Anchor ads are not supported on this page.

4S Ranch Allied Gardens Alpine Baja Balboa Park Bankers Hill Barrio Logan Bay Ho Bay Park Black Mountain Ranch Blossom Valley Bonita Bonsall Borrego Springs Boulevard Campo Cardiff-by-the-Sea Carlsbad Carmel Mountain Carmel Valley Chollas View Chula Vista City College City Heights Clairemont College Area Coronado CSU San Marcos Cuyamaca College Del Cerro Del Mar Descanso Downtown San Diego Eastlake East Village El Cajon Emerald Hills Encanto Encinitas Escondido Fallbrook Fletcher Hills Golden Hill Grant Hill Grantville Grossmont College Guatay Harbor Island Hillcrest Imperial Beach Imperial Valley Jacumba Jamacha-Lomita Jamul Julian Kearny Mesa Kensington La Jolla Lakeside La Mesa Lemon Grove Leucadia Liberty Station Lincoln Acres Lincoln Park Linda Vista Little Italy Logan Heights Mesa College Midway District MiraCosta College Miramar Miramar College Mira Mesa Mission Beach Mission Hills Mission Valley Mountain View Mount Hope Mount Laguna National City Nestor Normal Heights North Park Oak Park Ocean Beach Oceanside Old Town Otay Mesa Pacific Beach Pala Palomar College Palomar Mountain Paradise Hills Pauma Valley Pine Valley Point Loma Point Loma Nazarene Potrero Poway Rainbow Ramona Rancho Bernardo Rancho Penasquitos Rancho San Diego Rancho Santa Fe Rolando San Carlos San Marcos San Onofre Santa Ysabel Santee San Ysidro Scripps Ranch SDSU Serra Mesa Shelltown Shelter Island Sherman Heights Skyline Solana Beach Sorrento Valley Southcrest South Park Southwestern College Spring Valley Stockton Talmadge Temecula Tierrasanta Tijuana UCSD University City University Heights USD Valencia Park Valley Center Vista Warner Springs

Bridgepoint: Huge Profits, but Possibly No Future

San Diego's Bridgepoint Education, the for-profit university that Sen. Tom Harkin of Iowa bluntly calls "a scam," is amazingly profitable. It sports a 25.30% return on assets and a 44.7% return on equity, to go with a profit margin of almost 16% and an operating margin of 26.28%. What's more, its balance sheet is well nigh pure. But as of yesterday (July 13) its price-earnings multiple was an astoundingly low 3.64 -- astoundingly low, that is, for a technician who only looks at numbers and ratios. For an analyst who looks at fundamentals, the stock may still be overpriced because the company's future is in doubt.

The stock lost more than half its value this from Monday to Friday. One accrediting agency slammed its educational quality, and then yesterday the agency that now accredits it wants to take another look. If the second accrediting organization thumbs down Ashford University, which is most of Bridgepoint, the company is out of business, because its students can't get federal grants and loans if the university is not accredited. Bridgepoint gets almost all it revenue from the government.

There is another factor. Insiders have been dumping the stock. On July 25 of last year, Wall Street's Warburg Pincus, which owned two-thirds of the stock, said it wanted to sell. Bridgepoint stock plunged 11.61% that day. As of the end of March of this year, Warburg Pincus still had its position.

On Feb. 2 of last year, I wrote a column saying that while I thought Bridgepoint was a smelly company, its stock might go up. The reason was that more than 60% of its stock was short, meaning most speculators were betting it would go down. Any good news would force the shorts to cover (buy the stock), thus running it up. That happened. The stock went up in a short squeeze.

But on May 9 of this year, I wrote that Bridgepoint stock might be headed down. (It was receding already, but I didn't think it would plunge this far this fast.) This time, there were just too many negatives out there, I believed, and even the fat profits and a high short position might not be enough to hold the stock up. And there are negatives by the bushel: the Department of Education is trying to discipline the company; the accreditors are now realizing that the educational quality is extremely low; New York, North Carolina and Iowa are investigating the company for non-compliance with consumer laws. In short, too many people are aware that this company and many other for-profit companies are basically boiler rooms.

Monday will be interesting. Bridgepoint is technically ridiculously cheap, based on PAST performance. But investors and speculators alike will be aware that this company's future is very, very cloudy.

Here's something you might be interested in.
Submit a free classified
or view all

Previous article

Summit Fellowship wants to be a home of belonging

Unitarian Universalism allows you to be exactly who you are in the moment
Next Article

Croome Brothers Trio, Jack Tempchin, Ricky, Swami & the Bed Of Nails, Kahlil Nash

Acoustic and electric in Del Mar, La Jolla, Little Italy, and City Heights

San Diego's Bridgepoint Education, the for-profit university that Sen. Tom Harkin of Iowa bluntly calls "a scam," is amazingly profitable. It sports a 25.30% return on assets and a 44.7% return on equity, to go with a profit margin of almost 16% and an operating margin of 26.28%. What's more, its balance sheet is well nigh pure. But as of yesterday (July 13) its price-earnings multiple was an astoundingly low 3.64 -- astoundingly low, that is, for a technician who only looks at numbers and ratios. For an analyst who looks at fundamentals, the stock may still be overpriced because the company's future is in doubt.

The stock lost more than half its value this from Monday to Friday. One accrediting agency slammed its educational quality, and then yesterday the agency that now accredits it wants to take another look. If the second accrediting organization thumbs down Ashford University, which is most of Bridgepoint, the company is out of business, because its students can't get federal grants and loans if the university is not accredited. Bridgepoint gets almost all it revenue from the government.

There is another factor. Insiders have been dumping the stock. On July 25 of last year, Wall Street's Warburg Pincus, which owned two-thirds of the stock, said it wanted to sell. Bridgepoint stock plunged 11.61% that day. As of the end of March of this year, Warburg Pincus still had its position.

On Feb. 2 of last year, I wrote a column saying that while I thought Bridgepoint was a smelly company, its stock might go up. The reason was that more than 60% of its stock was short, meaning most speculators were betting it would go down. Any good news would force the shorts to cover (buy the stock), thus running it up. That happened. The stock went up in a short squeeze.

But on May 9 of this year, I wrote that Bridgepoint stock might be headed down. (It was receding already, but I didn't think it would plunge this far this fast.) This time, there were just too many negatives out there, I believed, and even the fat profits and a high short position might not be enough to hold the stock up. And there are negatives by the bushel: the Department of Education is trying to discipline the company; the accreditors are now realizing that the educational quality is extremely low; New York, North Carolina and Iowa are investigating the company for non-compliance with consumer laws. In short, too many people are aware that this company and many other for-profit companies are basically boiler rooms.

Monday will be interesting. Bridgepoint is technically ridiculously cheap, based on PAST performance. But investors and speculators alike will be aware that this company's future is very, very cloudy.

Sponsored
Here's something you might be interested in.
Submit a free classified
or view all
Ask a Hipster — Advice you didn't know you needed Big Screen — Movie commentary Blurt — Music's inside track Booze News — San Diego spirits Classical Music — Immortal beauty Classifieds — Free and easy Cover Stories — Front-page features Drinks All Around — Bartenders' drink recipes Excerpts — Literary and spiritual excerpts Feast! — Food & drink reviews Feature Stories — Local news & stories Fishing Report — What’s getting hooked from ship and shore From the Archives — Spotlight on the past Golden Dreams — Talk of the town The Gonzo Report — Making the musical scene, or at least reporting from it Letters — Our inbox Movies@Home — Local movie buffs share favorites Movie Reviews — Our critics' picks and pans Musician Interviews — Up close with local artists Neighborhood News from Stringers — Hyperlocal news News Ticker — News & politics Obermeyer — San Diego politics illustrated Outdoors — Weekly changes in flora and fauna Overheard in San Diego — Eavesdropping illustrated Poetry — The old and the new Reader Travel — Travel section built by travelers Reading — The hunt for intellectuals Roam-O-Rama — SoCal's best hiking/biking trails San Diego Beer — Inside San Diego suds SD on the QT — Almost factual news Sheep and Goats — Places of worship Special Issues — The best of Street Style — San Diego streets have style Surf Diego — Real stories from those braving the waves Theater — On stage in San Diego this week Tin Fork — Silver spoon alternative Under the Radar — Matt Potter's undercover work Unforgettable — Long-ago San Diego Unreal Estate — San Diego's priciest pads Your Week — Daily event picks
4S Ranch Allied Gardens Alpine Baja Balboa Park Bankers Hill Barrio Logan Bay Ho Bay Park Black Mountain Ranch Blossom Valley Bonita Bonsall Borrego Springs Boulevard Campo Cardiff-by-the-Sea Carlsbad Carmel Mountain Carmel Valley Chollas View Chula Vista City College City Heights Clairemont College Area Coronado CSU San Marcos Cuyamaca College Del Cerro Del Mar Descanso Downtown San Diego Eastlake East Village El Cajon Emerald Hills Encanto Encinitas Escondido Fallbrook Fletcher Hills Golden Hill Grant Hill Grantville Grossmont College Guatay Harbor Island Hillcrest Imperial Beach Imperial Valley Jacumba Jamacha-Lomita Jamul Julian Kearny Mesa Kensington La Jolla Lakeside La Mesa Lemon Grove Leucadia Liberty Station Lincoln Acres Lincoln Park Linda Vista Little Italy Logan Heights Mesa College Midway District MiraCosta College Miramar Miramar College Mira Mesa Mission Beach Mission Hills Mission Valley Mountain View Mount Hope Mount Laguna National City Nestor Normal Heights North Park Oak Park Ocean Beach Oceanside Old Town Otay Mesa Pacific Beach Pala Palomar College Palomar Mountain Paradise Hills Pauma Valley Pine Valley Point Loma Point Loma Nazarene Potrero Poway Rainbow Ramona Rancho Bernardo Rancho Penasquitos Rancho San Diego Rancho Santa Fe Rolando San Carlos San Marcos San Onofre Santa Ysabel Santee San Ysidro Scripps Ranch SDSU Serra Mesa Shelltown Shelter Island Sherman Heights Skyline Solana Beach Sorrento Valley Southcrest South Park Southwestern College Spring Valley Stockton Talmadge Temecula Tierrasanta Tijuana UCSD University City University Heights USD Valencia Park Valley Center Vista Warner Springs
Close

Anchor ads are not supported on this page.