National Western Life: An Asymmetric Risk-Reward Opportunity [View article]
Michael, I enjoy your approach to insurance companies. I'm relatively new to investing with about a year of research and individual investing under my belt. I've just been beginning to develop an understanding of financial services and your articles are certainly aiding that process.
You mention that the high ratio of liabilities to equity is conservative given the risk of interest rates increasing. And you use the phrase "letting its books run." If you explained these concepts I'd greatly appreciate it.
The Washington Post Company Is An Ideal Buy And Hold [View article]
Thanks, Imenwe. I did note that most of Kaplan's products are digital already. I mean that seems like an industry problem more than a company-specific issue, so everyone is being hurt by it. I think even with the pains associated with producing digital content, the company has to continue to make the technological shift. Education is fast moving in the cheap, mass-available, innovative, digital direction. Look up MOOCs if you haven't heard of them. If Kaplan doesn't get on board the innovative train, it will be left in the dust. I've seen several for-profits trying to commit to campus education and it just won't continue to work, the shift will wipe companies like that out.
Education Management Corp: Bankrupt In 5 Years Or Less And Overvalued Now [View article]
Thanks Onepaw, I've seen your comments before it seems like you have a lot of inside knowledge. Do you work for a for-profit? What can you tell us about the future of MOOCs? When do you see education companies thriving again?
Aflac: Insure Your Portfolio With Value [View article]
Great article. I actually have been working as an agent at Aflac this summer and I can tell you that this company is here to stay and thrive. The brand is so much more powerful than anyone else in insurance and the company has a really good reputation. Me and another agent were actually able to get an appointment to solicit insurance in a Church. I don't think any other insurance company could pull that off but Aflac can because people trust the company. Japan has had socialized insurance for decades now and Aflac has thrived in that environment by 'filling in the gaps'. As Obamacare kicks in and insurance and medicine in America become more and more regulated and socialized, its hard to not see Aflac coming out on top.
Education Management Corp: Bankrupt In 5 Years Or Less And Overvalued Now [View article]
You may have a point but I don't thing $29 million in FCF is sustainable. I assume in my article that FCF will increase considerably but that is yet to be seen. You also must remember that the cost of servicing its debt will substantially increase in just a few years.
I probably should have mentioned your points in my article but my overall opinion that the shares are overvalued and the company will eventually go under remains unchanged.
Education Management Corp: Bankrupt In 5 Years Or Less And Overvalued Now [View article]
You know I considered this when writing the article but I found that the company just refinanced in Q3 for a cost of $5.2 million so I don't know when this becomes a viable option again if the debt has already been extended. They might be able to do it again in the future but the charges will add up, making it even more difficult to pay everything off.
It's just not a good situation to get into, especially for the price. The price doesn't reflect a company on the verge of bankruptcy.
Bridgepoint CEO Clark: 'Stay Classy, San Diego!' [View article]
To be quite honest the 75% is just my estimate based on all the information I've read. It's hard to quantify this sort of thing but I tried to give readers a ballpark number.
I agree that the regulation fiasco is doing more harm then good. It'll be interesting how it plays out.
Bridgepoint CEO Clark: 'Stay Classy, San Diego!' [View article]
Well said, I agree with you.
The accreditors respect each other's opinions. If WASC denies Ashford, the university will have to transform itself in some magical way in a matter of a few months. I think they probably get WASC but if not, they're quite seriously screwed.
Great article Scott. I always thought Buffett strictly used DCF, it's nice to know he's assigning growth-based multiples like I've been doing.
It makes sense to add cash and investments to intrinsic value considering the buyer inherits the cash but why not make adjustments for debt. When you take ownership of a company, you inherit its cash but also its debt and so it seems that would be the more accurate method.
When Buffett and 3G Capital bought Heinz, the cost was widely publicized as $29 billion not $23 even though they only paid $23. Everyone made adjustments for the debt that Buffett and 3G inherited. If we do this with the purchases of entire companies, why should valuing a stock be any different?
the 21% decline in enrollments in Q1 YOY was compared to 95000 students at the end of Q1 2012. Q2 2012 enrollments were only 77k. That's why the total student enrollment decline will go from 21% to 5.3% because of the change last year. i explained that in the article. YOY comparisons can be very faulty. Management said they were confident they could hold on for 12 months at minimum. Do you think they'd risk legal liability saying something like that unless they were extremely confident in that number. In my article I claim a little more, 15 months, because of the strength of the balance sheet and the fact that CECO very likely gave a low ball number to protect itself.
I also mention in my article that the company currently has no debt and could likely secure some loaned money if need be. I don't think my claims are unreasonable.
As far as whether the company actually will earn a profit again, that's anyone's guess but I like the indicators I mentioned. Clock's ticking though
I think it is amazing that a virtually teacher-less class can offer college credit. Many services are offered through cloud for free already ex: email and so the cost of a MOOC could be ridiculously low and still have a nice value proposition due to the massive amount of contributed material from all over the world. They're already the cheapest way to get gen eds done but I think they could become substantially cheaper- like $30-40 per credit. This would solve the affordability issue big time
The Post-Secondary Education Market [View article]
Thank you Ron, great article. I will be writing an article of my own on MOOCs soon but I will focus specifically on Capella's SOPHIA subsidiary. I'll mention your article. Great info here
Bridgepoint CEO Clark: 'Stay Classy, San Diego!' [View article]
WP has had majority share for quite some time and has control of the board. I can't speak for WP but this company isn't catering to a retail investor who wouldn't care where corporate HQ is, so long as accreditation is secure
The Buyback Kings, Part 5: hhgregg - Buybacks And Growth Without Debt [View article]
I honestly haven't been in the stores, none near me but I don't think this company will die. Every year that same store sales decrease, the bar is set lower and lower. Also, the company is currently debt-free so it has quite a bit of time before bankruptcy becomes a real possibility. Even with the possible downside, I have no doubt that the stock was still very attractive at 7.25. Obviously it isn't now, but maybe we'll see that cheap price again.
The Buyback Kings Part 4: ITT Education Is Teaching The World How To Buy Back Stock [View article]
I made it clear in my article that I was disappointed the buybacks were at higher price levels. Obviously management wasn't expecting the decline but now the shares can be bought cheaper going forward- two sides to the story, I mentioned both.
As for earnings the company guided to the earnings numbers for this fiscal year that I used in my article. Analyst estimates for next year are lower but I am more optimistic because I see enrollments stabilizing sooner than most analysts based on the new student enrollments number. That's my opinion and I stated it in my article with reasons. I said "I figure" but the reasons are there.
I'm sure ESI is not the only for-profit education company in the world to enter RSAs and end up paying up because of it. That's what I meant the wording is a little weird though.
I don't see why its necessary to be disrespectful like that. You clearly have some bias against young people. I have no problem trying to clear things up or explain myself but really?
National Western Life: An Asymmetric Risk-Reward Opportunity [View article]
You mention that the high ratio of liabilities to equity is conservative given the risk of interest rates increasing. And you use the phrase "letting its books run." If you explained these concepts I'd greatly appreciate it.
The Washington Post Company Is An Ideal Buy And Hold [View article]
Education Management Corp: Bankrupt In 5 Years Or Less And Overvalued Now [View article]
Aflac: Insure Your Portfolio With Value [View article]
Education Management Corp: Bankrupt In 5 Years Or Less And Overvalued Now [View article]
I probably should have mentioned your points in my article but my overall opinion that the shares are overvalued and the company will eventually go under remains unchanged.
Education Management Corp: Bankrupt In 5 Years Or Less And Overvalued Now [View article]
It's just not a good situation to get into, especially for the price. The price doesn't reflect a company on the verge of bankruptcy.
Bridgepoint CEO Clark: 'Stay Classy, San Diego!' [View article]
I agree that the regulation fiasco is doing more harm then good. It'll be interesting how it plays out.
Bridgepoint CEO Clark: 'Stay Classy, San Diego!' [View article]
The accreditors respect each other's opinions. If WASC denies Ashford, the university will have to transform itself in some magical way in a matter of a few months. I think they probably get WASC but if not, they're quite seriously screwed.
Warren Buffett's 2-Column Valuation Method [View article]
It makes sense to add cash and investments to intrinsic value considering the buyer inherits the cash but why not make adjustments for debt. When you take ownership of a company, you inherit its cash but also its debt and so it seems that would be the more accurate method.
When Buffett and 3G Capital bought Heinz, the cost was widely publicized as $29 billion not $23 even though they only paid $23. Everyone made adjustments for the debt that Buffett and 3G inherited. If we do this with the purchases of entire companies, why should valuing a stock be any different?
Will Career Education Survive? [View article]
I also mention in my article that the company currently has no debt and could likely secure some loaned money if need be. I don't think my claims are unreasonable.
As far as whether the company actually will earn a profit again, that's anyone's guess but I like the indicators I mentioned. Clock's ticking though
The Post-Secondary Education Market [View article]
I think it is amazing that a virtually teacher-less class can offer college credit. Many services are offered through cloud for free already ex: email and so the cost of a MOOC could be ridiculously low and still have a nice value proposition due to the massive amount of contributed material from all over the world. They're already the cheapest way to get gen eds done but I think they could become substantially cheaper- like $30-40 per credit. This would solve the affordability issue big time
The Post-Secondary Education Market [View article]
Bridgepoint CEO Clark: 'Stay Classy, San Diego!' [View article]
The Buyback Kings, Part 5: hhgregg - Buybacks And Growth Without Debt [View article]
The Buyback Kings Part 4: ITT Education Is Teaching The World How To Buy Back Stock [View article]
As for earnings the company guided to the earnings numbers for this fiscal year that I used in my article. Analyst estimates for next year are lower but I am more optimistic because I see enrollments stabilizing sooner than most analysts based on the new student enrollments number. That's my opinion and I stated it in my article with reasons. I said "I figure" but the reasons are there.
I'm sure ESI is not the only for-profit education company in the world to enter RSAs and end up paying up because of it. That's what I meant the wording is a little weird though.
I don't see why its necessary to be disrespectful like that. You clearly have some bias against young people. I have no problem trying to clear things up or explain myself but really?