Why I'm Shorting DeVry 17 comments
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We said in January or February (can't remember when the adult education bubble was at its peak) that this was an overhyped sector. At the time we had a successful short of ITT Educational (ESI) even when the sector was in a bull run. Now as I scan the charts in the group, this sector is showing a lot of weakness - just a handful of names.
I've decided to pick one and went with DeVry (DV) as a short - it's been rejected at the 50 day moving average for the past 8 days so I like the risk / reward here. If it begins to break north of that level (currently $45) and then passes recent highs of $47 we'll reassess. I'll begin with a 3% stake around $42. Wish I had seen this chart Wednesday near $45. $39 looks like a good near term target to cover.
Disclosure: Short DeVry in fund and personal account
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This article has 17 comments:
1. Recovering economy -- this sector benefited tremendously from 2007, when unemployed people (who still had money) decided to go back to school instead of look for another job, thinking that the economy would have a "soft landing"; when they got their degrees, everything would be back to normal, and they can start great new careers. Obviously, the economy is not recovering, and these folks are quite disappointed at the job prospects. Thus, new student enrollment growth is down dramatically.
2. Lack of private student loans -- with the collapse of securitization and freeze of loan market, many students could not obtain loans for tuition, and were turning to credit cards and alternative lending (person-to-person lending), but these have also tightened quite a bit.
3. Cloud over deceptive marketing practices -- few of these firms have been investigated or been involved in class action lawsuits regarding marketing practices and questions regarding some of their certification programs.
As these are know issues, we'll see which is the real trigger that brings down these stocks. Clearly, valuation relative to S&P is very high.
On May 29 08:59 AM Market Speculator wrote:
> Education stocks had great earnings until Obama took office and is
> essentially taking their ability to make money away. Not a bad short
> idea.
US News and World Report just ran a story
"Which Colleges Leave Students With the Most Debt?"
which concludes
"Almost 30 percent of seniors at for-profit universities in 2008 owed at least $40,000 in college loans, an amount that could be excessive, according to a new analysis of the latest federal data by Mark Kantrowitz, publisher of Finaid.org and Fastweb.com. For comparison, only about 11 percent of seniors at private nonprofit colleges—many of which charge higher sticker prices than typical for-profits—graduate with excessive debt, Kantrowitz found. And excessive debt was a problem for only about 6 percent of seniors at public universities, which are typically comparatively lower priced. That means new graduates of for-profit schools are about five times as likely to have borrowed heavily as new graduates of public universities."
source: www.usnews.com/article...
My personal take is where is the money coming from for these companies? Unemployed people can only pay for so long. We'll see. A lot of this is technical in nature - the group is showing a consistent broken nature in the chart, until it changes its a nice intermediate risk /reward but in this market charts can change overnight.
On May 29 10:28 AM JPSmith wrote:
> I thought Obama was throwing money at higher education funding, which
> should allow this sector to get fat?
if the trade goes against you take the loss and move on. But know your risk reward lines going in. I actually shorted a bit more this morning and was hoping to short at $45 but did not get there. As I wrote, I wish I had seen it the day before because the entry point would of been a lot cleaner.
On May 29 11:57 AM gcvsport wrote:
> Looks like a bad move - up over 5% today !
Where do I cover? With a HUGE move down on HUGE volume or I cut my gains/loss with a close over the 50 DMA on HUGE volume or a close over the 200 DMA at ALL. If any of the three events happen, I will be out of all DV short
Disclosure: short DV and three other stocks; long a WHOPPING 57 stocks (most since early 2007).
top longs w/ TOTAL returns since purchase making money TODAY: KONG 84% ATSG 76% FIRE 48% SIGA 48% ASCA 41% PALM 34% CAST 33% WAVX 31% ADAT 27% ISTA 25% ARST 29%
SELLING FINAL DV SHORT FOR A 11% gain 22% on margin....Yeah that REALLLLLLLY FAILED. What are those big gains below....Failure??? Another angry Buffet fundamental douche-bag. Try COMBINING fundamentals with technicals. Then maybe you can be long and have gains like this IN UNDER TWO MONTHS:
top longs w/ TOTAL returns since purchase making money TODAY: CKEC 87% GRRF 88% FREE 52% KONG 84% ATSG 76% FIRE 48% SIGA 55% ASCA 51% PALM 37% CAST 33% WAVX 31% ADAT 27% ISTA 25% ARST 29% ...that is just SOME of our big winners at BigWaveTrading.com...just SOME...please review my past big winners, look at the charts, and TELL ME THAT TA DOES NOT WORK!!!!! I DARE YOU!!!!
Where are your gains like this????? Buffetmaster????
Where are your 50% to 90% gains in 2008 like me on POT, MOS, AAPL, RIMM, GOOG????? Have you EVER studied my past big winners on my website? Of course not. People like you find ONE stupid TIME your point works and people like me have to come up and destroy it for you. TraderMark shouldn't have to read stupid comments like yours. Pathetic.
The problem with this analysis on this post was that the writer is shorting DV TOO LATE...DV was a sHORT IN FEBRUARY NOT NOW.
On Jun 02 08:35 AM BuffettMaster wrote:
> Looks like technical analysis has failed today. Any thoughts on changing/abandoning
> your short?
Old people...grow up!!!! and learn what works. Cutting your losses and combining technicals/fundamentals ALWAYS WORKS!
Not yet, it got added to the S&P 500 - can't game that :) that's just unlucky. This news created a gap up, so it will either come back to fill that gap or exceed $47 where I'll take the loss. $47 was the recent highs as noted in the piece. Being added to the S&P 500 is a siren call for fast money traders to pile in for a short term bounce.
On the positive side its back over the 50 day moving average
A gap fill would take it slightly below - to be safe I'll probably cover some there and see how it acts
On Jun 02 08:35 AM BuffettMaster wrote:
> Looks like technical analysis has failed today. Any thoughts on changing/abandoning
> your short?
I did not bash tradermark. I bashed technical analysis. You took it personally and let loose your "cannons of war", LOL. You do need to see someone about that, as I know enough about human nature to know that you have likely lost your flower-imprinted hawaiian shirt in the market. 1000% gains are the claims of schysters and carnival barkers, and people with money do not casually engage in slander or libel. I also know that, in a couple of years, after you have lost the last of your family's money, you will cry out for a knowledgeable investor to train you in the basics of making (slash not losing) wealth.
I'll be declining your plea, thank you very much.
On Jun 02 08:20 PM Joshua Hayes wrote:
> Yeah Technical Analysis failed...wow OMG can you believe that TA
> isn't perfect!!!! I KNOW I am SHOCKED TOO!!!!!! Uh...it worked in
> Feb and still works. I am leaving with a profit. How many 1000% returns
> do you have under your belt the past 10 years? I have over 20. Do
> you think TA or FA found them...uhm..BOTH DID!!! Unbelievable, those
> that "only" focus on TA and then ONE time someone gets a call wrong
> and come in and bash tradermark. LOL. Pathetic squirlemaster. <br/>
>
> SELLING FINAL DV SHORT FOR A 11% gain 22% on margin....Yeah that
> REALLLLLLLY FAILED. What are those big gains below....Failure???
> Another angry Buffet fundamental douche-bag. Try COMBINING fundamentals
> with technicals. Then maybe you can be long and have gains like this
> IN UNDER TWO MONTHS:
>
> top longs w/ TOTAL returns since purchase making money TODAY: CKEC
> 87% GRRF 88% FREE 52% KONG 84% ATSG 76% FIRE 48% SIGA 55% ASCA 51%
> PALM 37% CAST 33% WAVX 31% ADAT 27% ISTA 25% ARST 29% ...that is
> just SOME of our big winners at BigWaveTrading.com...just SOME...please
> review my past big winners, look at the charts, and TELL ME THAT
> TA DOES NOT WORK!!!!! I DARE YOU!!!!
>
> Where are your gains like this????? Buffetmaster????
>
> Where are your 50% to 90% gains in 2008 like me on POT, MOS, AAPL,
> RIMM, GOOG????? Have you EVER studied my past big winners on my website?
> Of course not. People like you find ONE stupid TIME your point works
> and people like me have to come up and destroy it for you. TraderMark
> shouldn't have to read stupid comments like yours. Pathetic.
>
> The problem with this analysis on this post was that the writer is
> shorting DV TOO LATE...DV was a sHORT IN FEBRUARY NOT NOW.
both ,Fundamentals/ Technical Analysis together a more effective
model?. As Gartman said, find simple technical signals,
quote.from Gartman!...".Simplicity Breeds Elegance"