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The Catalysts in the For-Profit Education Sector Over the Next 6-8 Weeks - It's Not All About Gainful Employment

September 23rd, 2010

Volatility has always been a hallmark of the publicly traded for-profit education companies.  In the ten+ years we have been following the sector, the number of trading opportunities have been seemingly...

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WPO: Barron's Strikes Again, A More Realistic SOTP Analysis, Tail Risk Growing Rapidly

August 23rd, 2010

Barron's columnist Andrew Bary published a follow up piece this weekend to his initial write-up on WPO in which he argued that the stock could be worth as much as $900/share.  You can read the original article here.  Mr. Bary's...

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COCO Runs Itself Into Regulatory "Maelstrom", Expect Full Year Operating Losses for the Next Several Years

August 20th, 2010

Our short thesis on COCO has never been predicated on a change in the regulatory landscape governing the for-profit postsecondary education sector.  While the outcomes of NegReg 2009 and potential legislation by...

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We Thought the Repayment Rate Data Would Be Bad, It Was Worse - After "Black Monday" What Will Be the Lingering...

August 16th, 2010

On July 23rd, stocks in the for-profit education sector "ripped" after the release of the Department of Education's initial proposal on "gainful employment".  At that time, many investors thought...

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WPO: 2Q10 Earnings Release Is a "Wake Up Call" to Investors, Yields More Questions than Answers

August 6th, 2010

In our preview of WPO's 2Q10 earnings release we asked: "As the Questions Pile Up, Will We Finally Get Some Answers?"  Today's earnings release provided little in the form of clarity on the questions we asked, but it...

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WPO: As the Questions Pile Up, Will We Finally Get Some Answers?

August 3rd, 2010

Don Graham and other senior executives of WPO laud themselves for their "Berkshire-like" approach to managing the company.  In the world of WPO managment, the numbers speak for themselves.  While we find this approach refreshing in some respects, we...

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"Repayment Rate" Provision of Gainful Employment Is Not Nearly as "Toothless" as You Might Think

July 23rd, 2010

At long last the details on the Department of Education's proposal for its "gainful employment" were released. You can read an excellent summary of the proposal as well as responses from Senator Harkin, Harris Miller (CCA),...

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ESI: Rapidly Slowing Start Growth, Revenue Miss, and Low Quality Earnings Beat Suggest Growth Strains Are Starting to...

July 22nd, 2010

ESI reported 2Q10 earnings results this morning. Overall we think the precipitous slow down in new student start growth for the summer term should start to raise significant questions about the...

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A View From Privately Held For-Profit Postsecondary Institutions

July 21st, 2010

Even though we are only 24 hours away from the first earnings report of the season from a publicly traded for-profit education provider, investor focus remains firmly on the eventual outcome of the Department of Education's "gainful employment" proposal....

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Considerations Heading Into ESI's 2Q10 Earnings Results - Are ESI Shares Really "Cheap"?

July 20th, 2010

On Thursday, July 22nd ESI will report 2Q10 earnings results and its Summer 2010 enrollment figures.  This quarter's earnings season for the for-profit postsecondary education sector should be unique.  We would not go as far as...

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Solving the Credit Crisis..... In Higher Education

June 18th, 2010

Over the past 48 hours a significant change has occurred in the operating landscape for proprietary higher education institutions.  While most investors and sell-side analysts debate the eventual outcome of the Department of Education's "gainful employment" proposal,...

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WPO: 1Q10 Results Do Little To Change Our Short Thesis, Our Revised Estimates

May 10th, 2010

WPO reported 1Q10 results on 5/7.  Overall, the results did little to alter our short thesis on the stock.  The company beat our estimates on the topline but fell short of our EPS forecast due to lower than expected profitability at the...

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COCO's 3Q10 Results Might Signal the Last Days of Margin Expansion, The Questions that Should Be Asked, Establishing a...

May 4th, 2010

COCO reported 3Q10 earnings results this morning.  You can read the full release here.  Overall, we would characterize the results as more or less inline, but they will likely be viewed as a...

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ESI's 1Q10 Results Were Stronger Than Expected, but Leave Us With Plenty of Questions

April 22nd, 2010

ESI reported 1Q10 results this morning that topped PAA Research and consensus expectations. You can read the full release here.   Here are the quick highlights: Revenues and EPS of $384.0 million and $2.46 beat consensus...

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ESI 1Q10 Preview, New Lawsuit Raises More Questions About ESI's Regulatory Compliance Practices

April 19th, 2010

ESI will report 1Q10 results on Thursday, 4/22 before the market opens.  Based on the feedback from our recent survey of privately held for-profit education institutions, we think enrollment momentum across ESI's network of...

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A "Must Read" Report for Any Investor in the For-Profit Education Sector Heading Into 1Q10 Earnings Season

April 14th, 2010

In the for-profit postsecondary education sector, controversy never dies and it seems like trading opportunities are omnipresent. After a one-month period during which news flow within the industry slowed to a...

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Surprising Observations From the ACICS Key Operating Statistics Report for 2009

April 9th, 2010

Earlier this week, the Accrediting Council for Independent Colleges and Schools (ACICS) finally released its Key Operating Statistics report for FY09 (6/30/09).  You can find the full report here.  The report includes a comprehensive...

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WPO 10-K Highlights – Program Review at Kaplan University, Kaplan Resolves 25% CDR Issue at a Few Schools

March 12th, 2010

This report was originally published on 3/4/10.We recently discussed WPO (446.15 ↓1.20%)’s 4Q09 results, which have prompted a 5.8% rally in shares.  In our review, we highlighted how we were eagerly...

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WPO 4Q09: Margin Improvement at Newspaper and Broadcasting Divisions Overshadow Sequential Decline in Margins at Kaplan...

March 12th, 2010

WPO reported 4Q09 results this morning. You can read all of the details here.  The company’s revenue and EPS of $1.238 billion and $8.71 beat the lone set of analysts estimates out there of $1.16...

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Chart of the Week: Do Your Remember When APOL Was Known For Enrolling High Quality Working Adults?

March 12th, 2010

This report was originally published on 2/21/10.Our entry for chart of the week is sure to send a painful reminder to shareholders of APOL(63.11 ↓0.52%) about Friday’s sell-off.  APOL provided initial guidance for...

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ESI 10-K Highlights, the “More You Learn, the More You Earn” Student Covenant Continues to Slip Away While Cohort...

March 12th, 2010

This report was originally published on 2/21/10.ESI released its annual 10-K filing on Friday. We wanted to provide you with a few key observations and revisit some of the original tenets of our...

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COCO Continues to Struggle With High Cohort Default Rates – “Self Regulation” Is Not Only Likely, It’s Necessary

March 12th, 2010

This report was originally published on 2/9/10.In an 8-K filing this morning, COCO (17.72 ↑1.72%) disclosed its draft 2-year cohort default rate (CDR) data for FY08, which was released to...

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Quick Comments on COCO’s 2Q10 Results: Higher Retention Sparks Revenue Upside, Starts Fall Short, EPS Beat Driven by...

March 12th, 2010

This report was originally published on 2/2/10.COCO reported 1Q10 results this morning.  You can read the full press releasehere. Overall the company delivered upside to consensus on both the top...

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PAA Research For-Profit Education Survey Suggests Enrollment Growth for the Winter Term Remained Robust, Some Slowdown...

March 12th, 2010

This report was originally published on 1/26/10.We recently conducted a survey of privately-held for-profit postsecondary education institutions.  Our goal was to gain a better understanding of...

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ESI Reports a Solid Quarter, New “Private Student Loan Program” Optically Looks Good, Economically “Kicks the Can...

March 12th, 2010

This report was originally published on 1/21/10.ESI reported 4Q09 results this morning. You can read the full press releasehere. Overall we would characterize the results as a solid beat relative to...

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ESI 4Q09 Preview: The Last Days of Operating Margin Leverage?

March 12th, 2010

This report was originally published on 1/19/10.ESI will report 4Q09 results on Thursday, before the market opens.  Here are the issues which we expect to be at the forefront of investor concerns heading into and subsequent to the company’s earnings...

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The Dept. of Education Fires A Shot Across the Bow of the Higher Learning Commission (HLC)

March 11th, 2010

This report was published on 12/17/09.The education stocks are trading off today following the release of a memorandum from the Department of Education’s Office of Inspector General (OIG).   You can find the memorandumhere. ...

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Unofficial FY07 3-Year Cohort Default Rates Come In-line With Expectations, Now Comes the Hard Part for COCO and WPO

March 11th, 2010

This report was originally published on 12/14/09.The Department of Education released unofficial 3-year cohort default rate data this morning.  You can find the DOE’s press release here, which also...

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Preparing for the Release of Unofficial 3-Year Cohort Default Rate Data – Follow the Script, At the Very Least...

March 11th, 2010

This report was originally published on 12/9/09.We have expressed our concerns in the past about the impact the transition from a 2-year to a 3-year cohort default rate calculation could have on the...

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Details of Department of Education Negotiated Rulemaking Proposals Leak Out – Incentive Comp and Program...

March 11th, 2010

This report was originally published 12/1/09.The U.S. Department of Education (DOE) distributed its first round of proposals to the negotiated rulemaking panel on Monday on Program Integrity Issues...

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