ESI - News and Analysis from Seeking Alpha 'ESI' Tag RSS Syndication from SeekingAlpha.com SeekingAlpha.com http://seekingalpha.com/symbol/esi Considering Apollo's Downside for All Private Education Operators http://seekingalpha.com/article/172697-considering-apollo-s-downside-for-all-private-education-operators?source=feed 172697

Let the bubble blow.

That’s the signal the Federal Reserve gave to commodities markets and the stock market Wednesday after keeping interest rates unchanged at historic lows and making no noise about when its policy of easy money will end.

]]> Wed, 11 Nov 2009 04:51:41 -0500 Greg Feirman Greg Feirman submits:

Let the bubble blow.

That’s the signal the Federal Reserve gave to commodities markets and the stock market Wednesday after keeping interest rates unchanged at historic lows and making no noise about when its policy of easy money will end.


Complete Story »]]> APOL BNI BRK.A BRK.B CECO COCO DV ESI Greg Feirman Why We're Not Holding DeVry http://seekingalpha.com/article/172394-why-we-re-not-holding-devry?source=feed 172394 A couple of weeks ago we added a position of DeVry (DV) after they posted excellent earnings and discussed a rosy outlook. That was on the heels of the announcement that Apollo (APOL) was being investigated over some of their accounting practices related to student recruitment.

While we do like DeVry as well as some of the other names in the sector such as Corinthian (COCO) and ITT Education (ESI), there was a great deal of weakness that these names showed after the Apollo news. We felt that there were a few possible scenarios that could play out.

]]> Tue, 10 Nov 2009 04:01:21 -0500 Andrew Horowitz Andrew Horowitz submits:

A couple of weeks ago we added a position of DeVry (DV) after they posted excellent earnings and discussed a rosy outlook. That was on the heels of the announcement that Apollo (APOL) was being investigated over some of their accounting practices related to student recruitment.

While we do like DeVry as well as some of the other names in the sector such as Corinthian (COCO) and ITT Education (ESI), there was a great deal of weakness that these names showed after the Apollo news. We felt that there were a few possible scenarios that could play out.


Complete Story »]]> APOL COCO DV ESI Andrew Horowitz Thursday Options Recap http://seekingalpha.com/article/171614-thursday-options-recap?source=feed 171614 Sentiment

Stocks opened higher on positive earnings from Cisco (CSCO) and a bigger-than-expected decline in weekly jobless claims. Before the opening bell, the Labor Department reported that jobless claims fell by 20,000 to 512,000 last week. Economists were looking for a smaller 8,000 decline. The report takes on added importance this week, as it comes ahead of the Labor Department's monthly jobs data Friday. Economists expect tomorrow's numbers to show the economy losing 175,000 jobs in October. The unemployment rate is expected to improve to 6.5 percent, from 6.6 percent.

Meanwhile, Cisco Systems is helping both the Dow and the NASDAQ. Shares are up 68 cents to $23.97 after the tech bellwether reported earnings that beat Street estimates and the company's CEO also noted that a recovery in the industry is "well underway." CSCO and the other 29 components of the Dow are up and the industrial average has added 200 points heading into the final forty-five minutes of trading. The NASDAQ gained 47.

]]> Thu, 05 Nov 2009 15:53:45 -0500 Frederic Ruffy Frederic Ruffy submits:

Sentiment

Stocks opened higher on positive earnings from Cisco (CSCO) and a bigger-than-expected decline in weekly jobless claims. Before the opening bell, the Labor Department reported that jobless claims fell by 20,000 to 512,000 last week. Economists were looking for a smaller 8,000 decline. The report takes on added importance this week, as it comes ahead of the Labor Department's monthly jobs data Friday. Economists expect tomorrow's numbers to show the economy losing 175,000 jobs in October. The unemployment rate is expected to improve to 6.5 percent, from 6.6 percent.

Meanwhile, Cisco Systems is helping both the Dow and the NASDAQ. Shares are up 68 cents to $23.97 after the tech bellwether reported earnings that beat Street estimates and the company's CEO also noted that a recovery in the industry is "well underway." CSCO and the other 29 components of the Dow are up and the industrial average has added 200 points heading into the final forty-five minutes of trading. The NASDAQ gained 47.


Complete Story »]]> BAC CSCO DTV ESI JAVA S SBUX SPY UUP Frederic Ruffy An ITT Educational Services Options Play http://seekingalpha.com/article/169156-an-itt-educational-services-options-play?source=feed 169156 While the recession has hurt most companies across the USA, ITT Educational Services (ESI) has actually benefitted. Enrollment trends have been strengthening as unemployed workers have signed on to upgrade skills and other students continue on towards advanced degrees to become more employable in the future.
ITT Educational Services, Inc. is a leading provider of technology-oriented postsecondary degree programs. ESI operates more than 105 Technical Institutes in 37 states, which predominantly provide career-focused degree programs of study in fields involving technology to approximately 65,000 students. ESI has been actively involved in the higher education community in the United States since 1969. Shares are traded on the New York Stock Exchange under the symbol "ESI."
October 26, 2009 - $99.15
52-week range: $65.31 - $133.75
Since their IPO in June 1968 at a split-adjusted $2.50 /share ESI has done little to disappoint its investors. Year after year they have posted higher sales and earnings with the stock price reflecting the great numbers.
Here are ESI’s per share numbers from continuing operations as reported by Value Line:
Year
Sales
C/F
EPS
Avg. P/E
Y.E. Close
1999
6.43
0.72
0.48
25.9x
$7.72
2000
7.40
0.89
0.57
16.1x
$11.00
2001
8.86
1.13
0.72
24.1x
$18.43
2002
10.31
1.44
0.94
22.4x
$23.55
2003
11.51
1.76
1.27
28.6x
$46.97
2004
13.43
2.37
1.94
20.8x
$47.55
2005
15.06
2.81
2.34
21.6x
$59.11
2006
18.46
3.42
2.72
23.9x
$66.37
2007
21.91
4.40
3.71
27.4x
$85.27
2008
26.22
5.82
5.17
14.8x
$94.98
2009*
35.25
8.50
7.80
15.0x
N/A
* 2009 figures include VL estimates for Q4
With consensus views for EPS of about $7.75 this year and $9.10 or better for 2010 the current multiple is about 12.8x and the forward P/E is just 10.9x. Those are exceedingly low for this consistent growth company. Compare those with the normalized P/Es of the previous 10 years to see just how cheap these shares are right now.
ESI’s balance sheet looks great with no short-term debt and just $150 million in total debt versus treasury cash of about $300 million. Value Line gives ESI a ‘B++’ for financial strength while noting 95th percentile scores for both ‘earnings predictability’ and ‘share price growth persistence’ (with 100th being best). ITT Educational Services shares have outperformed 19 of 20 companies in the Value Line universe over the long haul.
Standard & Poors sees ‘fair value’ as $125.60 while Morningstar is even more bullish with a (recently raised) $139 ‘fair value’ estimate and a 4-star ranking (out of 5).
About the only negative is the lack of a dividend. The company seems to have done pretty well with the cash though. Shares outstanding have been pared from 49.23 million at YE 1999 to 37.76 million as of Sep. 30th. EPS have grown from $0.48 to $7.07 in that same (less than 10 year) period. Shareholders have seen over 1100% gains [NOT a misprint] during the past decade.
With macro-economic tailwinds and nothing but great results this seems like an opportune time to pick up some ESI while the valuation is historically low.
A return to even fifteen times next year’s $9.10 estimate would bring these shares to $136.50 or 37.6% above today’s close. Is that a stretch? Hardly. ESI touched $131.80 in 2007 on just $3.71 in full year earnings and they’ve been as high as $133.75 already in 2009.

*****************************************************************************************************
For the option savvy crowd…
Consider this buy/write combo for Jan. 21, 2011:
Cash Outlay
Cash Inflow
Buy 100 ESI @ $99.15 /share
$9,915
Sell 1 Jan. 2011 $125 Call @ $8.20 /sh.
$820
Sell 1 Jan. 2011 $125 Put @ $33.20 /sh.
$3,320
Net Cash out-of-Pocket
$5,775
If ESI shares move to $125 or better (+ 26.1%) by Jan. 21, 2011:
  • The $125 call will be exercised.
  • You will sell your shares for $12,500.
  • The $125 put will expire worthless.
  • You will have no further option obligations.
  • You will end up with no shares and $12,500 in cash.
That best-case scenario would lead to a net profit of $6,725 / $5,775 = 116.4%
achieved in less than 15 months on shares that only needed to rise by 26.1% or more.
What’s the downside?
If ESI shares remain under $125 on Jan. 21, 2011:
  • The $125 call will expire worthless.
  • The $125 put will be exercised.
  • You will need to buy another 100 ESI shares.
  • You will be forced to lay out an additional $12,500 in cash.
  • You will have no further option obligations.
  • You will end up with 200 ESI shares.
What’s the break-even on the whole trade?
On the original 100 shares it’s their $99.15 /share purchase price less the $8.20 /share call premium = $90.95 /share.
On the ‘put’ shares it’s the $125 strike price less the $33.20 put premium = $91.80 /share.
Your overall break-even would be $91.38 /share or $7.77 below your starting price. ESI shares could fall by up to 7.8% without causing a loss.
While that’s far from impossible a glance at my data chart will show that there hasn’t been one calendar year in the past decade when ESI closed lower on December 31 than the year before – including the horrendous market of 2008!
Summary: ITT educational Services is a high-quality growth stock at a very reasonable valuation. All signs point to continued success in one of the few expanding areas of our economy.
Outright purchase of the shares could easily see 30 – 40% returns over the next 12 – 18 months. Buying and writing as described could lever that same gain into a cash-on-cash return of over 116% if you’re well capitalized and willing to play with options.
You’d be protected against loss on the first 7.8% drop if we’re totally wrong on this one.
Disclosure: Author is long ESI shares and short ESI puts.
]]> Tue, 27 Oct 2009 12:18:15 -0400 Paul Price Paul Price submits:
While the recession has hurt most companies across the USA, ITT Educational Services (ESI) has actually benefitted. Enrollment trends have been strengthening as unemployed workers have signed on to upgrade skills and other students continue on towards advanced degrees to become more employable in the future.
ITT Educational Services, Inc. is a leading provider of technology-oriented postsecondary degree programs. ESI operates more than 105 Technical Institutes in 37 states, which predominantly provide career-focused degree programs of study in fields involving technology to approximately 65,000 students. ESI has been actively involved in the higher education community in the United States since 1969. Shares are traded on the New York Stock Exchange under the symbol "ESI."
October 26, 2009 - $99.15
52-week range: $65.31 - $133.75
Since their IPO in June 1968 at a split-adjusted $2.50 /share ESI has done little to disappoint its investors. Year after year they have posted higher sales and earnings with the stock price reflecting the great numbers.
Here are ESI’s per share numbers from continuing operations as reported by Value Line:
Year
Sales
C/F
EPS
Avg. P/E
Y.E. Close
1999
6.43
0.72
0.48
25.9x
$7.72
2000
7.40
0.89
0.57
16.1x
$11.00
2001
8.86
1.13
0.72
24.1x
$18.43
2002
10.31
1.44
0.94
22.4x
$23.55
2003
11.51
1.76
1.27
28.6x
$46.97
2004
13.43
2.37
1.94
20.8x
$47.55
2005
15.06
2.81
2.34
21.6x
$59.11
2006
18.46
3.42
2.72
23.9x
$66.37
2007
21.91
4.40
3.71
27.4x
$85.27
2008
26.22
5.82
5.17
14.8x
$94.98
2009*
35.25
8.50
7.80
15.0x
N/A
* 2009 figures include VL estimates for Q4
With consensus views for EPS of about $7.75 this year and $9.10 or better for 2010 the current multiple is about 12.8x and the forward P/E is just 10.9x. Those are exceedingly low for this consistent growth company. Compare those with the normalized P/Es of the previous 10 years to see just how cheap these shares are right now.
ESI’s balance sheet looks great with no short-term debt and just $150 million in total debt versus treasury cash of about $300 million. Value Line gives ESI a ‘B++’ for financial strength while noting 95th percentile scores for both ‘earnings predictability’ and ‘share price growth persistence’ (with 100th being best). ITT Educational Services shares have outperformed 19 of 20 companies in the Value Line universe over the long haul.
Standard & Poors sees ‘fair value’ as $125.60 while Morningstar is even more bullish with a (recently raised) $139 ‘fair value’ estimate and a 4-star ranking (out of 5).
About the only negative is the lack of a dividend. The company seems to have done pretty well with the cash though. Shares outstanding have been pared from 49.23 million at YE 1999 to 37.76 million as of Sep. 30th. EPS have grown from $0.48 to $7.07 in that same (less than 10 year) period. Shareholders have seen over 1100% gains [NOT a misprint] during the past decade.
With macro-economic tailwinds and nothing but great results this seems like an opportune time to pick up some ESI while the valuation is historically low.
A return to even fifteen times next year’s $9.10 estimate would bring these shares to $136.50 or 37.6% above today’s close. Is that a stretch? Hardly. ESI touched $131.80 in 2007 on just $3.71 in full year earnings and they’ve been as high as $133.75 already in 2009.

*****************************************************************************************************
For the option savvy crowd…
Consider this buy/write combo for Jan. 21, 2011:
Cash Outlay
Cash Inflow
Buy 100 ESI @ $99.15 /share
$9,915
Sell 1 Jan. 2011 $125 Call @ $8.20 /sh.
$820
Sell 1 Jan. 2011 $125 Put @ $33.20 /sh.
$3,320
Net Cash out-of-Pocket
$5,775
If ESI shares move to $125 or better (+ 26.1%) by Jan. 21, 2011:
  • The $125 call will be exercised.
  • You will sell your shares for $12,500.
  • The $125 put will expire worthless.
  • You will have no further option obligations.
  • You will end up with no shares and $12,500 in cash.
That best-case scenario would lead to a net profit of $6,725 / $5,775 = 116.4%
achieved in less than 15 months on shares that only needed to rise by 26.1% or more.
What’s the downside?
If ESI shares remain under $125 on Jan. 21, 2011:
  • The $125 call will expire worthless.
  • The $125 put will be exercised.
  • You will need to buy another 100 ESI shares.
  • You will be forced to lay out an additional $12,500 in cash.
  • You will have no further option obligations.
  • You will end up with 200 ESI shares.
What’s the break-even on the whole trade?
On the original 100 shares it’s their $99.15 /share purchase price less the $8.20 /share call premium = $90.95 /share.
On the ‘put’ shares it’s the $125 strike price less the $33.20 put premium = $91.80 /share.
Your overall break-even would be $91.38 /share or $7.77 below your starting price. ESI shares could fall by up to 7.8% without causing a loss.
While that’s far from impossible a glance at my data chart will show that there hasn’t been one calendar year in the past decade when ESI closed lower on December 31 than the year before – including the horrendous market of 2008!
Summary: ITT educational Services is a high-quality growth stock at a very reasonable valuation. All signs point to continued success in one of the few expanding areas of our economy.
Outright purchase of the shares could easily see 30 – 40% returns over the next 12 – 18 months. Buying and writing as described could lever that same gain into a cash-on-cash return of over 116% if you’re well capitalized and willing to play with options.
You’d be protected against loss on the first 7.8% drop if we’re totally wrong on this one.
Disclosure: Author is long ESI shares and short ESI puts.

Complete Story »]]> ESI Paul Price Thursday Options Update: XRX, SLE, AMGN & ESI http://seekingalpha.com/article/168185-thursday-options-update-xrx-sle-amgn-esi?source=feed 168185 Xerox Corp. (XRX) – The largest producer of high-speed color printers popped up on our ‘hot by options volume’ market scanner this morning due to bullish options activity in the December contract. Shares of XRX are trading 3.5% higher to $7.99 today after the firm raised its 2011 profit forecast to $1.05 per share from 95 cents. Xerox posted third-quarter profits of 14 cents per share, surpassing average expectations of 12 cents per share, ahead of the opening bell today. Option traders appear to be making bullish bets on XRX by engaging in a couple of strategies. Plain-vanilla call buying in the amount of 2,500 contracts took place at the December 8.0 strike for 50 cents apiece. Investors long the calls may profit if shares rally 6% over the current price to surpass the breakeven point at $8.50 by expiration. Other investors put on bullish risk reversals. It looks like 3,700 puts were sold at the December 7.0 strike for 10 cents apiece to partially offset the cost of buying the same number of calls at the December 8.0 strike for 40 cents each. The sale of the puts lowers the effective breakeven point to $8.30. A 31 cent increase in shares to $8.30 would allow reversal players to breakeven by December’s expiration day.

Sara Lee Corp. (SLE) – Reports that Proctor & Gamble is in talks to purchase portions of SLE’s international household products unit pushed shares of Sara Lee up about 0.5% to $11.50 today. Option traders hoping to see further bullish movement in the price of the underlying picked up calls in the November contract. It appears more than 6,000 calls were purchased at the November 12.5 strike for an average premium of 25 cents apiece. Call-buyers are now positioned to accumulate profits if the stock increases by 11% to breach the breakeven point at $12.75. Such a move would push shares of Sara Lee to a new 52-week high over the current high of $12.00 attained on November 4, 2008.

]]> Thu, 22 Oct 2009 12:49:29 -0400 Andrew Wilkinson Xerox Corp. (XRX) – The largest producer of high-speed color printers popped up on our ‘hot by options volume’ market scanner this morning due to bullish options activity in the December contract. Shares of XRX are trading 3.5% higher to $7.99 today after the firm raised its 2011 profit forecast to $1.05 per share from 95 cents. Xerox posted third-quarter profits of 14 cents per share, surpassing average expectations of 12 cents per share, ahead of the opening bell today. Option traders appear to be making bullish bets on XRX by engaging in a couple of strategies. Plain-vanilla call buying in the amount of 2,500 contracts took place at the December 8.0 strike for 50 cents apiece. Investors long the calls may profit if shares rally 6% over the current price to surpass the breakeven point at $8.50 by expiration. Other investors put on bullish risk reversals. It looks like 3,700 puts were sold at the December 7.0 strike for 10 cents apiece to partially offset the cost of buying the same number of calls at the December 8.0 strike for 40 cents each. The sale of the puts lowers the effective breakeven point to $8.30. A 31 cent increase in shares to $8.30 would allow reversal players to breakeven by December’s expiration day.

Sara Lee Corp. (SLE) – Reports that Proctor & Gamble is in talks to purchase portions of SLE’s international household products unit pushed shares of Sara Lee up about 0.5% to $11.50 today. Option traders hoping to see further bullish movement in the price of the underlying picked up calls in the November contract. It appears more than 6,000 calls were purchased at the November 12.5 strike for an average premium of 25 cents apiece. Call-buyers are now positioned to accumulate profits if the stock increases by 11% to breach the breakeven point at $12.75. Such a move would push shares of Sara Lee to a new 52-week high over the current high of $12.00 attained on November 4, 2008.


Complete Story »]]> AMGN ESI SLE XRX Andrew Wilkinson Boom Times in For-Profit Education http://seekingalpha.com/article/163021-boom-times-in-for-profit-education?source=feed 163021

Lately it’s been all the rage to complain about companies that are too big to fail. However, there’s another prominent American institution that’s also become too big to fail. It’s bloated, overstaffed and to fails to meet the most basic need of its customers.

Welcome to American higher education.

]]> Wed, 23 Sep 2009 15:45:29 -0400 Eddy Elfenbein Eddy Elfenbein submits:

Lately it’s been all the rage to complain about companies that are too big to fail. However, there’s another prominent American institution that’s also become too big to fail. It’s bloated, overstaffed and to fails to meet the most basic need of its customers.

Welcome to American higher education.


Complete Story »]]> APOL COCO ESI LINC SLM STRA Eddy Elfenbein What Do the Schizophrenic Markets Want? http://seekingalpha.com/article/162922-what-do-the-schizophrenic-markets-want?source=feed 162922 While I am not a psychiatrist, I am tempted to diagnose our current market as borderline schizophrenic because it has shown a tendency to go up on bad news but also often go down on good news.

To be sure, there was a fair amount of good news last week, with retail sales beating their numbers handily, the New York Manufacturing Index doing the same, and Chairman Bernanke declaring that the recession is very likely over. So as one might expect, the market was up for the week. However, by the time most of this good news was made public (on Thursday), the market went down.

]]> Wed, 23 Sep 2009 05:20:12 -0400 David Brown While I am not a psychiatrist, I am tempted to diagnose our current market as borderline schizophrenic because it has shown a tendency to go up on bad news but also often go down on good news.

To be sure, there was a fair amount of good news last week, with retail sales beating their numbers handily, the New York Manufacturing Index doing the same, and Chairman Bernanke declaring that the recession is very likely over. So as one might expect, the market was up for the week. However, by the time most of this good news was made public (on Thursday), the market went down.


Complete Story »]]> APOL BBY CECO COCO DV ESI GILD NRG RTN STRA David Brown Education Stocks: Bulls Go Back to School http://seekingalpha.com/article/162722-education-stocks-bulls-go-back-to-school?source=feed 162722 By Mike Yamamoto

The bulls stampeded back to school yesterday, getting long Apollo Group (APOL) and other education stocks.

]]> Tue, 22 Sep 2009 07:56:55 -0400 optionMONSTER optionMONSTER submits:

By Mike Yamamoto

The bulls stampeded back to school yesterday, getting long Apollo Group (APOL) and other education stocks.


Complete Story »]]> APOL BPI CECO COCO DV EDU ESI optionMONSTER Older Student Demographic a Boon for Apollo http://seekingalpha.com/article/159030-older-student-demographic-a-boon-for-apollo?source=feed 159030 As we pointed out in our August 2nd Seeking Alpha article – Overlooked Education Sector: K-12 Poised to Prosper – the education sector, while viewed a safe, defensive play, is often overlooked as a great long-term growth play. A key factor that investors should examine when seeking companies with the best growth prospects in this sector is demographics.

Total U.S. enrollment in degree-granting higher education institutions (community colleges and four-year colleges an universities) is projected to grow by about 9 percent by 2017, according to the U.S. Department of Education’s National Center for Education Statistics. And while this is significantly below the 26 percent enrollment growth experienced between 1997 and 2007, the center projects that higher education enrollment of students over the age of 25 will rise by 19 percent by 2017.

]]> Sun, 30 Aug 2009 08:28:16 -0400 Beacon Asset Managers Jamie Moye submits:

As we pointed out in our August 2nd Seeking Alpha article – Overlooked Education Sector: K-12 Poised to Prosper – the education sector, while viewed a safe, defensive play, is often overlooked as a great long-term growth play. A key factor that investors should examine when seeking companies with the best growth prospects in this sector is demographics.

Total U.S. enrollment in degree-granting higher education institutions (community colleges and four-year colleges an universities) is projected to grow by about 9 percent by 2017, according to the U.S. Department of Education’s National Center for Education Statistics. And while this is significantly below the 26 percent enrollment growth experienced between 1997 and 2007, the center projects that higher education enrollment of students over the age of 25 will rise by 19 percent by 2017.


Complete Story »]]> APOL BPI COCO CPLA ESI LOPE STRA Beacon Asset Managers Wednesday Options Recap http://seekingalpha.com/article/155747-wednesday-options-recap?source=feed 155747 Sentiment

Stocks are trading broadly higher after the Federal Reserve concluded its two-day meeting on monetary policy and the post-meeting statement held no major surprises one way or the other. Trading was cautious Monday and Tuesday ahead of the announcement, as investors awaited to hear if Fed officials were going to change their tone or offer any guidance regarding future monetary policy. Instead, the Fed basically said it expects inflation and the Fed Funds rate to remain low, as the economy continues to grapple with sluggish housing, lost jobs, and declining household wealth.

In other economic news Wednesday, the trade balance deficit widened to $27 billion in June, greater than the -26 billion in May, but not as wide as the -$28.7 billion economists had expected. Crude oil gained 77 cents to $70.22 on weekly inventory data.

]]> Wed, 12 Aug 2009 15:51:17 -0400 Frederic Ruffy Frederic Ruffy submits:

Sentiment

Stocks are trading broadly higher after the Federal Reserve concluded its two-day meeting on monetary policy and the post-meeting statement held no major surprises one way or the other. Trading was cautious Monday and Tuesday ahead of the announcement, as investors awaited to hear if Fed officials were going to change their tone or offer any guidance regarding future monetary policy. Instead, the Fed basically said it expects inflation and the Fed Funds rate to remain low, as the economy continues to grapple with sluggish housing, lost jobs, and declining household wealth.

In other economic news Wednesday, the trade balance deficit widened to $27 billion in June, greater than the -26 billion in May, but not as wide as the -$28.7 billion economists had expected. Crude oil gained 77 cents to $70.22 on weekly inventory data.


Complete Story »]]> AKAM AMAT CPO CXW ERTS ESI MBI SLE TOL Frederic Ruffy For-Profit Education: Steve Mandel vs. Jim Chanos http://seekingalpha.com/article/153849-for-profit-education-steve-mandel-vs-jim-chanos?source=feed 153849 Steve Mandel of Lone Pine Capital and Jim Chanos of Kynikos Associates expressed starkly different views on the investment merit of for-profit education providers at this year's Ira Sohn Investment Conference. Mandel has disclosed holdings in Apollo Group (APOL) and Strayer Education (STRA), while Chanos has presumably sold short shares in those companies or other for-profit education providers, such as ITT Education Services (ESI), DeVry (DV), Career Education (CECO), Corinthian Colleges (COCO), and Capella Education (CPLA).

We provide a synopsis of Mandel and Chanos’s theses here, based on notes from the conference. The notes from Steve Mandel’s speech have been adopted from notes shared by Mike O’Rourke of BTIG. The summary of Jim Chanos’s speech has been written based on Chanos’s slide presentation from the conference.

]]> Wed, 05 Aug 2009 05:16:05 -0400 The Manual of Ideas The Manual of Ideas submits:

Steve Mandel of Lone Pine Capital and Jim Chanos of Kynikos Associates expressed starkly different views on the investment merit of for-profit education providers at this year's Ira Sohn Investment Conference. Mandel has disclosed holdings in Apollo Group (APOL) and Strayer Education (STRA), while Chanos has presumably sold short shares in those companies or other for-profit education providers, such as ITT Education Services (ESI), DeVry (DV), Career Education (CECO), Corinthian Colleges (COCO), and Capella Education (CPLA).

We provide a synopsis of Mandel and Chanos’s theses here, based on notes from the conference. The notes from Steve Mandel’s speech have been adopted from notes shared by Mike O’Rourke of BTIG. The summary of Jim Chanos’s speech has been written based on Chanos’s slide presentation from the conference.


Complete Story »]]> APOL CECO COCO CPLA DV ESI STRA The Manual of Ideas The New Reality for Higher Education http://seekingalpha.com/article/151029-the-new-reality-for-higher-education?source=feed 151029 After my recent posts on university enrollments and affordability (see Enrollment Drops at Private Colleges and The Future of U.S. Higher Education), I received an email from Marc Scheer, author of No Sucker Left Behind: Avoiding the Great College Ripoff. On his site I found a link to a recent Wall Street Journal article (see Weighing Price and Value when Picking a College) that describes some of the very same effects that I anticipated in my earlier posts.

According to the Wall Street Journal:

]]> Fri, 24 Jul 2009 01:04:38 -0400 Robert Salomon Robert Salomon submits:

After my recent posts on university enrollments and affordability (see Enrollment Drops at Private Colleges and The Future of U.S. Higher Education), I received an email from Marc Scheer, author of No Sucker Left Behind: Avoiding the Great College Ripoff. On his site I found a link to a recent Wall Street Journal article (see Weighing Price and Value when Picking a College) that describes some of the very same effects that I anticipated in my earlier posts.

According to the Wall Street Journal:


Complete Story »]]> APOL CECO DV ESI Robert Salomon Wall Street Breakfast: Must-Know News http://seekingalpha.com/article/150765-wall-street-breakfast-must-know-news?source=feed 150765

  • Goldman is TARP-free at last. Goldman Sachs (GS) became the first major bank to completely shed its bailout ties, paying $1.1B to redeem the government's TARP warrants and calling the Treasury's valuation 'full and fair' given the government's support of the financial system. With the warrant redemption and the $318M Goldman paid in dividends on its $10B TARP aid, taxpayers received a 23% annualized return for the nine-month transaction.
  • S&P flip-flops on ratings. Standard & Poor's unexpectedly switched its rating of some bonds backed by commercial mortgages, upgrading the bonds to AAA just days after the same bonds had been sharply downgraded. The unusual move further damaged S&P's credibility and unsettled investors in the $700B market for commercial mortgage-backed securities [CMBS]. The reversal came after S&P realized bonds with a shorter lifespan were less risky than similarly structured bonds with a longer lifespan, a mistake that could reflect a basic misunderstanding of the way cash flows are distributed across CMBS.
  • Bristol-Myers buys biotech firm. Bristol-Myers Squibb (BMY) agreed to acquire Medarex (MEDX), the biotech firm it already owns a 2% stake in, for $2.4B in cash. Bristol-Myers said the $16/share deal, which marks a 90% premium to Medarex's closing price on Wednesday, buys it proven antibody discovery technology and rights to an immunotherapy the companies developed. MEDX +89% premarket (7:00 ET).
  • Intel fights antitrust fine. Intel (INTC) is fighting back against a record €1.06B ($1.45B) fine levied by EU antitrust regulators in May, saying the fine violates protections granted by European human rights law. Since the EU antitrust body handles both the investigation and judgment of a given case, companies don't have the opportunity to fully defend themselves as they would in a court. However, the appeal is a bit of a long shot as no EU antitrust appeal has ever won on this argument.
  • Amazon's shoe-in to online apparel. Amazon (AMZN) will buy online shoe retailer Zappos.com for around $928M, an aggressive expansion into online apparel after Amazon's solo attempts at selling footwear were unsuccessful. Zappos is known for its fiercely loyal customer base, good customer service and free shipping/free returns policy. AMZN +0.6% premarket (7:00 ET).
  • Bair wants large firms to pay. FDIC's Sheila Bair is scheduled to testify before the Senate Banking Committee this morning, and will ask lawmakers to impose fees on the country's biggest financial firms. Bair wants Congress to create an industry-supported Financial Company Resolution Fund which will provide working capital and cover unanticipated losses if the government has to wind down a failed firm. In addition to minimizing government outlays, this would also "provide an economic incentive for an institution not to grow too large."
  • SEC targets pay-to-play. The SEC voted unanimously to propose rules preventing investment advisers from managing public programs for two years if they make political contributions. The proposal is an attempt to curb pay-to-play practices, in which public contracts are awarded to those who make political contributions.
  • Chrysler warns on dealership legislation. Chrysler warned it could face liquidation for a second time if lawmakers move forward with a plan to reinstate terminated dealership agreements. The House of Representatives has already approved a measure to restore contracts with 789 dealerships, but the bill's future in the Senate is less certain.
  • Moody's rebuffed in Berkshire sale. Moody's (MCO) fell 10.3% in after-hours trading following a disclosure by Berkshire Hathaway (BRK.A) that it sold 7.99M shares of the ratings company this week. Though Berkshire remains Moody's largest shareholder, the sale reduced its stake by 17%. Moody's has reported a profit decline for seven consecutive quarters.
  • Porsche CEO, CFO resign. Porsche's CEO Wendelin Wiedeking and CFO Holger Haerter both resigned from the company with immediate effect, after coming to "the conclusion that the further strategic development of Porsche... is better off, if they are not on board as acting persons," said a company spokesman. The move is expected to facilitate a merger agreement with Volkswagen (VLKAY.PK).
  • eBay beats as Paypal, marketplace show signs of life. eBay (EBAY) managed to beat quarterly earnings expectations (see details below), even as profit fell 29% and revenue fell 4%. The company's PayPal online-payments unit continued to grow strongly and a decline in eBay's core marketplace leveled off.
  • ING may sell private banking unit. ING Group (ING) reportedly hired JPMorgan Chase (JPM) to advise it on the possible sale of its private banking business in Europe and Asia. A deal could be worth over $1B.
  • House prices rise. The FHFA House Price Index was up 0.9% in May vs. -0.2% consensus, after falling 0.3% in April (revised). Nationwide prices are down 5.6% from a year earlier, and 10.7% from the April 2007 peak.

Earnings: Thursday Before Open

  • 3M (MMM): Q2 EPS of $1.20 beats by $0.26. Revenue of $5.7B (-15%) vs. $5.4B. Adjusts guidance for FY '09 - sees EPS of $4.10-4.30 vs. prior guidance of $3.90-4.30. Shares +1.3% premarket (7:40 ET). (PR)
  • Alexion Pharmaceuticals (ALXN): Q2 EPS of $0.20 beats by $0.04. Revenue of $92M (+55%) vs. $89M. Shares +1.9% premarket (8:00 ET). (PR)
  • AT&T (T): Q2 EPS of $0.54 beats by $0.03. Revenue of $30.7B (-0.4%) in-line. Shares +2.9% premarket (7:45 ET). (PR)
  • Bristol-Myers Squibb (BMY): Q2 EPS of $0.56 beats by $0.09. Revenue of $5.4B (+3.5%) vs. $5.3B. Issues upside EPS guidance for FY '09 of $1.95-2.05 vs. prior guidance of $1.85-2.00. (PR)
  • Bunge (BG): Q2 EPS of $2.28 beats by $1.57. Revenue of $11B (-23.5%) vs. $12B. (PR)
  • Celestica (CLS): Q2 EPS of $0.11 beats by $0.01. Revenue of $1.4B (-25%) in-line. (PR)
  • Celgene (CELG): Q2 EPS of $0.46 in-line. Revenue of $629M (+10%) vs. $621M. Shares +8.9% premarket (7:45 ET). (PR)
  • CME Group (CME): Q2 EPS of $3.37 beats by $0.14. Revenue of $648M (+15%) vs. $652M. (PR)
  • Danaher (DHR): Q2 EPS of $0.89 beats by $0.01. Revenue of $2.7B (-19%) vs. $2.8B. (PR)
  • Diamond Offshore Drilling (DO): Q2 EPS of $2.79 beats by $0.15. Revenue of $946M (-0.8%) vs. $942M. (PR)
  • EMC (EMC): Q2 EPS of $0.18 beats by $0.01. Revenue of $3.3B (-11%) vs. $3.2B. Sees FY '09 EPS of $0.82 vs. &0.78 consensus. Shares +4.8% premarket (7:30 ET). (PR)
  • EnCana (ECA): Q2 EPS of $1.22 beats by $0.25. Revenue of $3.8B (-49%) vs. $4.4B. (EnCana news release (.pdf))
  • Fifth Third Bancorp (FITB): Q2 EPS of $1.15 vs. consensus of -$0.34 (may not be comparable). Tier 1 ratio of 12.9%. Shares +7% premarket (7:30 ET). (PR)
  • FLIR Systems (FLIR): Q2 EPS of $0.35 in-line. Revenue of $278M (+6.5%) vs. $297M. Shares +1.9% premarket (7:50 ET). (PR)
  • Ford Motor (F): Q2 EPS of -$0.21 beats by $0.27. Revenue of $27.2B (-34%) vs. $24.8B. (PR)
  • Goodrich (GR): Q2 EPS of $1.15 beats by $0.04. Revenue of $1.7B (-8%) in-line. (PR)
  • Hershey (HSY): Q2 EPS of $0.43 beats by $0.08. Revenue of $1.2B (+6%) vs. $1.1B. (PR)
  • Huntington Bancshares (HBAN): Q2 EPS of -$0.40 misses by $0.22. Increased provision for credit losses 42% from Q1 to $413.7M. Tier 1 capital ratio of 11.86%. Shares -3.1% premarket (7:50 ET). (PR)
  • ITT Educational Services (ESI): Q2 EPS of $1.87 beats by $0.14. Revenue of $317M (+29%) vs. $307M. (PR)
  • JetBlue Airways (JBLU): Q2 EPS of $0.05 beats by $0.03. Revenue of $807M (-6%) vs. $800M. (PR)
  • Kimberly-Clark (KMB): Q2 EPS of $1.16 beats by $0.22. Revenue of $4.7B (-5.6%) vs. $4.6B. Issues upside FY '09 EPS guidance of $4.10-4.25 vs. $4.12 consensus. (PR)
  • Newmont Mining (NEM): Q2 EPS of $0.43 misses by $0.04. Revenue of $1.6B (+7%) in-line. (PR)
  • NII Holdings (NIHD): Q2 EPS of $0.79 beats by $0.23. Revenue of $1.1B (-4%) vs. $1B. (PR)
  • Omnicom Group (OMC): Q2 EPS of $0.75 beats by $0.01. Revenue of $2.9B (-17%) in-line. (PR)
  • PNC Financial Services Group (PNC): Q2 EPS of $0.14 vs. consensus of $0.45 (may not be comparable). Revenue of $4B (+95.5%) vs. $3.65B. (PR)
  • Potash Corp. (POT): Q2 EPS of $0.62 misses by $0.07. Revenue of $856M (-67%) vs. $981M. Issues downside Q3 EPS guidance of $0.80-1.20 vs. $1.56 consensus. Issues downside FY '09 EPS guidance of $4.00-5.00 vs. $5.24 consensus. Shares -2.3% premarket (6:50 ET). (PR)
  • Raytheon (RTN): Q2 EPS of $1.24 beats by $0.11. Revenue of $6.1B (+4%) vs. $6.2B. (PR)
  • Starwood Hotels & Resorts Worldwide (HOT): Q2 EPS of $0.22 beats by $0.05. Revenue of $1.2B (-23%) in-line. Issues downside guidance: sees Q3 EPS of $0.06-0.10 vs. $0.21 consensus, FY '09 EPS of $0.65 vs. $0.76 consensus. (PR)
  • Terra Industries (TRA): Q2 EPS of $0.81 misses by $0.10. Revenue of $453.5M (-46%) vs. $568M. (PR)
  • Thermo Fisher Scientific (TMO): Q2 EPS of $0.74 beats by $0.08. Revenue of $2.5B (-8%) vs. $2.4B. (PR)
  • Wyeth (WYE): Q2 EPS of $0.94 beats by $0.09. Revenue of $5.7B (-4%) vs. $5.6B. Issues upside FY '09 EPS guidance of $3.48-3.58 vs. prior guidance of $3.33-3.53. (PR)
  • Xerox (XRX): Q2 EPS of $0.16 beats by $0.05. Revenue of $3.7B (-18%) in-line. (PR)

Earnings: Wednesday After Close

  • Alliance Data Systems (ADS): Q2 EPS of $0.95 misses by $0.07. Revenue of $460M (-9%) vs. $481M. Sees Q3 EPS of $1.34 in-line. Maintains 2009 EPS guidance of $5.15 vs. $5.00. (PR)
  • Amdocs (DOX): Q3 EPS of $0.53 beats by $0.05. Revenue of $690M (-16%) vs. $679M. Sees Q4 EPS of $0.47-0.51 vs. $0.48. Sees Q4 revenue of $670M-690M vs. $668M. (PR)
  • Citrix Systems (CTXS): Q2 EPS of $0.39 beats by $0.01. Revenue of $393M (+0%) vs. $387M. Sees Q3, FY09 revenues flat vs. 2008. (PR)
  • Covanta Holding Corp. (CVA): Q2 EPS of $0.21 beats by $0.01. Revenue of $376M (-11%) vs. $391M. Reaffirms 2009 EPS $0.65-0.80 vs. $0.71 and adjusted EBITDA of $500M-540M. (PR)
  • C.R. Bard (BCR): Q2 EPS of $1.23 beats by $0.02. Revenue of $625M (+1%) vs. $634M. (PR)
  • eBay (EBAY): Q2 EPS of $0.37 beats by $0.01. Revenue of $2.1B (-4%) vs. $2B. Sees Q3 EPS of $0.34-0.36 vs. $0.35. Sees Q3 revenue of $2.05B-2.15B vs. $2B. (PR)
  • Equifax (EFX): Q2 EPS of $0.57 in-line. Revenue of $455M (-9%) vs. $453M. Sees Q3 EPS of $0.52-0.57 vs. $0.59. (PR)
  • Equinix (EQIX): Q2 EPS of $0.44 beats by $0.11. Revenue of $213M (+7%) vs. $209M. Sees Q3 revenue of $221M-225M vs. $220M. Sees FY09 revenue of $860M-$875M vs. $861M. (PR)

  • E*TRADE Financial (ETFC): Q2 EPS of -$0.22 beats by $0.09. Total loan loss allowance was flat at $1.2B, or 5% of gross loans receivable. (PR)

]]> Thu, 23 Jul 2009 07:16:14 -0400 SA Editor Rachael Granby

  • Goldman is TARP-free at last. Goldman Sachs (GS) became the first major bank to completely shed its bailout ties, paying $1.1B to redeem the government's TARP warrants and calling the Treasury's valuation 'full and fair' given the government's support of the financial system. With the warrant redemption and the $318M Goldman paid in dividends on its $10B TARP aid, taxpayers received a 23% annualized return for the nine-month transaction.
  • S&P flip-flops on ratings. Standard & Poor's unexpectedly switched its rating of some bonds backed by commercial mortgages, upgrading the bonds to AAA just days after the same bonds had been sharply downgraded. The unusual move further damaged S&P's credibility and unsettled investors in the $700B market for commercial mortgage-backed securities [CMBS]. The reversal came after S&P realized bonds with a shorter lifespan were less risky than similarly structured bonds with a longer lifespan, a mistake that could reflect a basic misunderstanding of the way cash flows are distributed across CMBS.
  • Bristol-Myers buys biotech firm. Bristol-Myers Squibb (BMY) agreed to acquire Medarex (MEDX), the biotech firm it already owns a 2% stake in, for $2.4B in cash. Bristol-Myers said the $16/share deal, which marks a 90% premium to Medarex's closing price on Wednesday, buys it proven antibody discovery technology and rights to an immunotherapy the companies developed. MEDX +89% premarket (7:00 ET).
  • Intel fights antitrust fine. Intel (INTC) is fighting back against a record €1.06B ($1.45B) fine levied by EU antitrust regulators in May, saying the fine violates protections granted by European human rights law. Since the EU antitrust body handles both the investigation and judgment of a given case, companies don't have the opportunity to fully defend themselves as they would in a court. However, the appeal is a bit of a long shot as no EU antitrust appeal has ever won on this argument.
  • Amazon's shoe-in to online apparel. Amazon (AMZN) will buy online shoe retailer Zappos.com for around $928M, an aggressive expansion into online apparel after Amazon's solo attempts at selling footwear were unsuccessful. Zappos is known for its fiercely loyal customer base, good customer service and free shipping/free returns policy. AMZN +0.6% premarket (7:00 ET).
  • Bair wants large firms to pay. FDIC's Sheila Bair is scheduled to testify before the Senate Banking Committee this morning, and will ask lawmakers to impose fees on the country's biggest financial firms. Bair wants Congress to create an industry-supported Financial Company Resolution Fund which will provide working capital and cover unanticipated losses if the government has to wind down a failed firm. In addition to minimizing government outlays, this would also "provide an economic incentive for an institution not to grow too large."
  • SEC targets pay-to-play. The SEC voted unanimously to propose rules preventing investment advisers from managing public programs for two years if they make political contributions. The proposal is an attempt to curb pay-to-play practices, in which public contracts are awarded to those who make political contributions.
  • Chrysler warns on dealership legislation. Chrysler warned it could face liquidation for a second time if lawmakers move forward with a plan to reinstate terminated dealership agreements. The House of Representatives has already approved a measure to restore contracts with 789 dealerships, but the bill's future in the Senate is less certain.
  • Moody's rebuffed in Berkshire sale. Moody's (MCO) fell 10.3% in after-hours trading following a disclosure by Berkshire Hathaway (BRK.A) that it sold 7.99M shares of the ratings company this week. Though Berkshire remains Moody's largest shareholder, the sale reduced its stake by 17%. Moody's has reported a profit decline for seven consecutive quarters.
  • Porsche CEO, CFO resign. Porsche's CEO Wendelin Wiedeking and CFO Holger Haerter both resigned from the company with immediate effect, after coming to "the conclusion that the further strategic development of Porsche... is better off, if they are not on board as acting persons," said a company spokesman. The move is expected to facilitate a merger agreement with Volkswagen (VLKAY.PK).
  • eBay beats as Paypal, marketplace show signs of life. eBay (EBAY) managed to beat quarterly earnings expectations (see details below), even as profit fell 29% and revenue fell 4%. The company's PayPal online-payments unit continued to grow strongly and a decline in eBay's core marketplace leveled off.
  • ING may sell private banking unit. ING Group (ING) reportedly hired JPMorgan Chase (JPM) to advise it on the possible sale of its private banking business in Europe and Asia. A deal could be worth over $1B.
  • House prices rise. The FHFA House Price Index was up 0.9% in May vs. -0.2% consensus, after falling 0.3% in April (revised). Nationwide prices are down 5.6% from a year earlier, and 10.7% from the April 2007 peak.

Earnings: Thursday Before Open

  • 3M (MMM): Q2 EPS of $1.20 beats by $0.26. Revenue of $5.7B (-15%) vs. $5.4B. Adjusts guidance for FY '09 - sees EPS of $4.10-4.30 vs. prior guidance of $3.90-4.30. Shares +1.3% premarket (7:40 ET). (PR)
  • Alexion Pharmaceuticals (ALXN): Q2 EPS of $0.20 beats by $0.04. Revenue of $92M (+55%) vs. $89M. Shares +1.9% premarket (8:00 ET). (PR)
  • AT&T (T): Q2 EPS of $0.54 beats by $0.03. Revenue of $30.7B (-0.4%) in-line. Shares +2.9% premarket (7:45 ET). (PR)
  • Bristol-Myers Squibb (BMY): Q2 EPS of $0.56 beats by $0.09. Revenue of $5.4B (+3.5%) vs. $5.3B. Issues upside EPS guidance for FY '09 of $1.95-2.05 vs. prior guidance of $1.85-2.00. (PR)
  • Bunge (BG): Q2 EPS of $2.28 beats by $1.57. Revenue of $11B (-23.5%) vs. $12B. (PR)
  • Celestica (CLS): Q2 EPS of $0.11 beats by $0.01. Revenue of $1.4B (-25%) in-line. (PR)
  • Celgene (CELG): Q2 EPS of $0.46 in-line. Revenue of $629M (+10%) vs. $621M. Shares +8.9% premarket (7:45 ET). (PR)
  • CME Group (CME): Q2 EPS of $3.37 beats by $0.14. Revenue of $648M (+15%) vs. $652M. (PR)
  • Danaher (DHR): Q2 EPS of $0.89 beats by $0.01. Revenue of $2.7B (-19%) vs. $2.8B. (PR)
  • Diamond Offshore Drilling (DO): Q2 EPS of $2.79 beats by $0.15. Revenue of $946M (-0.8%) vs. $942M. (PR)
  • EMC (EMC): Q2 EPS of $0.18 beats by $0.01. Revenue of $3.3B (-11%) vs. $3.2B. Sees FY '09 EPS of $0.82 vs. &0.78 consensus. Shares +4.8% premarket (7:30 ET). (PR)
  • EnCana (ECA): Q2 EPS of $1.22 beats by $0.25. Revenue of $3.8B (-49%) vs. $4.4B. (EnCana news release (.pdf))
  • Fifth Third Bancorp (FITB): Q2 EPS of $1.15 vs. consensus of -$0.34 (may not be comparable). Tier 1 ratio of 12.9%. Shares +7% premarket (7:30 ET). (PR)
  • FLIR Systems (FLIR): Q2 EPS of $0.35 in-line. Revenue of $278M (+6.5%) vs. $297M. Shares +1.9% premarket (7:50 ET). (PR)
  • Ford Motor (F): Q2 EPS of -$0.21 beats by $0.27. Revenue of $27.2B (-34%) vs. $24.8B. (PR)
  • Goodrich (GR): Q2 EPS of $1.15 beats by $0.04. Revenue of $1.7B (-8%) in-line. (PR)
  • Hershey (HSY): Q2 EPS of $0.43 beats by $0.08. Revenue of $1.2B (+6%) vs. $1.1B. (PR)
  • Huntington Bancshares (HBAN): Q2 EPS of -$0.40 misses by $0.22. Increased provision for credit losses 42% from Q1 to $413.7M. Tier 1 capital ratio of 11.86%. Shares -3.1% premarket (7:50 ET). (PR)
  • ITT Educational Services (ESI): Q2 EPS of $1.87 beats by $0.14. Revenue of $317M (+29%) vs. $307M. (PR)
  • JetBlue Airways (JBLU): Q2 EPS of $0.05 beats by $0.03. Revenue of $807M (-6%) vs. $800M. (PR)
  • Kimberly-Clark (KMB): Q2 EPS of $1.16 beats by $0.22. Revenue of $4.7B (-5.6%) vs. $4.6B. Issues upside FY '09 EPS guidance of $4.10-4.25 vs. $4.12 consensus. (PR)
  • Newmont Mining (NEM): Q2 EPS of $0.43 misses by $0.04. Revenue of $1.6B (+7%) in-line. (PR)
  • NII Holdings (NIHD): Q2 EPS of $0.79 beats by $0.23. Revenue of $1.1B (-4%) vs. $1B. (PR)
  • Omnicom Group (OMC): Q2 EPS of $0.75 beats by $0.01. Revenue of $2.9B (-17%) in-line. (PR)
  • PNC Financial Services Group (PNC): Q2 EPS of $0.14 vs. consensus of $0.45 (may not be comparable). Revenue of $4B (+95.5%) vs. $3.65B. (PR)
  • Potash Corp. (POT): Q2 EPS of $0.62 misses by $0.07. Revenue of $856M (-67%) vs. $981M. Issues downside Q3 EPS guidance of $0.80-1.20 vs. $1.56 consensus. Issues downside FY '09 EPS guidance of $4.00-5.00 vs. $5.24 consensus. Shares -2.3% premarket (6:50 ET). (PR)
  • Raytheon (RTN): Q2 EPS of $1.24 beats by $0.11. Revenue of $6.1B (+4%) vs. $6.2B. (PR)
  • Starwood Hotels & Resorts Worldwide (HOT): Q2 EPS of $0.22 beats by $0.05. Revenue of $1.2B (-23%) in-line. Issues downside guidance: sees Q3 EPS of $0.06-0.10 vs. $0.21 consensus, FY '09 EPS of $0.65 vs. $0.76 consensus. (PR)
  • Terra Industries (TRA): Q2 EPS of $0.81 misses by $0.10. Revenue of $453.5M (-46%) vs. $568M. (PR)
  • Thermo Fisher Scientific (TMO): Q2 EPS of $0.74 beats by $0.08. Revenue of $2.5B (-8%) vs. $2.4B. (PR)
  • Wyeth (WYE): Q2 EPS of $0.94 beats by $0.09. Revenue of $5.7B (-4%) vs. $5.6B. Issues upside FY '09 EPS guidance of $3.48-3.58 vs. prior guidance of $3.33-3.53. (PR)
  • Xerox (XRX): Q2 EPS of $0.16 beats by $0.05. Revenue of $3.7B (-18%) in-line. (PR)

Earnings: Wednesday After Close

  • Alliance Data Systems (ADS): Q2 EPS of $0.95 misses by $0.07. Revenue of $460M (-9%) vs. $481M. Sees Q3 EPS of $1.34 in-line. Maintains 2009 EPS guidance of $5.15 vs. $5.00. (PR)
  • Amdocs (DOX): Q3 EPS of $0.53 beats by $0.05. Revenue of $690M (-16%) vs. $679M. Sees Q4 EPS of $0.47-0.51 vs. $0.48. Sees Q4 revenue of $670M-690M vs. $668M. (PR)
  • Citrix Systems (CTXS): Q2 EPS of $0.39 beats by $0.01. Revenue of $393M (+0%) vs. $387M. Sees Q3, FY09 revenues flat vs. 2008. (PR)
  • Covanta Holding Corp. (CVA): Q2 EPS of $0.21 beats by $0.01. Revenue of $376M (-11%) vs. $391M. Reaffirms 2009 EPS $0.65-0.80 vs. $0.71 and adjusted EBITDA of $500M-540M. (PR)
  • C.R. Bard (BCR): Q2 EPS of $1.23 beats by $0.02. Revenue of $625M (+1%) vs. $634M. (PR)
  • eBay (EBAY): Q2 EPS of $0.37 beats by $0.01. Revenue of $2.1B (-4%) vs. $2B. Sees Q3 EPS of $0.34-0.36 vs. $0.35. Sees Q3 revenue of $2.05B-2.15B vs. $2B. (PR)
  • Equifax (EFX): Q2 EPS of $0.57 in-line. Revenue of $455M (-9%) vs. $453M. Sees Q3 EPS of $0.52-0.57 vs. $0.59. (PR)
  • Equinix (EQIX): Q2 EPS of $0.44 beats by $0.11. Revenue of $213M (+7%) vs. $209M. Sees Q3 revenue of $221M-225M vs. $220M. Sees FY09 revenue of $860M-$875M vs. $861M. (PR)

  • E*TRADE Financial (ETFC): Q2 EPS of -$0.22 beats by $0.09. Total loan loss allowance was flat at $1.2B, or 5% of gross loans receivable. (PR)


Complete Story »]]> ADS ALXN AMZN BCR BG BMY BRK.A CELG CLS CME CTXS CVA DHR DIA DO DOX EBAY ECA EFX EMC EQIX ESI ETFC F FFIV FITB FLIR GLD GR GS HBAN HOT HSY ING INTC ISIL ISRG JAH JBLU JPM KMB KNX LHO MCO MEDX MMM MOS NE NEM NFX NIHD OMC OMTR OSIP PNC POT QCOM QQQQ RJF RTN SNDK SPY STLD SWKS T TEX TMO TQNT TRA USO VLKAY.PK VMW WLT WYE XRX SA Editor Rachael Granby Weekly Street Sentiment: Sell-Side Gets Burned Going Bearish Too Soon http://seekingalpha.com/article/150113-weekly-street-sentiment-sell-side-gets-burned-going-bearish-too-soon?source=feed 150113 click to enlarge

Sell-Side Gets Burned Going Bearish Too Soon
Ouch, that one hurt!
Sixteen weeks we waited for the sell-side to decide the market rally was ready to turn.
Sixteen weeks we wondered what it would take to make them reconsider their long bias and what that would mean for a market that seemingly was running based on the notion that the market simply wanted it to keep running higher.
Sixteen weeks we marvelled at the resolve of the sell-side to maintain their composure and be consistent with their “stay long” advice to their client base.
Sixteen weeks we waited… and it only took two weeks for the sell-side to conclude that they had moved too soon.
Welcome back folks! According to the sell-side, this rally isn’t over yet and when they realized their mistake, the sell-side couldn’t find a fast enough way to jump back on the bullish bandwagon that they had left a mere 14 days ago!
Last week saw sentiment climb 7.8%, the largest single week-over-week climb since we’ve been tracking this data. However, it probably speaks more to the amount of sell-side professionals who got caught offside than it does to any fundamental shift in the economic or corporate picture.
Now, we’re not going to take a stab at trying to figure out what made the sell-side turn bearish two weeks ago. In truth, it could have been anything from macro data to just being nervous that the market had come too far too fast. And, we’re not going to try and understand what drove them to do a one hundred and eighty degree turn on that feeling this past week. But where we can add value is in trying to understand how often we’ve been in this type of “flip-flop” environment when sentiment has turned this rapidly and what did that means for the upcoming months.
So, What Certainty Comes from Uncertainty?
Let’s put things in context. Over the past 30 months, there have been sixteen distinct sentiment shifts including the two that most recently occurred. The average sentiment trend has lasted eight weeks with the longest being 26 weeks back in 2007 and the shortest being a few occasions of just one week.
During those thirty months, there have only been three occasions since we started tracking sell-side sentiment when their “feel” for the market has shifted back and forth over such a short duration.
The first was between December 2007 and January 2008. The sell-side had been in a pronounced bearish trend for 10 weeks before they went bullish for a week, reverted back for a couple of weeks, went bullish again for a single week, reverted back for a month and then finally settled into a sustained 17-week bullish period that ran from February to March of 2008. The final bullish period generated a 9% benchmark return even though it took a couple months of uncertainty to establish a new direction for the market.
In May of 2008, at the end of the above mentioned trend, the sell-side went bearish for two weeks, reverted back to being bullish for a single week and then finally turned bearish for good in mid-June, 2008. The perma-bears ruled for 18 weeks during which the sentiment benchmark posted a greater than 30% return.
Finally, there was one other time in which the sell-side jumped to the other side of the sentiment equation (i.e., from being bulls to bears) for a single week in November of 2008. They managed to capture a generous 15% return in that single week and then went back to being bulls again until the beginning of 2009.
In hindsight, it shouldn’t be surprising that meaningful shifts aren’t pretty or clean. They do tend to take a couple tries to finally move the sell-side from one side of the market to the other for good and knowing that it’s the upcoming weeks that will be the decisive ones to watch. If the sell-side shows continued volatility and moves bearish again in the next week or two, then history would indicate we’ve entered another sustained bearish trend. While the transition wouldn’t have been pretty or even profitable, at that time the sell-side would be suggesting that your money should be off the table and out of the market for at least a couple of months and probably even longer.
So, as we wait and watch, here are the five tickers that have undergone the biggest bullish and bearish sentiment shifts over the last week:
Top 5 Bullish Sentiment Shifts:
Top 5 Bearish Sentiment Shifts:
Until next week…
]]> Tue, 21 Jul 2009 09:16:56 -0400 First Coverage First Coverage submits:

click to enlarge

Sell-Side Gets Burned Going Bearish Too Soon
Ouch, that one hurt!
Sixteen weeks we waited for the sell-side to decide the market rally was ready to turn.
Sixteen weeks we wondered what it would take to make them reconsider their long bias and what that would mean for a market that seemingly was running based on the notion that the market simply wanted it to keep running higher.
Sixteen weeks we marvelled at the resolve of the sell-side to maintain their composure and be consistent with their “stay long” advice to their client base.
Sixteen weeks we waited… and it only took two weeks for the sell-side to conclude that they had moved too soon.
Welcome back folks! According to the sell-side, this rally isn’t over yet and when they realized their mistake, the sell-side couldn’t find a fast enough way to jump back on the bullish bandwagon that they had left a mere 14 days ago!
Last week saw sentiment climb 7.8%, the largest single week-over-week climb since we’ve been tracking this data. However, it probably speaks more to the amount of sell-side professionals who got caught offside than it does to any fundamental shift in the economic or corporate picture.
Now, we’re not going to take a stab at trying to figure out what made the sell-side turn bearish two weeks ago. In truth, it could have been anything from macro data to just being nervous that the market had come too far too fast. And, we’re not going to try and understand what drove them to do a one hundred and eighty degree turn on that feeling this past week. But where we can add value is in trying to understand how often we’ve been in this type of “flip-flop” environment when sentiment has turned this rapidly and what did that means for the upcoming months.
So, What Certainty Comes from Uncertainty?
Let’s put things in context. Over the past 30 months, there have been sixteen distinct sentiment shifts including the two that most recently occurred. The average sentiment trend has lasted eight weeks with the longest being 26 weeks back in 2007 and the shortest being a few occasions of just one week.
During those thirty months, there have only been three occasions since we started tracking sell-side sentiment when their “feel” for the market has shifted back and forth over such a short duration.
The first was between December 2007 and January 2008. The sell-side had been in a pronounced bearish trend for 10 weeks before they went bullish for a week, reverted back for a couple of weeks, went bullish again for a single week, reverted back for a month and then finally settled into a sustained 17-week bullish period that ran from February to March of 2008. The final bullish period generated a 9% benchmark return even though it took a couple months of uncertainty to establish a new direction for the market.
In May of 2008, at the end of the above mentioned trend, the sell-side went bearish for two weeks, reverted back to being bullish for a single week and then finally turned bearish for good in mid-June, 2008. The perma-bears ruled for 18 weeks during which the sentiment benchmark posted a greater than 30% return.
Finally, there was one other time in which the sell-side jumped to the other side of the sentiment equation (i.e., from being bulls to bears) for a single week in November of 2008. They managed to capture a generous 15% return in that single week and then went back to being bulls again until the beginning of 2009.
In hindsight, it shouldn’t be surprising that meaningful shifts aren’t pretty or clean. They do tend to take a couple tries to finally move the sell-side from one side of the market to the other for good and knowing that it’s the upcoming weeks that will be the decisive ones to watch. If the sell-side shows continued volatility and moves bearish again in the next week or two, then history would indicate we’ve entered another sustained bearish trend. While the transition wouldn’t have been pretty or even profitable, at that time the sell-side would be suggesting that your money should be off the table and out of the market for at least a couple of months and probably even longer.
So, as we wait and watch, here are the five tickers that have undergone the biggest bullish and bearish sentiment shifts over the last week:
Top 5 Bullish Sentiment Shifts:
Top 5 Bearish Sentiment Shifts:
Until next week…

Complete Story »]]> AMSC ANSS CCL CNW ESI FCX LSTR RIMM VPRT X First Coverage Private University Enrollment Figures Reflect Paradigm Shift in College Education? http://seekingalpha.com/article/150000-private-university-enrollment-figures-reflect-paradigm-shift-in-college-education?source=feed 150000 Given my interest in the history and development of universities and colleges, I found today’s article about private college enrollments interesting, though not entirely unexpected (see Enrollment to Drop at a Third of Private Colleges). According to Bloomberg:

Almost a third of U.S. private colleges expect freshman enrollment to decline in the 2009-2010 school year as families struggle to pay bills and hold down debt, according to a survey.

]]> Tue, 21 Jul 2009 04:22:39 -0400 Robert Salomon Robert Salomon submits:

Given my interest in the history and development of universities and colleges, I found today’s article about private college enrollments interesting, though not entirely unexpected (see Enrollment to Drop at a Third of Private Colleges). According to Bloomberg:

Almost a third of U.S. private colleges expect freshman enrollment to decline in the 2009-2010 school year as families struggle to pay bills and hold down debt, according to a survey.


Complete Story »]]> APOL CECO DV ESI Robert Salomon Weekly Market Notes: Bye Bye Bernie http://seekingalpha.com/article/147096-weekly-market-notes-bye-bye-bernie?source=feed 147096

July 6th, 2009

“Capitalism is the legitimate racket of the ruling class.” - Al Capone 1899-1947

]]> Mon, 06 Jul 2009 05:26:42 -0400 Ned Brines Ned Brines submits:

July 6th, 2009

“Capitalism is the legitimate racket of the ruling class.” - Al Capone 1899-1947


Complete Story »]]> APOL COCO CPLA DV ESI F GMGMQ.PK HMC LINC LOPE NSANY SCHN TM Ned Brines Our Monthly Buy / Sell List http://seekingalpha.com/article/146025-our-monthly-buy-sell-list?source=feed 146025 As some investors may believe the market is starting to show "signs of recovery", many of the over 200 institutional firms The Applied Finance Group (AFG) works with can always take advantage of identifying mispriced securities. While some of AFG’s clients might have a specific focus on growth or value, most subscribe to the practice of buying growth at a discount (growth at a reasonable price GARP) and avoiding “value traps.”

In October 2008 AFG released the study, Then and Now, discussing the low expectations priced into the market

]]> Mon, 29 Jun 2009 13:52:27 -0400 Value Expectations Value Expectations submits:

As some investors may believe the market is starting to show "signs of recovery", many of the over 200 institutional firms The Applied Finance Group (AFG) works with can always take advantage of identifying mispriced securities. While some of AFG’s clients might have a specific focus on growth or value, most subscribe to the practice of buying growth at a discount (growth at a reasonable price GARP) and avoiding “value traps.”

In October 2008 AFG released the study, Then and Now, discussing the low expectations priced into the market


Complete Story »]]> AHC BC BLC BOLT CBRX CDII CEPH CPE CVI DCP DISH DRC ESI GAP GCI HOT HOV HRZ JOYG LHCG MDTH MEDX MEG MENT MIR MTW MWW NCS NE NPSP NYT OSK PHM SBAC SCI TXT UFS UGI VMED ZQK Value Expectations 4 'Bathwater Babies' and 20 'Dogs with Fleas' Stocks for the Week http://seekingalpha.com/article/140641-4-bathwater-babies-and-20-dogs-with-fleas-stocks-for-the-week?source=feed 140641 At the end of each trading week, Hillbent scans for the equity market for potential anomalies which exhibit extremely oversold and overbought conditions. Past observations have revealed that such candidates may experience reversal corrections to the upside or downside once the market reconfirms that their fundamentals remain solidly intact or relatively poor. From a contrarian perspective, these lists may also serve as a precursor to changes in institutional sentiment and underlying fundamentals.

(The purpose of this report is not to provide specific recommendations, but instead serve as a time-saving reference tool and starting point for investment ideas as the upcoming trading week unfolds. Of course, the results generated are not always perfect and users are strongly encouraged to perform their own due diligence on these names. Note that overbought and oversold conditions are based upon proprietary algorithms and quantitative models instead of conventional technical analysis indicators. As a supplement to this report, please refer to our Market Condition Summary to determine if market direction trends support a bullish or bearish investment bias over short-term, intermediate, and long-term timeframes.)

]]> Mon, 01 Jun 2009 08:51:20 -0400 J Clinton Hill J Clinton Hill submits:

At the end of each trading week, Hillbent scans for the equity market for potential anomalies which exhibit extremely oversold and overbought conditions. Past observations have revealed that such candidates may experience reversal corrections to the upside or downside once the market reconfirms that their fundamentals remain solidly intact or relatively poor. From a contrarian perspective, these lists may also serve as a precursor to changes in institutional sentiment and underlying fundamentals.

(The purpose of this report is not to provide specific recommendations, but instead serve as a time-saving reference tool and starting point for investment ideas as the upcoming trading week unfolds. Of course, the results generated are not always perfect and users are strongly encouraged to perform their own due diligence on these names. Note that overbought and oversold conditions are based upon proprietary algorithms and quantitative models instead of conventional technical analysis indicators. As a supplement to this report, please refer to our Market Condition Summary to determine if market direction trends support a bullish or bearish investment bias over short-term, intermediate, and long-term timeframes.)


Complete Story »]]> ANW BEAV CEO CGV CGX CMCO COCO COLM CP ECOL ESI FDP HANS IBKR KMT KNDL LAYN MTX SAIA TNE TREE WCC YZC ZEUS J Clinton Hill Why I'm Shorting DeVry http://seekingalpha.com/article/140271-why-i-m-shorting-devry?source=feed 140271 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.

]]> Fri, 29 May 2009 00:37:08 -0400 TraderMark Trader Mark submits:

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.


Complete Story »]]> APOL DV ESI TraderMark Strayer Education Suffers from Market Contradictions http://seekingalpha.com/article/139745-strayer-education-suffers-from-market-contradictions?source=feed 139745 Summary:

Strayer Education (STRA) is in a state of a contradiction in the eyes of the market. It is treated as a “defensive” play and yet trades like it is a growth stock. To resolve this contradiction, one of these beliefs must be wrong. I would contend that both of these beliefs are wrong. The stock is not trading within fundamentals and is more likely to be valued lower (lower multiple, lower reported earnings) in the quarters ahead.

]]> Wed, 27 May 2009 08:35:02 -0400 Chris Lau Summary:

Strayer Education (STRA) is in a state of a contradiction in the eyes of the market. It is treated as a “defensive” play and yet trades like it is a growth stock. To resolve this contradiction, one of these beliefs must be wrong. I would contend that both of these beliefs are wrong. The stock is not trading within fundamentals and is more likely to be valued lower (lower multiple, lower reported earnings) in the quarters ahead.


Complete Story »]]> APOL DV ESI STRA Chris Lau