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ESI: More Correspondence with the SEC, but It’s not related to the Off-Balance Sheet Treatment of PEAKS

September 25th, 2012

More Correspondence with the SEC….We just wanted to flag a round of correspondence between ESI and the SEC that occurred in July and August of this year.  The letters were just released through the SEC’s...

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COCO: Another Log on the “Regulatory Fire”

September 18th, 2012

“The investment thesis for us is pretty straightforward, as I said earlier, career-oriented, that's a big deal to us. I mean, we're teaching students how to become prepared for their first job. Not only do we teach them and get them through the process, we also spend a...

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MCRS: “Square”ly in the Scope of the Mobile Payments and iOS Revolutions, Time to Get Short

August 23rd, 2012

“I just charge additional license fees for these iPad implementations, so it actually drives business”Peter Rodgers, EVP Investor Relations and Business Development MICROS Systems, Inc.That’s it, nothing to see here....

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COCO: All Available Levers Pulled, The Focus Should Increasingly Turn to COCO’s Liquidity and Leverage

August 20th, 2012

After gapping down earlier in the morning, COCO shares rallied over the course of the day to end down only 1% following 4Q12 results and management commentary that should create significant cause for concern among...

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BGG/TTC: Drought Aside, Earnings Visibility and FCF Prospects Are Improving Rapidly for BGG

August 9th, 2012

BGG shares traded off modestly today following 4Q12 results and initial FY13 guidance that were both below consensus expectations.  Two factors weighed on the company’s 2Q12 and significantly dampened the company’s FY13...

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Z: All About the Metrics

August 8th, 2012

Zillow shares traded off sharply after hours yesterday following earnings results that were good, but perhaps not strong enough relative to “whisper numbers”.  Additionally, the company filed a shelf offering which included the option for significant stock holders to sell as much as 3.6MM...

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THQI: Waiting on Darksiders…

August 7th, 2012

Realistically THQI’s 1Q13 results were more or less a side show.  The company did not release any new games in the quarter, so the focus of the earnings call was primarily on THQI’s release slate and efforts to reposition itself in the marketplace.  In one week, THQI will release...

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WPO: The Song Remains the Same, Lowering Estimates to Reflect Weakening Prospects for Kaplan

August 3rd, 2012

In many respects, WPO’s 2Q12 earnings results represent a complete validation of our short thesis on the stock.  At a time when it appears most bulls on the stock own it based on some theoretical breakup value, two...

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OPEN: Another OPEX Driven Beat Aside, the Signposts of Growth Maturation and Competitive Pressures Continue to Pile Up

August 3rd, 2012

With OPEN shares down 24% in the past month and now trading at what some might think is an attractive 18.7x consensus EPS for 2013 we shouldn’t be completely surprised by the strength in the stock...

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WWE: Our Revised Estimates, The Catalysts for WWE for the Next 6-Months

August 2nd, 2012

WWE’s 2Q12 results were more or less inline with expectations.  Based on the strong buy rate for Wrestlemania 28 and subsequent PPV events, it’s clear that WWE’s creative cycle has turned a corner.  Over time we expect this to lead to...

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WWE: Positive Developments Continue to Be Overlooked in Light of the Ongoing Uncertainty Surrounding the WWE Network

August 1st, 2012

It has been a grueling slog for WWE shareholders over the past 6-9 months.  Over the past 3-4 months the company crushed expectations for 1Q12, delivered the highest selling Wrestlemania in history,...

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ESI: Where Did the Cash Go? ESI’s Leverage Looms Large as Prospective FCF Generation Dwindles, Reducing Target to $30

July 26th, 2012

Fundamentals Are Breaking Down…. And Liquidity Now Becomes a Real ConcernFor some the 2Q12 earnings season will be remembered as the quarter in which the publicly traded for-profit postsecondary...

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For-Profit EDU: Checks with Privately Held Institutions Suggest Trends Are Not Getting Better; Be Wary of the 150%...

July 24th, 2012

Make no mistake, as we navigate earnings season in the for-profit education space over the next 2-3 weeks, the poor operating results from DeVry will look like an accurate gauge of the operating...

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For-Profit EDU: The CFPB Frames the Private Student Lending Industry

July 20th, 2012

Early this morning, the Consumer Financial Protection Bureau (CFPB) released its long awaited report on the Private Student Loan (PSL) industry.  The report provides a broad overview of the characteristics of the private student loan market for the...

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My Interview in Barron's

July 1st, 2012

In case you missed it, I recently had the opportunity to speak with Leslie Norton of Barron's about PAA Research, our approach to idea generation, and some of our latest thoughts on for-profit education, payment processing and OPEN, Z, BGG, and TTC.  You can find the full interview HERE.

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For-Profit EDU: Another Log on the Fire? The Pell Grant Party Might Be Over

June 20th, 2012

There is little doubt that the for-profit postsecondary education sector has been under siege for the past 2-3 years.  Most stocks in the space are trading at or near their 52-week lows and at valuations most investors and management teams in...

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OPEN: This is Not a “Blocking and Tackling” Exercise

June 12th, 2012

If you were to listen solely to OPEN management, the company’s path to market dominance in the online restaurant reservation space is merely an exercise in “blocking and tackling”.  Management continues to execute on the same strategy the company had in...

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THQI: The Power of One

May 16th, 2012

In April 2009, in our very first report on THQI we wrote the following:“Over the past 15-months, THQI’s stock has declined in excess of 80% in large part due to poor execution by the company in its efforts to target “core gamers” and decreased receptivity among young consumers for...

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APOL: Closing Out Our Short Idea with a 32% Gain (vs. S&P 500 +11.3%), Core Thesis Remains Intact

May 8th, 2012

On 12/15/11 we introduced APOL as a short idea (see “The Monster is Out of the Cage and APOL’s Secular Decline Begins in Earnest”).  Our thesis at that time was predicated on the following: Demographic trends were...

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WWE: On the Cusp of Meaningful Content Monetization

May 4th, 2012

It shouldn’t come as a complete surprise that WWE shares traded off over the past three months following 4Q11 results that were in no uncertain terms hugely disappointing and initial guidance for 2012 that was well below consensus forecasts.  However, we were quite...

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Z: Zillow Provides a Glimpse of the Future, While Investing In It

May 3rd, 2012

Some investors might be perplexed by the strength in Zillow shares after hours.  Yes, the company did report strong 1Q12 results that handily beat estimates.  Yes, the operating metrics delivered in 1Q12 were fantastic and well above what most...

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OPEN: As Growth Metrics Collapse Investors Are Left to Wonder: Where is the Vision?

May 2nd, 2012

Was it really just only 12-months ago that OPEN was the darling of Wall Street?  It seems like another lifetime.  Approximately one year ago to the day, OPEN reported another quarter of 40%+ YOY organic revenue growth and handily...

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700+ Real Estate Agents Can’t Be Wrong. The Housing Market Is On the Cusp of a Sustained Recovery. Getting Long Zillow

May 1st, 2012

This is a report about housing. This is also a report about a company that has the potential to transform the home purchase process in the US.  Every Spring for each of the past three years we have...

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ESI: Running Out of Bullets? The EPS Beat Means Little in the Context of Weakening Student Metrics and Evaporating FCF

April 26th, 2012

It’s True They Did Beat, But….ESI reported 1Q12 revenue and EPS results that were significantly better than consensus estimates.  Despite the overall outperformance, there are CLEAR signs now that...

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For-Profit EDU: As Some Try to Celebrate “Less Worse” Metrics, Starts Deteriorate and a Fundamental Inflection...

April 24th, 2012

Today the 1Q12 earnings season in the for-profit postsecondary education sector kicks off in earnest.  Thus far, many of the 12 issues that we thought would matter most this year have weighed...

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THQI: Perception vs. Reality

April 18th, 2012

For the first time in a long time, THQI shareholders received some good news today.  The stock has been in a steep decline over the past 4-5 months since the uDraw disaster.  We recognize that people remain highly skeptical of management’s ability to execute on its plan to transform the...

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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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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