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Sen. Harkin Cites Bridgepoint's Shocking Dropout Rate
Visduh, regarding the details - I posted the link to our last discussion where these were discussed at length. To summarize, there are several rules that the Dept of Education has determined it will use to measure the performance of for-profit stocks. The ones that gathered the most attention include default rates and the yet-to-be settled "gainful employment", which compares student income to loan payments. In each case, Bridgepoint is at the top of its peer group and is one of only a few schools that can meet the 8% threshold (loan payments divided by income not to exceed 8%) that gainful employment describes. That gainful employment rule, which hasn't been finalized, may be weakened in the new year. Rep John Kline, who will head the House education committee has been vocal about opposing the rules: http://www.bloomberg.com/news/2010-12-10/for-prof… Yes, the stock is off its 52-week high, but I wouldn't have purchased it at $27.50. I was recommending it on these boards (see link in previous post) in the $13-$14 range. Hope some of you came to the same conclusion.— December 30, 2010 10:46 a.m.
Sen. Harkin Cites Bridgepoint's Shocking Dropout Rate
Missed you guys, especially you, Surfpuppy. I don't doubt there are problems with some of the student base, but I'll throw out the investor's POV again - BPI is so much better than the competition that they will rise above the ongoing wave of scrutiny. Harkin can throw barbs all he wants, but Bridgepoint still crushes all of the benchmarks that the Senate committee has laid out, which just means there will be other easier targets for the anticipated govt scapegoating. And Bridgepoint still offers a much better product than the competitors (based on grad and loan repayment rates), which will make the company a bigger success after all the govt oversight on the industry blows over (which you have to expect, unless you really think destroying all for profit educators will be a high priority when the new Congress takes hold). BPI's stock is up over 40% since we last looked at it 4 months ago - nice return for the investors, hope you bought in back then. Happy New Year. http://www.sandiegoreader.com/weblogs/financial-c… ^ For the archives— December 29, 2010 11:11 p.m.
Bridgepoint Brass Dumping Stock
Re: #73 "The default rate for "for profit" schools was 44% before the financial meltdown of 2008, it is probably double that today. You're in denial if you think for profit education is a winner with those stats." ----------- Appreciate the enthusiasm, but I never said the industry as a whole is a winner. It's going through a massive shakeup with additional legislation likely. Which means the companies best positioned will gain market share as others fall off. Per the Dept of Ed's release on Friday, Bridgepoint's Ashford students are among the few for-profits that repay at a rate above the 45% hurdle that the Dept considers to be acceptable. "Nonprofit" schools average in the mid 50%s. Ashford students are almost 20% active military (minimal default) and a larger portion of students are completing degrees, not beginning them with no understanding of financial aid. Sure, some still default, but you're kidding yourself if you think the govt is shutting down the entire sector. All of which contributes to the big rebound in share price today. Consider the low multiples paid for its earnings and there's a lot of upside. Surfpuppy, this one's for you: http://www.streetauthority.com/news/new-federal-r…— August 16, 2010 3:39 p.m.
Bridgepoint Brass Dumping Stock
Re: #64 I noted they were paid as a consultant – not trying to get anything by anyone. Former affiliation with Sallie Mae is one thing, assuming they made up all numbers for the 2,600 schools they worked with is another. Kraft was once a subsidiary of Philip Morris, but I don't question every statement it makes on health or nutrition. The sector has bad actors and misdeeds. However, assuming each for-profit education company is a Countrywide in disguise and about to collapse means you’ll miss out on the chance to buy the eventual government oversight survivors at historically cheap levels. For investments, I'm looking for the ones who will get a slap on the wrist and avoiding those most at risk of losing funding. That’ll be based on loan repayment, gainful employment levels and adhering to new legislation – so far Bridgepoint is among the best positioned. If you think all Title IV funding will be shut down, short them all. If you think the govt will punish the worst actors but keep for-profit education options open, I’d argue Bridgepoint’s stock is undervalued at current levels. Today’s price moves support that, though the volatility may remain through November at least.— August 16, 2010 11:50 a.m.
Bridgepoint Brass Dumping Stock
Re: #41 & 44: Regarding the 95% recommendation rate: It's actually 97% (of AU students who would recommend AU to others) and conducted by / in conjunction with Noel Levitz Adult Learner Inventory survey of student satisfaction. Per their site, Noel Levitz conducts independent surveys (but yes, paid as a consultant) and has worked with 2,600 institutions. The 97% is quoted in the December 2009 Wedbush "10th Annual California Dreamin’ Management Access Conference" slides. I have the pdf - happy to send to anyone interested - but don't have the link. If you have it, slide 7 has the numbers I quoted. Could this all have been made up by management? Depends on how low your opinion of management is...— August 16, 2010 10:31 a.m.
Bridgepoint Brass Dumping Stock
"You see them as potential students, I see them as potential victims." That's the big debate. I think there's value in the product: the education offered at Ashford. I'd love to hear why anyone would disagree. "I'm more interested in why you choose to back that horse that you back when the rest of the betting public seems to be betting on something entirely different." I think negative govt comments on the sector have scared investors off the good stocks along with the bad. The sector won't disappear - the good companies will take market share. I'd mentioned "good growth, no debt, $200 mil in cash AND...publicly stated it'd already comply with the proposed regulations on for-profit schools". Even with no growth, the multiple paid on Bridgepoint earnings would still be less than half of what the market pays for other companies, even in this market. That's the type of buying opportunity that screams at me. Unless enrollments drop by 50%, it's a great value. Ultimately, I like the product - it offers convenient education options for people that wouldn't have them otherwise. Profits at Bridgepoint only dry up if the students no longer believe the education is worthwhile.— August 14, 2010 1:49 a.m.
Bridgepoint Brass Dumping Stock
"Actually, I've intentionally bypassed college grads and hired non-college grads, it equates to what's appropriate for the job. But never mind that..." No one says a college degree makes one right for every job. We're on the same page - you want the most qualified person for the position. If you're looking for a delivery truck driver, you'll take the guy with the most experience, not the highest degree. I expect you'd agree that education is the most recognizable way to gain skills. That was my point - the 12.5% unemployed you quoted will look for the best ways to make themselves competitive. If they can't find a job, they'll look for an institution to offer the training needed to get them that job. Regarding investment success, as with any investment, I've made money on this sector by buying specific stocks when they're undervalued, not chasing them when everyone wants them, and not dumping them when the market is irrational. For those who believe the market is rational in its current valuation of Bridgepoint's stock, I'd love to hear why. Considering its product and the latest share price, I'd say there's a lot of upside for anyone with a 6-12 month investment horizon (enough to ride out the results of education "reform" and see the market recognize the good companies).— August 14, 2010 12:35 a.m.
Bridgepoint Brass Dumping Stock
Re: #26/Refried Gringo, I understand your point, but that's the nature of the education industry - it always picks up in a recession. Unemployed people will spend their time both looking for work and trying to make themselves more appealing to employers through additional training/degrees. It's the nature of capitalism - if you're hiring someone new, will you pay more attention to a high school grad or a college grad? You can ask the same question of someone with demonstrated skills - all else equal, the person with more completed education will be hired. So it's not so much a gamble on the merits of organized education as it is on the actual institution. 95%+ of Ashford grads recommend the program, which contributes to my faith in the program.— August 13, 2010 11:20 p.m.
Bridgepoint Brass Dumping Stock
Great points all - thanks. Re: #7/Visduh and Surfpuppy: Thanks for the smile :) but no, my last name won't be found in the 10-Ks. And if any execs spend their time on posting to our local paper, the investors are in a lot of trouble. I'm just an investor and SDR reader, but haven't posted in the past. Guess when my money is at stake, I take more of an interest - go figure. Re: #10 - agree on the federal funding but look at what the last 6 months of terrible coverage and Eisman testifying produced: proposed regs that Bridgepoint already meets across the board (unlike many programs at the larger companies). The govt will make an example of the company(ies), if any, with the most egregious violations. That of course assumes Harkin is still leading the committee and the investigations have any teeth after the November elections. Re: #21/Don - I hope so too! Bottom line, if the mgmt is as bad as you all assume, then we investors are in a lot of trouble. The historians know that the sector has survived oversight before. I'm a contrarian by nature and not only are the company financials solid, but the US economy is in very slow growth (many people still looking for additional education if they aren't working) and I just don't believe in the government's ability to level the for-profit education sector given the demand for (emphasis) quality education and the White House's push to maximize US college graduates.— August 13, 2010 10:48 p.m.
Bridgepoint Brass Dumping Stock
Mgmt selling shares a couple times a year is usually to diversify - especially if it's a small % of their holdings. Obviously govt heat on the for-profit industry and shaky markets have driven the stock down. This stock has one of the highest short interests out there though - that can drive price down significantly short term, especially one with a small market cap like Bridgepoint where shares are thinly traded. Visduh, are you one of the short sellers or a disgruntled ex-employee? Otherwise, why encourage everyone to sell at this price? A company with good growth, no debt, $200 mil in cash AND that publicly stated it'd already comply with the proposed regulations on for-profit schools isn't going bankrupt. The industry has some bad actors, but nobody in govt wants to see all online educators go under - there's too much demand / need. My disclosure: I own it and I'm holding it. It's selling at 5x forward earnings - I'll buy more if it gets any cheaper.— August 13, 2010 5:52 p.m.