA.TO

SHORT

$22

ING.PA

SHORT

$35

ZU

SHORT

$15

TRLA

SHORT

$20

MCRS

SHORT

$31

APOL

SHORT

$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