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ESI: Why Did ESI Get a New Credit Facility? Revisiting Our Daisy Chain of Events

March 28th, 2012

If we have learned anything over the past 12 years in which we have been following ESI as analysts and investors it is this: never underestimate the guile of the company’s management team, particularly when it comes to crafting...

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APOL: Struggling to Find Its Way in the Era of Brand and Price, Staying Short

March 27th, 2012

The statistics in many respects are simply overwhelming.  Consider the following: More than 700,000 students have now graduated from the University of Phoenix Stated another way, 1 in roughly 450 Americans has a degree from the...

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MLHR: Recovery in Demand for Office Furniture Remains Anemic but Trends Have Improved Modestly, Closing Out MLHR Short...

March 20th, 2012

In the 8-months since we originally introduced MLHR as a short idea, the stock has declined (-17.4%) compared to a 7.7% gain in the S&P 500 over the same time frame.  For those that also rely on...

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WPO: 10-K High (and Low) Lights; 2012 Could Be As Good As It Gets for Quite Some Time, Revised Estimates

March 2nd, 2012

Admittedly, WPO’s 4Q11 results beat our estimates by a wide margin.  Normally this type of EPS upside would yield a more meaningful reaction in any given company’s stock price – that did not happen.  WPO...

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APOL: Management Has No Visibility, Lowering Estimates

February 29th, 2012

Approximately 3-months ago we published a report entitled: “The Monster Is Out of the Cage and APOL’s Secular Decline Begins in Earnest” in which we outlined our short thesis for APOL.  Below we quickly review the principal tenets of the secular short case...

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WWE: 2012 Becomes a Year of Significant Investment as We Await Details on Content Distribution and the WWE Network

February 23rd, 2012

Presumably, WWE investors will awake tomorrow morning after fully digesting 4Q11 results that can best be described as substandard to a round of negative estimate revisions for 2012 EPS in the 30-45%...

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ARC: Generating Copious Free Cash Flow While Waiting for a Market Upturn, Enhanced B/S Flexibility Enables Increased...

February 22nd, 2012

We cannot think of a better testament to the skill and guile of ARC’s current management team than the chart below.  In it we compare ARC’s aggregate free cash flow generation over the past five...

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XOXO: 4Q11 Results Demonstrate Why This Remains One of Our Favorite Names in the Internet Space, Taking Price Objective...

February 17th, 2012

Humor us for a moment and allow us to walk you through a sequence of events that occurred for a company for the past 12-months.  For the moment we will not reveal the name of the company (but at...

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OPEN: When Did This Become a Cost-Cutting Story? Peak EPS Could Be Closer Than You Think

February 8th, 2012

At the highest level here are the headlines about OPEN’s 4Q11 earnings results and subsequent earnings conference call: 1) the company delivered a low quality beat, 2) underlying operating metrics for the most part were...

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OPEN: Stock Rips As the Company Loses Share in Euro., Faces Increased Competition in the US, 4Q11 Should Show More Sign...

February 7th, 2012

Stop us if you’ve heard this one before: a heavily shorted stock, which was one of the worst performing names in its sector in 2011 has now rallied more than 20% to start the year.  Of course in...

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BCO: The North American Grind Continues, Value Without Catalysts, Just a Compelling Emerging Markets Growth Story

February 3rd, 2012

Admittedly when we founded PAA Research, investment recommendations like what BCO has become for us, were exactly what we’re trying to avoid.  Our absolute return focus and strict adherence to loss...

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THQI: Cost Cuts Likely Take Liquidity “Crunch” Off the Table and Are Bigger Than You Think, Option Value Remains...

February 3rd, 2012

THQI reported 3Q12 non-GAAP EPS that was actually higher than our forecast ($0.35 vs. $0.31).  Unfortunately consensus expectations were considerably higher, so we consider this somewhat of a...

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COCO: What is COCO Doing Wrong?

February 1st, 2012

It seems like an outlandish question to ask on a day when COCO shares have gapped up a draw-dropping 30% in response to a modest earnings beat that was almost entirely driven by lower bad-debt expense and a 2Q12 enrollment intake that was inline with expectations.  However, we think...

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BGG/TTC: BGG, This Needed to Happen, Now the Stock Becomes Even More Compelling

January 27th, 2012

Admittedly, we did not expect something like this.  Suffice it to say BGG’s 2Q12 earnings results and conference call included a number of unexpected outcomes both operationally and strategically.  Obviously the big news of the day was...

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ESI: 4Q11 EPS Beat Belies Significant Operational Red Flags

January 26th, 2012

It’s True They Did Beat, But….ESI reported 4Q11 revenue and EPS results that were significantly better than consensus estimates.  Despite the overall outperformance, many of the critical underlying metrics the company reported were weak and/or should...

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For-Profit EDU: Will Winter Term/4Q11 Results Represent an Inflection Point for the Industry? Checks with Private...

January 25th, 2012

Yesterday we published a lengthy report that outlined the 12 issues that we think will have the greatest impact on the enrollment, revenue, EPS and stock sentiment of the publicly traded for-profit...

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BGG/TTC: BGG 2Q12 Preview, Highlights from Proprietary Outdoor Power Equipment Dealer Survey, Still Favor Long...

January 25th, 2012

If there has been any sector that has served as the backbone of the recent rally in the market it has been the homebuilders.  Most of the largest publicly traded homebuilders have witnessed stock...

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For-Profit EDU: As the Focus Turns To “Brand and Price”, The 12 Issues That Will Matter Most in For-Profit...

January 24th, 2012

Perhaps it happens every year, but the relative outperformance of last year’s losers compared to the prior year’s winners has been particularly pronounced thus far in 2012.  The 25 worst...

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APOL: A Question of Amplitude and the Eight Other Issues that Matter Most, Staying Short

January 6th, 2012

APOL reported 1Q12 enrollment and earnings results that on the surface, at least looked like exactly what bulls on the stock were hoping for.  To quickly review: The company posted slight revenue upside and beat on EPS by a...

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About Your PAA Research Account

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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HCG.TO

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AYI

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RON.TO

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BIG

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ESI

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DV

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$15

BGG

PAIR - LONG BGG/SHORT TTC

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TTC

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Z

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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

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KNL

PAIR - LONG KNL/SHORT MLHR

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XOXO

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CSGP

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$100

GCA

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IPSU

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MLHR

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ARC

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LOOP

PAIR - LONG CSGP/SHORT LOOP

40%

THQI

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WPO

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COCO

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HNI

SIG

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