Comments for ForProfit EDU http://www.forprofitedu.com Wed, 11 Jan 2012 20:01:54 +0000 hourly 1 http://wordpress.org/?v=3.3.1 Comment on A call with an industry short fund by Rob MacArthur http://www.forprofitedu.com/2011/08/a-call-with-an-industry-short-fund/comment-page-1/#comment-1139 Rob MacArthur Wed, 11 Jan 2012 20:01:54 +0000 http://www.forprofitedu.com/?p=1388#comment-1139 No such luck in 2011. Many hedge funds shorted Apollo up around 80 or 90 in 2009, ITT over 100, Strayer at 250 etc. It was almost a no-brainer when Bob Shireman was brought on board at DOE. Thankfully, revoking the protections from the Safe Harbors was the first order of business--bye-bye incentive comp. However, when Apollo hit 35 ish at the end of 2010, most short sellers covered (bought back) their borrowed shares booking profits. There were several opportunities in between to cover and re-short, in that 2 year period. With the stocks down so much even with new enrollments down 45% for Apollo the bottom feeders were willing to buy in 2011, at great risk. Add some aggressive share repurchases and a little window-dressing at the end of the year and Apollo had a 50% return in 2011. So where are the shorts going in 2011? Higher Learning Commission will be doing its re-accreditation of UOP this year. Syvlia Manning in principle seems tougher than Steve Crowe; however, the systemic corruption is so high, I am not advising clients to short on the possibility that UOP goes through something similar to Career Education in 2004 when SACS suspended their accreditation. The 2 OIG reports to HLC were shots across the bow, but I doubt DOE will have much influence on HLC. Cynicism is a prerequisite of the short side of the market. UOP has really shot themselves in the foot. They blame the bad press for their down total enrollments. From what I hear the students themselves are so negative that they are talking to other students out of staying enrolled. They have a terrible PR problem no matter how many hundreds of millions they spend on advertising to counter it. UOP is dying on the vine from within. Morale at the level of the enrollment counselors, financial aid counselors, and academic advisors is low. There are few barriers to entry for the industry in general and UOP will need to make significant investments in quality of education in the area of teacher pay, qualified teachers, etc. I suspect there will be more pressure on the industry from Congress, but that's not a good enough reason to be short either. None of this is good for earnings. UOP's excuse that total enrollments will be down for several quarters because of higher graduation rates is not credible. Their graduation rates are too low to begin with to have any impact. So what's left? I question the integrity of the balance sheet. I don't believe the balance sheet. What % of enrollments are receiving Pell? What is the drop-out rate for Pell Recipients and are Pell funds being disubursed on a timely basis? The industry incorrectly assumes that compliance with Title IV regulation makes them compliant with SEC regulations regarding revenue recognition and proper disclosures. Its right in the 2009 program review--UOP has been a repeat offender. It is in the 2003 program review, the Dec 05 and Jan 06 OIG audits through the 2009 program reivew. What if the behaviors of making late and incorrect refund calculations, inccorect last dates of attendance etc have never changed. DOE only took a sample. I am betting that it's systemwide and intentional to skim funds. The fines were nominal the revenue recognition was not. Eventually Uncle Sam is going to come looking for that money, the Hansen memo will be revoked and the industry will be forced to return money to the feds. The whole industry could go zero following Computer Learning Centers model. That's just a theory of course, but one that people that have been around awhile seem to understand. John and Peter better hurry up and sell their stock, with 14 million shares, it is going to hurt when the stock gets killed-again. God forbid the SEC investigation goes against them. I recommended clients sell short Apollo up around $54, but I have no specific reason or event to justify it other than the stock has rallied back from $35 in 2011. From the Department of Education OIG audit (public document): “UOP systemically monitored students' status and progress, readjusting the beginning and ending dates of payment periods to accommodate leaves of absence, ‘no shows’, failed courses or repeated courses. Referring to this process as ‘remapping’, UOP readjusted payment period end dates and re-scheduled second disbursements to assure that students actually completed their first payment periods and were eligible for a second disbursement.” What if that behavior never changed? The company may claim that this is not being done anymore. It is within in the rights of any free thinking institutional investor to not believe managment of any public company and to invest accordingly And if they turn out to be wrong they lose a lot of money. That's how the stock market works. It is your brain against my brain. That's what the short side is about--not believing management when they lie or when they are in a state of denial about an issue. No such luck in 2011. Many hedge funds shorted Apollo up around 80 or 90 in 2009, ITT over 100, Strayer at 250 etc. It was almost a no-brainer when Bob Shireman was brought on board at DOE. Thankfully, revoking the protections from the Safe Harbors was the first order of business–bye-bye incentive comp. However, when Apollo hit 35 ish at the end of 2010, most short sellers covered (bought back) their borrowed shares booking profits. There were several opportunities in between to cover and re-short, in that 2 year period. With the stocks down so much even with new enrollments down 45% for Apollo the bottom feeders were willing to buy in 2011, at great risk. Add some aggressive share repurchases and a little window-dressing at the end of the year and Apollo had a 50% return in 2011. So where are the shorts going in 2011? Higher Learning Commission will be doing its re-accreditation of UOP this year. Syvlia Manning in principle seems tougher than Steve Crowe; however, the systemic corruption is so high, I am not advising clients to short on the possibility that UOP goes through something similar to Career Education in 2004 when SACS suspended their accreditation. The 2 OIG reports to HLC were shots across the bow, but I doubt DOE will have much influence on HLC. Cynicism is a prerequisite of the short side of the market. UOP has really shot themselves in the foot. They blame the bad press for their down total enrollments. From what I hear the students themselves are so negative that they are talking to other students out of staying enrolled. They have a terrible PR problem no matter how many hundreds of millions they spend on advertising to counter it. UOP is dying on the vine from within. Morale at the level of the enrollment counselors, financial aid counselors, and academic advisors is low. There are few barriers to entry for the industry in general and UOP will need to make significant investments in quality of education in the area of teacher pay, qualified teachers, etc. I suspect there will be more pressure on the industry from Congress, but that’s not a good enough reason to be short either. None of this is good for earnings. UOP’s excuse that total enrollments will be down for several quarters because of higher graduation rates is not credible. Their graduation rates are too low to begin with to have any impact.

So what’s left? I question the integrity of the balance sheet. I don’t believe the balance sheet. What % of enrollments are receiving Pell? What is the drop-out rate for Pell Recipients and are Pell funds being disubursed on a timely basis? The industry incorrectly assumes that compliance with Title IV regulation makes them compliant with SEC regulations regarding revenue recognition and proper disclosures. Its right in the 2009 program review–UOP has been a repeat offender. It is in the 2003 program review, the Dec 05 and Jan 06 OIG audits through the 2009 program reivew. What if the behaviors of making late and incorrect refund calculations, inccorect last dates of attendance etc have never changed. DOE only took a sample. I am betting that it’s systemwide and intentional to skim funds. The fines were nominal the revenue recognition was not. Eventually Uncle Sam is going to come looking for that money, the Hansen memo will be revoked and the industry will be forced to return money to the feds. The whole industry could go zero following Computer Learning Centers model. That’s just a theory of course, but one that people that have been around awhile seem to understand. John and Peter better hurry up and sell their stock, with 14 million shares, it is going to hurt when the stock gets killed-again. God forbid the SEC investigation goes against them. I recommended clients sell short Apollo up around $54, but I have no specific reason or event to justify it other than the stock has rallied back from $35 in 2011.

From the Department of Education OIG audit (public document): “UOP systemically monitored students’ status and progress, readjusting the beginning and ending dates of payment periods to accommodate leaves of absence, ‘no shows’, failed courses or repeated courses. Referring to this process as ‘remapping’, UOP readjusted payment period end dates and re-scheduled second disbursements to assure that students actually completed their first payment periods and were eligible for a second disbursement.” What if that behavior never changed? The company may claim that this is not being done anymore. It is within in the rights of any free thinking institutional investor to not believe managment of any public company and to invest accordingly And if they turn out to be wrong they lose a lot of money. That’s how the stock market works. It is your brain against my brain. That’s what the short side is about–not believing management when they lie or when they are in a state of denial about an issue.

]]> Comment on Private Equity Investing in Education Companies Conference by leelehmen http://www.forprofitedu.com/2011/06/private-equity-investing-in-education-companies-conference/comment-page-1/#comment-1118 leelehmen Thu, 03 Nov 2011 11:37:55 +0000 http://www.forprofitedu.com/?p=1329#comment-1118 I am looking forward to see a healthy debate on online education as well during the conference. Concerns regarding benefits and limitation of online education are rising and some one should step forward and wash away the misgivings of the prospective students. Potential that online education promises is terrific and requires the removal of hurdles as soon as possible. I am looking forward to see a healthy debate on online education as well during the conference. Concerns regarding benefits and limitation of online education are rising and some one should step forward and wash away the misgivings of the prospective students. Potential that online education promises is terrific and requires the removal of hurdles as soon as possible.

]]> Comment on Many lead providers note lack of Demand for leads by large schools by Nexus Teleservices http://www.forprofitedu.com/2011/09/many-lead-providers-note-lack-of-demand-for-leads-by-large-schools/comment-page-1/#comment-1116 Nexus Teleservices Tue, 25 Oct 2011 21:26:11 +0000 http://www.forprofitedu.com/?p=1398#comment-1116 Agree. We have been in the EDU lead generation business for several years and we have found that 2011 demand is less than previous years. This is perhaps a combination of the US economy, over supply and reduced demand. Agree. We have been in the EDU lead generation business for several years and we have found that 2011 demand is less than previous years. This is perhaps a combination of the US economy, over supply and reduced demand.

]]> Comment on Many lead providers note lack of Demand for leads by large schools by bobdonna http://www.forprofitedu.com/2011/09/many-lead-providers-note-lack-of-demand-for-leads-by-large-schools/comment-page-1/#comment-1105 bobdonna Mon, 19 Sep 2011 16:23:35 +0000 http://www.forprofitedu.com/?p=1398#comment-1105 I agree with what you have seen. We have experienced lackluster demand by our clients for any additional lead volume or new lead sources. It feel like they are simply treding water and waiting till they are ready to turn the volume back on. There is plenty of quality edu lead volume sitting on the sidelines thus, if the schools want to they can begin increasing enrolmments. I agree with what you have seen. We have experienced lackluster demand by our clients for any additional lead volume or new lead sources. It feel like they are simply treding water and waiting till they are ready to turn the volume back on. There is plenty of quality edu lead volume sitting on the sidelines thus, if the schools want to they can begin increasing enrolmments.

]]> Comment on A call with an industry short fund by bobdonna http://www.forprofitedu.com/2011/08/a-call-with-an-industry-short-fund/comment-page-1/#comment-1104 bobdonna Mon, 19 Sep 2011 16:21:37 +0000 http://www.forprofitedu.com/?p=1388#comment-1104 These shorts have done very well for themselves. There is a lot to be said for uncertainty. I look forward to the day the shorts loose their shirts These shorts have done very well for themselves. There is a lot to be said for uncertainty. I look forward to the day the shorts loose their shirts

]]> Comment on ESM Becomes Charter Member of the Education Marketing Council by Highlands Ranch http://www.forprofitedu.com/2011/01/esm-becomes-charter-member-of-the-education-marketing-council/comment-page-1/#comment-1103 Highlands Ranch Wed, 31 Aug 2011 02:15:37 +0000 http://www.forprofitedu.com/?p=759#comment-1103 Great post. The information you've shared will be of great help for students in the country. With this kind of collaboration, it's a guarantee that students will be lead to a brighter future. Great post. The information you’ve shared will be of great help for students in the country. With this kind of collaboration, it’s a guarantee that students will be lead to a brighter future.

]]> Comment on Debt to Degree a new report correlating debt & degree completion by EDU Guy http://www.forprofitedu.com/2011/08/debt-to-degree-a-new-report-correlating-debt-degree-completion/comment-page-1/#comment-1097 EDU Guy Fri, 05 Aug 2011 15:07:15 +0000 http://www.forprofitedu.com/?p=1375#comment-1097 the link is in the post and you can also copy and paste the following url: http://www.educationsector.org/sites/default/files/publications/Debt%20to%20Degree%20CYCT_RELEASE.pdf the link is in the post and you can also copy and paste the following url: http://www.educationsector.org/sites/default/files/publications/Debt%20to%20Degree%20CYCT_RELEASE.pdf

]]> Comment on Debt to Degree a new report correlating debt & degree completion by Bob http://www.forprofitedu.com/2011/08/debt-to-degree-a-new-report-correlating-debt-degree-completion/comment-page-1/#comment-1096 Bob Fri, 05 Aug 2011 14:45:09 +0000 http://www.forprofitedu.com/?p=1375#comment-1096 I did not see a link to the report--do you know where I could find it? I did not see a link to the report–do you know where I could find it?

]]> Comment on Case study “all out WAR” in Media Coverage of For-Profit Higher Education by Nicole Kardell http://www.forprofitedu.com/2011/07/case-study-all-out-war-in-media-coverage-of-for-profit-higher-education/comment-page-1/#comment-1094 Nicole Kardell Tue, 02 Aug 2011 14:41:29 +0000 http://www.forprofitedu.com/?p=1367#comment-1094 Some, including in the media, presume financial success must be tied to some underlying "badness" (for lack of a better word). And making money to provide education -- that people want, or else they wouldn't seek it out -- is wrong. Since they can't wrap their heads around a win-win situation, they overlook the fact that people may not have education opportunities elsewhere and the for-profit sector is actually providing a desired service with a social benefit. Some, including in the media, presume financial success must be tied to some underlying “badness” (for lack of a better word). And making money to provide education — that people want, or else they wouldn’t seek it out — is wrong. Since they can’t wrap their heads around a win-win situation, they overlook the fact that people may not have education opportunities elsewhere and the for-profit sector is actually providing a desired service with a social benefit.

]]> Comment on APSCU file a lawsuit against the United States Department of Education regarding its gainful employment regulations by Dylan http://www.forprofitedu.com/2011/07/apscu-file-a-lawsuit-against-the-united-states-department-of-education-regarding-its-gainful-employment-regulations/comment-page-1/#comment-1087 Dylan Thu, 21 Jul 2011 15:52:37 +0000 http://www.forprofitedu.com/?p=1357#comment-1087 This is why I am a member of this association, if you are in the industry you should join to help support the future of the industry This is why I am a member of this association, if you are in the industry you should join to help support the future of the industry

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