Jeff Smith noon, Oct. 6
Bridgepoint's Major Shareholder to Sell; Stock Down
Shares of Bridgepoint Education are down 11.61% to $26.96 near the end of the July 25 trading day.
The company's largest shareholder, Wall Street's Warburg Pincus, has put its entire stake -- 65% of outstanding shares -- up for sale. Warburg was one of the founders of the company in 2004. The stock has tripled since Warburg took it public in April 2009.
Bridgepoint is extremely controversial because, as I have stated many times, it is a boiler room. High-pressures salespeople get people to sign up for online education even though the people aren't suited for any college. Senator Tom Harkin repeatedly points out that 84% of two-year students at Bridgepont's Ashford University drop out, and 63% of four-year students quit. (Ashford accounts for almost all of Bridgepoint's business.)
You, the taxpayer, get stuck for the bill for this. Officially, the company gets 85% of its business from federal Pell grants and federal loans. But if military recruits are counted, it's more like 100%.
I predicted some time ago that Bridgepoint stock would go up, even though I found everything about the company ethically repugnant. That was because the Department of Education was threatening to put restrictions on Bridgepoint and similar for-profit schools. More than half of Bridgepoint's shares were short. That meant that if the government watered down the proposal -- as it did -- the shorts would cover and the stock would roar up.
That happened. Bridgepoint stock roughly doubled, but then backed down today. Warburg's decision to take its considerable profits may have interesting implications.
More like this:
- Absence of rationality no argument — Oct. 21, 2014
- Bridgepoint: Huge Profits, but Possibly No Future — July 14, 2012
- Bridgepoint's Ashford Denied Accreditation; Stock Plummets — July 9, 2012
- Bridgepoint Most Shorted U.S. Stock — April 5, 2011
- Bridgepoint: Bad for Students, Good for Gamblers? — Feb. 2, 2011