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K12, Inc. Message Board

  • Claim_Digger Claim_Digger Apr 25, 2011 8:59 AM Flag

    Recent jump

    The recent jump in K12 shares is probably due to speculation over a possible buyout. BBBB Shares jumped recently when it was revealed that they have received buyout offers. Rumors have Pearson, Google and even Apple sniffing around. BBBB is more of a software/infrastructure play in the educational space and does not compete directly with LRN. LRN is more of a service company. However, they both offer advances in education that depend on online technology. By most ratios, PS, EV/EBIDTA, EV/REV, growth, etc. LRN is still selling for a more reasonable price than is BBBB.

    The investment by the venture fund in LRN might be part of this. Venture funds are always looking for an exit strategy and a quick buyout is certainly a favored route. Packard only owns 4% while Milken owns almost 24% so a buyout is not impossible but I think it unlikely. LRN is the big dog in their space and has lots of room to grow by themselves. I think with the venture money they are more likely to be an acquirer than an acquiree (is acquiree a word?)

    CD

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    • 24%, based on what, based on the proxy from last year?

      Prior to the issuance of the Series A Special Stock to Holdings on July 23, 2010, Learning Group, KULG, Learning Group Partners, Hampstead, Cornerstone, Knowledge Industries and Lowell J. Milken collectively held an aggregate of 5,256,527 shares of Common Stock, which represented approximately 17.3% of our then-outstanding voting power. Learning Group and the above mentioned affiliates collectively comprise our largest group of affiliated stockholders. If the Series A Rights Proposal is approved by our stockholders, Learning Group and these affiliates, including Holdings, will hold an aggregate of approximately 8,006,527 shares of Common Stock outstanding, on an as converted basis, which represented approximately 23.7% of our outstanding voting power as of December 20, 2010 (if the holders of Series A Special Stock had had a right to convert such shares into Common Stock or to vote such shares as of such date).
      ___

      It is really hard to tell what they own. They can have options, convertibles, short positions, you name it. I count such investors, who have played games for decades, as zero. I couldn't care less what they own.

    • Agree with you that the Milken's wouldn't seem to be sellers, although everyone has a price. It seems like TVS got a great deal buying 4 million shares at less than $32. Do you think that there is a possibility that the Company might look to reprice the deal instead of closing? Could be an extra $20 million for shareholders.

      I like this Company, but wonder if the price has gotten a little ahead of itself? What do you think? Are you buying at these levels?

      • 2 Replies to malvernj
      • I am not a buyer at these levels even though I am very optimistic on the stock as I agree that the price has gotten a little ahead of itself over the short term. I am a value investor and the ratios now are fairly high. PS is 2.7. The PE is over 80 and the EV/OCF ratio is over 20. Growth is still tremendous though, so the ratios must be taken in context. For instance they expect EBIDTA to be $72M this year, up from $61M in 2010. If one uses EBIDTA they are selling for about 17 times EBIDTA which is not so high these days. I am holding right now.

        CD

      • They are building a moat around this company and many great things ahead for it!! Getting Silicon Valley involved with the private placement was a stroke of genius!! Plenty of cash now, smart management, and a major factor in a niche space!! All things go, and I have my buy stop order in at 40!!

 
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