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December 30th, 2011

First and foremost we wanted to wish you a healthy, happy, and what we hope will be a lucrative new year.  2011 has not been without its challenges, but as a firm we are pleased that we continued to provide our clients with action oriented, thought-provoking, highly differentiated...

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MLHR: Proprietary Survey of Office Furniture Dealers Suggests Continued Deceleration, Staying Short MLHR

December 21st, 2011

In the 5-months since we originally introduced MLHR as a short idea, the stock has declined (-18.3%) compared to a (-5.2%) sell-off in the S&P 500 over the same time frame.  The sell-off in MLHR shares over the...

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APOL: The Monster Is Out of the Cage and APOL’s Secular Decline Begins in Earnest

December 15th, 2011

It used to be something that operators in the for-profit postsecondary education space could joke about with investors.  When asked what would represent the biggest competitive threat to their enrollment growth prospects, 5-years ago...

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IPSU: Closing Out Long Idea With a 63% Loss

December 8th, 2011

We are closing out our long idea on IPSU with a 63% loss.  Our views on the relatively positive fundamentals in the US sugar markets (widening refined sugar spreads) the asset value inherent in the company, and the cash flow potential of the business once normalized...

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THQI: uDraw a Razor without a Blade, Mauls THQI’s Quarter Despite Solid Sales of Saints Row the Third and WWE 12

December 8th, 2011

THQI reduced its holiday quarter revenue guidance by 25% last night; the company did not provide an update on its EPS or cash flow expectations.  In an ironic twist, all signs suggest that THQI’s core...

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WWE: As Details on the WWE Network Emerge, When Will Investors Take Notice?

December 7th, 2011

In the four months since we first introduced WWE as a long idea, the stock has increased approximately 7.3% compared to a 0.4% gain for the S&P 500 over the same time frame.   The stock has witnessed better price action of late from a...

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IPSU: The 10 Questions That Matter Most Now, It All Comes Back to Management Execution and Unlocking Asset Value

December 1st, 2011

Even in the context of a market that has been characterized by huge price swings and “whip-saw” action, IPSU’s stock has distinguished itself in terms of volatility.  It seems almost impossible to...

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THQI: Strong Critical Response to Saints Row the Third Should Bolster Sell Through – This Looks Like the Long Awaited...

November 11th, 2011

We’ve been watching our screens this morning in bewilderment at the stock price action in THQI.  Make no mistake, Saints Row the Third is the most important title in the history of the company. ...

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WPO: Steady As She Goes…. In Decline

November 4th, 2011

In many respects, WPO’s 3Q11 earnings results represent a complete validation of our short thesis on WPO shares.  At a time when it appears most bulls on the stock own it based on some theoretical breakup value, two unalienable truths remain clear: 1) WPO management has no...

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THQI: The Time is Now, Saints Row the Third Could Herald the Arrival of a New THQ

November 3rd, 2011

If we have learned anything about THQI over the past 30-months since we originally started recommending the stock as a long idea it’s that shares can turn on a dime.  Even though the stock now trades more than 40% below where we...

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OPEN: The Growth Story Unravels Just As Competition Appears Poised to Step Up, Lowering Price Objective to $30

November 2nd, 2011

In the lengthy report we published on OPEN on Monday (backed by a survey of 110-120 restaurant owners) we outlined a number key issues that we expected to become discounted in the stock over the next...

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OPEN: The NA Moat Is More Vulnerable Than You Think – A More Realistic TAM Analysis, Lowering Price Objective to $37

October 31st, 2011

In the 7+ months since we introduced OPEN as a short idea, we have been in a position where the stock has gained more than 40% against us and now trades more than 40% below where we initiated our...

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BCO: North American Headwinds Shouldn’t Overshadow Emerging Markets Growth Story

October 27th, 2011

We remain as enthusiastic as ever about the share appreciation prospects for BCO.  In the 2-years since we first introduced the BCO as an investment idea the stock has barely budged even though the company is on track to generate EBITDA...

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BGG/TTC: BGG, “Shooting Star” Price Action Aside, Stock Appears Poised for Gains

October 20th, 2011

As we anticipated, BGG reported 1Q12 results that were well above consensus expectations.  The magnitude of revenue upside was larger than we expected, but the company’s loss per share was roughly inline with our forecast. ...

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ESI: 3Q11 EPS Beat, Overshadowed by Balance Sheet Issues, Weakening Free Cash Flow

October 20th, 2011

ESI reported inline revenues and a healthy 3Q11 EPS beat.  New student starts and total enrollments were both better than our expectations, but still showed weakening trends on a 2-year stacked basis.  There are some in the sell-side...

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BGG/TTC: BGG, Looking for an Irene Based Beat for 1Q12

October 19th, 2011

The performance of BGG shares this year have been nothing short of “head scratching”.  We recognize that the spring/summer selling season for outdoor power equipment proved to be a disappointment and the company’s initial guidance for FY12 was below our...

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For-Profit EDU: More of the Same, Checks with Private Institutions Suggest Primary Fundamental Issues Likely Remained...

October 17th, 2011

What a difference a few months can make.  To put the performance of the publicly traded for-profit postsecondary education companies in perspective for the past few months, we thought it might be...

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For-Profit EDU: More Details Emerge on the Extent of Online Fraud Rings, APOL Outlines Its Exposure

October 11th, 2011

In an article on Insidehighered.com today entitled “Hitting Hard at Fraud”, more details on the extent of online fraud rings in higher education have emerged.  As a reminder, two weeks ago, the Department of...

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For-Profit EDU: Highlights from Our Conference Call with a Representative from an Influential Consumer Advocacy Group

October 5th, 2011

Earlier today PAA Research hosted a conference call with Deanne Loonin of the National Consumer Law Center, one of the best known and most influential non-profit consumer advocacy organizations in the...

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REMINDER: For-Profit EDU - TODAY at 2:30PM EST, PAA Research Conf. Call with Deanne Loonin of the National Consumer Law...

October 5th, 2011

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

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

October 3rd, 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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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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Current Ideas

CTC

SHORT

$101

ATGE

SHORT

$15

AYI

SHORT

$108

HCG.TO

SHORT

$0

RON.TO

SHORT

$9

BIG

SHORT

$28

ESI

SHORT

$0

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