#1 reason - DOE for-profit proposal will be modified(less harsh) to pass the House and Senate (this is a given due to Republicans gaining numbers after the elections) Check recent lobbying related news by Strayer, EDMC and Apollo. The DOE planned this strategy in the first place...deliberately announce a strict proposal, then moderate to appease to the opposition. Obama politics at work.
#2 COCO insiders voted with their wallets. (7 Directors including the Chairman bought stock)
#3 Valuation is at extreme historical lows. Private equity and hedge funds look for exactly this type of buyout situation. The initial offer is an indication, $8 Ackman rumor is a good start. My assessment is $10 per share minimum.
#4 COCO was targeted by the shorts (Eisman, etc.) to the highest degree amongst all for-profit stocks. Now with 100% of the negativity being baked into the stock price the shorts would be prudent to cover ASAP. A perfect environment for a short squeeze has started due to insider buying, improving fundamental news, stock buyback, potential buyout, etc.
If you have any other reasons , please add.
oh I had to laugh at another thing...some are speculating govt. will cut money to these for profit schools. WRONG ! Even if the democrats win..they are not cutting education...it is too politically painful.
These private schools, after making a profit, are still much more efficient and get more education to the population per dollar than a government ran college or vocational school AND they are probably more honest.
Ot: DTL try this link for the insiders they bought a few shares in August and i bet they are buying at this price too. They are in a quite period before earnings so i think we could see a few things going on. I see ACAD had some very big buys today at the end, you should get that news soon :-)
Hey shorts how does it feel now the longs took in the shorts last week this week is your turn. Thank you for the chance to buy again last week at less than $5.00 a share what a gift!!!
I wish I could. I've been trying to submit a post since last night about how a perfect storm could be brewing that could send the price through the roof, but Yahoo won't accept them message for no apparent reason. No error message, it just doesn't show up. *sigh*
#5) Technical analysis. Charts strengthening. Nice bounce out of oversold condition. RSI strengthening. Up days are on good volume. Down days are on weak volume. Nice gap to fill back up to $7 area. Chalkin Money Flow increasing. MACD cross over (although it is in negative territory).
#6) Overall market backdrop seems to be getting a little less negative. Seven out of last eight days up on SPX
#7) Stock price getting out of Margin Call Danger Area. Margin requirements change at $4, $5, and $6 areas. Longs are not "forced" to sell for Margin Calls.
I'm sure I'll think of other reasons. GOOD TOPIC and Congratulations to you for starting something THOUGHT PROVOKING and not just a bunch of inane banter.
Disclosure: COCO is by far my largest position. GLTAL.
The assumption that is bringing down the stock is that there will be legislation to significantly lower the income streams of education companies. I find this highly unlikely due to the following reasons:
1. Diane Feinstein's husband is a major owner of COCO and other education companies. You know she isn't going to let her hubby get hurt too much. More importantly, she won't let her hubby do anything that will tarnish her image.
2. Washington Post owns Kaplan and Kaplan is their primary profit engine. One thing I learned in Political Science degree is that the media influences Congress more than any other entity. Washington Post is one of the most influential media institutions.
3. Warren Buffett is major owner of beloved Washington Post. He is not likely to let any one or two congressman have him lose money and tarnish his reputation.
4. The CEO of Strayer Education is a former Republican Cabinet member i.e. very politically connected.
5. Education is linked to jobs. A congressman who impacts Education could risk being associated with Job Loss. Not a smart thing to do at this time.
1-5 leads me to believe that there is low probability that a bill that will inflict the kind of damage built into the stock price. I rate this stock a strong buy at a P/E ratio below 4.