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COCO: Hanging on By a Thread While the Challenges Continue to Mount

August 29th, 2013

We watched the stock price action in COCO over the past two weeks with considerable befuddlement and consternation. After all, the stock rallied more than 25% following the announcement that the Department of Education had preliminarily sided with the...

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ESI: Robbing Peter to Pay Paul in a Race to the Bottom

July 26th, 2013

In a vacuum, there might be legitimate cause for excitement.  After 11 consecutive quarters during which ESI reported a YOY decline in new student starts the company was finally able to identify an elixir to its enrollment woes – aggressive tuition discounting...

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For-Profit EDU: Just When You Think You Have All of the Answers, We Change the Questions; Feedback from Privately Held...

July 24th, 2013

“And you all know how the story go….Not bad meaning bad but bad meaning good…”-          Run-DMCWith all due respect to Monsieurs Simmons, McDaniels, and Mizell we doubt that they...

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For-Profit EDU: Has a New Legal Precedent Been Established For Institutions? A Recent CECO Case Warrants Closer...

June 19th, 2013

Earlier this week, the American Arbitration Association ruled on a dispute between a former student of CECO’s California School of Culinary Arts (since rebranded the Le Cordon Bleu College of...

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ESI: The Latest 90/10 Compliance Strategy/”Work Around” – Charter Schools and Free Associate’s Degrees

June 12th, 2013

In a move that received little fanfare this past February, ESI’s board of directors established a short term element to the company’s compensation policy for senior management that could be payable in...

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ESI: The Absurdity of Reported “Earnings” As FCF Collapses and Balance Sheet (Off and On) Obligations Loom Large

April 26th, 2013

How much are 400-600 ITT Tech students worth?  In a report in which we will outline some of the critical questions surrounding ESI, this is the question we have been pondering all day.  Afterall, it...

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ESI: 10-K Highlights – the SEC Subpoena Is Not the Sole Cause for Concern

February 25th, 2013

We have little doubt that among the kernels of information included in ESI’s 2012 10-K filing that the disclosure of the subpoena from the SEC will receive the greatest attention – as it should.  However, for anyone who has followed the...

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COCO: With $200MM Left to Go, Things Could Be Coming to a Head

January 31st, 2013

Despite all of the levers the company has pulled (cohort default rate “management”, asset sales, off-loading student loan credit risk temporarily, sale lease backs) over the past two years, it finally appears that COCO is starting to run out of...

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ESI: And So It Begins…. What Do You Believe?

January 25th, 2013

Who said volatility is dead?  In a day that will go down in infamy for ESI investors, the stock traded in an astounding 40%+ range today.  After gaping down in excess of 20% in early trading ESI shares rebounded over the course of the day to close up 17.7% - efficient...

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ESI: The True Nature of ESI’s Educational Outcomes Finally Coming to Light, Liquidity Position Looks Tenuous, Taking...

January 6th, 2013

If you were to distill our short thesis on ESI into its central elements (which we’ve now had in place for almost four years now) it can be succinctly summarized in two points: 1. The company’s...

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COCO: The Games Continue…. The Three Most Important Questions for COCO Stakeholders Now

October 31st, 2012

In some respects, given all that has happened over the past 2-3 years in the for-profit postsecondary education space it’s hard to imagine that COCO is still hanging around.  After all, in an era when brand, price, and return...

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ESI: After The Worst Fall Term Enrollment Intake in ESI’s History, It’s Clear the Emperor Has No Clothes, Taking...

October 25th, 2012

Losing Altitude and Gaining Speed…..At the simplest level, here are the five things that you need to know about ESI following the company’s 3Q12 earnings release and fall term enrollment...

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For-Profit EDU: Checks with Privately Held Institutions Suggest We’re On the Cusp of Yet Another Round of Meaningful...

October 15th, 2012

On Tuesday, October 16th APOL will kick-start the earnings season in the for-profit postsecondary education sector.  Investor expectations for the company’s results, particularly surrounding new...

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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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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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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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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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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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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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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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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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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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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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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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