Seeking Alpha

David Waldron

View as an RSS Feed
View David Waldron's Comments BY TICKER:
Latest  |  Highest rated
  • David Waldron Interviewed By Pittsburgh Business Times [View instapost]
    Thank you, Colin, for the shout out (much appreciated) and Papa of Four for the nice acknowledgement. Just saw this today (4/8/14) so I apologize for missing when originally posted.
    Apr 8 05:05 PM | Likes Like |Link to Comment
  • National American University Holdings: Total Return Sleeper On The Cheap [View article]
    Insider-Alerts, your call is certainly on the winning side here. Mine? Well not so good. But as a value investor, patience combined with your suggestion in unloading the RE division, could give this stock a needed bounce down the road. Therefore, now would be the time to act, or not. I will be on the earnings call. Thanks as always for your comments.
    Apr 3 10:20 AM | Likes Like |Link to Comment
  • ITT Educational Services: Downward Spiral From High Tuition And Low Transparency [View article]
    Jimmy Mason, thanks for reading and for your comment. Very good question. ESI has historically been one of the sector's favorite among growth and momentum investors. That could explain why it trades about 33% higher than its peers in relation to book value. But your observation of its precipitous drop from 10 P/B over five years is noteworthy. In deference to my article's thesis, that may be a result of momentum investors losing interest in recent times. The stock is down about 78% during that timeframe.
    Mar 27 07:37 PM | Likes Like |Link to Comment
  • ITT Educational Services: Downward Spiral From High Tuition And Low Transparency [View article]
    Highwater 888, thanks for reading and for your comment. Between the CFPB and gainful employment focus on the for-profits; and President Obama's pending ranking system of traditional higher education, one could argue that any tuition dependent college dispersing federal financial aid could theoretically be on the brink.
    Mar 19 02:36 PM | Likes Like |Link to Comment
  • Universal Technical Institute: Student Advocate In Need Of Shareholder Activist [View article]
    I encourage comments on this article before it embargoes in early April. Embellishment or disagreement on my thesis are both welcomed. Thanks for reading!
    Mar 19 02:27 PM | Likes Like |Link to Comment
  • Goldman upgrades Teva [View news story]
    The freeze up on TEVA was all about Copaxone coming off patent and how the company would deal with potential revenue dive. I took a page out of Howard Marks and bought it anyway simply because it was cheap. Up 25% while the analysts slept. (Long: TEVA)
    Mar 19 11:09 AM | 2 Likes Like |Link to Comment
  • National American University Holdings: Total Return Sleeper On The Cheap [View article]
    CT Programmer, thanks for the read and for your comments. And you are right, proposed Gainful Employment regulations were released today for public comments before going into effect in June of 2015. The for-profit lobby will once again challenge in court as you point out. The feds insist they have patched the area that resulted in the first federal judge strike down. We'll wait and see.

    Only recently regulatory vulnerable stocks like EDMC and ESI are down 2-3% intraday vs. flat for the sector as a whole.

    My take remains that publicly traded for-profits will figure this out and apply necessary resources (think S&P 500 and Sarbanes-Oxley). Conversely, if I were an owner or private investor in a small local chain or free-standing trade school, I would be worried about lack of resources to remain compliant.
    Mar 14 11:07 AM | Likes Like |Link to Comment
  • National American University Holdings: Total Return Sleeper On The Cheap [View article]
    Insider-Alerts, thanks for your comments. You add some worthy counter points to my thesis. I am compelled to challenge one of your comments: "the academic quality of the institution is really not a metric that investors are interested in because this is a for-profit endeavor." I know first hand many institutional investors with holdings in the education space who do measure academic quality as a predictor of profitability. Academic quality leads to higher graduation rates (thereby increasing revenue and lowering bad debt) and also leads to higher job placement rates (thereby increasing new enrollment referrals and lowering student loan default rates.) You then say that meeting accreditation standards is important at a for-profit. It should be noted that academic quality is a leading determination of a for-profit school's ability to maintain its accreditation. The only experts found on every for-profit accreditation visiting team are academic program specialists assigned to each degree or training discipline offered at the campus. In the eyes of education investors I work with, a demonstrated balance of quality and quantity is what makes a for-profit company worthy of longer term ownership.
    Feb 20 06:41 PM | Likes Like |Link to Comment
  • Microsoft: An Under-Appreciated, Overlooked, Misunderstood Portfolio Staple [View article]
    Microsoft reminds me of IBM under Gerstner in the early 90's. Much of Wall Street wrote them off as tech dinosaur. Well, enough said. Nice article! (I am long MSFT)
    Feb 11 01:34 PM | 1 Like Like |Link to Comment
  • Student Debt: Bad Loans Or Bad Education? [View article]
    Randal, thanks for reading my comment. It is appreciated. Too often the rhetoric on traditional education is virtuous, while the rhetoric on tax generating education is mostly dishonorable. The facts frequently are not as worthy or disparaging, respectively. I do hear you on the mom and pop beauty school scam, but in this forum we focus on the publicly traded players who are arguably more regulated than defense contractors.
    Jan 28 03:07 PM | Likes Like |Link to Comment
  • Student Debt: Bad Loans Or Bad Education? [View article]
    Jeff, good and timely article. Being you are a former member of the mainstream media, I am not surprised by your seemingly anti-for-profit education bent. The mainstream media is comprised of virtually 100% traditionally educated students who do not fully understand the for-profit motive in education. The insider joke is mainstream journalists fear their pending job obsolescence and won't be able to get teaching positions at traditional college journalism departments if they write negatively about those schools. In fairness to you, unlike the current mainstream media, you refreshingly have NOT taken traditional colleges off the hook in the student debt issue.

    Curiously, student loan default rates by institution or sector are always demonstrated in percentage format. This automatically casts a black cloud on the for-profits who cater primarily to students from underserved socio-demographics that are largely rejected or failed by the traditional colleges. Granted, community colleges serve the same student market as the for-profits, but between federal Pell grants (do not have to be repaid) and state subsidies, they are able keep student loans, and therefore defaults, to a minimum.

    I challenge you to create two additional YCharts (great product, btw) that would tell the aggregate story as opposed to just the macro data points:

    1) Total defaulted student loans in dollars (as opposed to %) at the for-profits vs. the combined private and state owned traditional colleges.
    2) Total Pell grants in dollars awarded to students who did not ultimately graduate or transfer from the schools where the grants were awarded.

    In the case of chart #1, you may find that aggregate dollars in defaulted student loans are significantly higher at the non-profits than the for-profits; and in the case of chart #2, you may find the wasted Pell grants are rampant at the community colleges as well.

    Also conveniently ignored by the mainstream media, for-profit education companies return up to 40% of their profits to state and federal tax coffers, in addition to paying real and tangible property taxes to the local communities where their schools are located. The traditionals? Perhaps a cursory annual donation to local police and fire departments. And since this is an investment platform, I should remind readers the traditional colleges' endowments pay zero capital gains taxes. Like the for-profits, the non-profits often take tax subsidies, but unlike the for-profits, rarely return tax payments to society.

    Until the faculty centric traditional educators decide to increasingly serve these mostly first generation students, or adequately serve them in the case of the community colleges, the students will continue to seek the safe haven of the student centric, career oriented for-profit educators.

    Jan 28 01:36 PM | 1 Like Like |Link to Comment
  • Apollo Education Group: Turnaround In Play With Compelling Valuation [View article]
    Mr. Levy, thanks for your comments. Interestingly, I noticed you left virtually the same comments on another recent SA article on APOL. Granted, your thoughts are well articulated so I will make an attempt to address them here.

    First, I can assure you that I am not 'compensated or otherwise influenced' by Apollo Education Group or any of the other 35 education and education related companies I follow. As an independent industry expert for the buy-side, I do not directly invest (long or short) in any of the companies nor provide consultancy to them. This is contrary to a vast majority of contributors and commenters on SA and other investment forums who often disclose long or short positions in the stocks or ETFs discussed.

    Your facts on APOL's recent results speak for themselves, but I will address two of your opinions offered: senior management compensation and CEO Cappelli's background and motives.

    I hear you on the senior management of APOL and other education companies being richly rewarded in a down business cycle as employees at the campus level get laid-off or squeezed. But this behavior certainly isn't unique to the education sector. It is a rampant American business model (bubble?) that will eventually correct itself with at least a narrowing of the income gap. My guess is the for-profit education sector, forever standing at the center of the regulatory radar, will make adjustments in this area of Main Street controversy long before other sectors covered by Wall Street.

    It might be prudent, as offered in your comments, to pass judgment on Cappelli's motive as a former investment banker turned education executive. But the founder and chairman of APOL, John Sperling, and his son, are both educators and have control of the voting stock of the company. My guess is they brought Cappelli in for the exact reason you imply they should not have: he understands the business side, the Wall Street side.

    Personally, I have found Cappelli to be refreshing and genuine in his role as turnaround CEO at Apollo. Unlike many education company leaders, he reminds me of the vast majority of campus based employees in the industry who are caring, student centered, and passionate about educating underserved Americans for careers. They are committed to providing students an opportunity to improve their socioeconomic standing. It is refreshing in today's otherwise apathetic, low service consumer environment and the reason I believe the education sector will survive in the long-term, bad actors notwithstanding.

    So yes, if I have any bias, it is my belief that for profit (translate: tax generating) educators play a significant role in the assimilation of otherwise underserved and ignored citizens, who just like you, me, and others reading this, want better for themselves and their families. But the traditional colleges (translate: no taxes generated) often reject these students or fail them in their mostly faculty-centered, self-motivated environments. The community colleges are the supposed alternative but their overcrowding and typically very low (non-transfer) graduation rates are also a deterrent for these students who then ultimately seek the safe haven of Apollo or other career oriented, albeit tax generating educators. The final alternative from there only gets ugly if one is a caring progressive thinker who believes in a capitalistic opportunity for all and not just the socio-economically privileged few.

    Finally, if I read correctly, you imply in your comments that I am recommending Apollo Education as a "buy." I do not make buy/hold/sell/short or avoid recommendations. I am merely suggesting in the article that deep value investors take a further look at APOL based on the turnaround story and compelling valuations, but also consider its suspect margin of safety . I certainly agree it is not a conventional growth stock.

    Deep value, or investing in beaten down companies everybody else hates, is not for everybody. But the investment style has made fortunes for the likes of the late Sir John Templeton and other well-known contrarians, only proving that companies do indeed reinvent themselves.
    Jan 20 11:13 AM | 1 Like Like |Link to Comment
  • Apollo Education Group: Turnaround In Play With Compelling Valuation [View article]
    Mitch, thanks for the comments and compliment. You make an excellent challenge to my assumption that redlining student loan eligibility based on attendance at a for-profit, private non-profit, or state owned institution would be illegal. We can only hope current or future legislation/regulations, however obscure, would prevent such debauchery.
    Jan 10 11:46 AM | 1 Like Like |Link to Comment
  • 'Twas A Contrarian's Year In Education Services [View article]
    Thanks for the compliment which is much appreciated. HEA Reauthorization is up in 2014, but I think Gainful Employment and the college accountability programs from the administration will predominate the headlines. As I have written previously, I believe the publicly traded and large private equity education companies such as Laureate, possess the resources to navigate gainful employment and any other regulations thrown at them. It is the small locally owned trade schools such as the cosmetology and tractor trailer driving schools that are the most vulnerable. Passionate student programs at all levels including culinary, massage therapy, and graphic design are also susceptible because those students attend for the opportunity to create as opposed to just make a living. It may be challenging for those schools to meet federal income targets for grads, even if the students are happy with their jobs.
    Dec 27 12:17 AM | Likes Like |Link to Comment
  • Margin Of Safety In U.S. Education Companies [View article]
    Article update: following last week's news on APOL earnings and CECO sale of international unit, CVCR U.S. Education Index up 10.2% for week and now 33.7% YTD vs. 31.7% for Russell 2000 as of market close on October 25, 2013. Catalyst for industry turnaround or just a blip of volatility?
    Oct 27 04:46 PM | Likes Like |Link to Comment
COMMENTS STATS
37 Comments
15 Likes