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NAUH And The Subprime College Crash

|Includes: Corinthian Colleges, Inc. (COCO), EDMC, ESI-OLD, NAUH

As a subprime higher education company, National American University Holdings (NAUH) has avoided media and agency scrutiny for years.

NAUH has mortgaged their real estate assets to stay afloat, to the tune of $8M, a big number for a small cap company.

NAUH has been losing money since 2015, with no end in sight.

Share price has been at or near $1 delisting price since March 2018.

NAUH has only one major investor left, T. Rowe Price.

NAUH and the Subprime College Crash

While subprime college college companies like Corinthian Colleges (COCO), Apollo Group (NASDAQ:APOL), DeVry University (DV), ITT Educational Services (ESI), and Education Management Corporation (EDMC) made the greatest profits and the greatest losses over the last two to three decades, National American University Holdings (NAUH) has been flying under the radar.  

The reason for so little attention: NAUH is a small cap company with about 35 small ground campuses. Their campuses are spread out across the US West and Midwest, including Ellsworth Air Force Base near Rapid City, South Dakota.

The company also has a few real estate holdings in South Dakota. 

NAUH's shares have never risen to the heights of other subprime colleges that have already crashed.  Its peak was $12--more than eight years ago.  

Downward Trajectory

NAUH has made some money by scavenging from other failed schools, such as Everest (once part of Corinthian Colleges) and Westwood College. But overall it has been on a three-year streak of earnings losses. NAUH's last reported gains were in February 2015. 

Revenues are also down, way down. According to NAUH's last quarterly report, "FY 2018 annual revenues were $77.2 million, compared to $86.6 million in the prior year."  

It Gets Worse

National American may gain some attention--in a bad way--because it shows few signs that it can survive. As part of its cost cutting, almost all of NAU's students are now online, which usually results in lower graduation rates--and more students who cannot repay their student loans.

According to the National Center for Education Statistics, NAUH's 3-year student loan default rate is 24%. Their graduation rate is 13-35%, depending on the campus.  Worse yet, NAUH is targeting service members and veterans even more as the company lies at the brink of delisting.  That's something that could get negative media attention. 

In 2018, NAUH has been forced to mortgage its properties for $8M. The loan is with Black Hills Community Bank. While the conditions may be favorable, maybe too favorable, business deals like this sound reminiscent of ITT Educational Services before they failed two years ago. 

At this point, only one investor stands between NAUH and delisting--T. Rowe Price, a huge company that can afford to lose a little money in spots.  But with all other institutional investors out, how long will T. Rowe Price keep their shares? 


  • National American University Holdings has been on the brink of delisting for most of 2018.
  • NAUH has been on an earnings losing streak for more then three years.
  • Revenues continue to crater and cost cutting will result in worsening student outcomes.
  • NAUH faces debt payments in 2019 that are favorable, but that indicate a failing company.
  • Only one investor, T. Rowe Price, stands between NAUH and delisting.

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

Additional disclosure: Dahn Shaulis data-driven blog about higher education business is at