David J. Waldron
Author, long only, value, long-term horizon

ITT Educational Services: Downward Spiral From High Tuition And Low Transparency

Executive summary:

  • Bullish to industry trends, ITT Educational Services is growing new student enrollments YOY
  • But the growth appears overly reliant on tuition discounting from a colossal scholarship program
  • Operational transparency is suspect
  • And a federal consumer protection agency thinks the company went too far with its private loan originations
  • Shorts seemingly covered in January, but will they return and profit?

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About halfway into writing this article about tuition costs and transparency issues at ITT Educational Services (NYSE:ESI) the Consumer Financial Protection Bureau (CFPB), on February 26, 2014, announced a lawsuit against the company for alleged predatory lending within its private loan origination programs. The stock closed down 9% on the news.

The announcement was far from...

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