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ITT Educational Services Inc. Message Board

  • swingtrader76 swingtrader76 Aug 9, 2012 11:33 AM Flag

    ESI is a value trap

    http://us.rd.yahoo.com/finance/external/pssa/SIG=12ai2hef1/*http://seekingalpha.com/article/793921-are-education-stocks-a-value-trap?source=yahoo

    Pretty much what I've been saying all along, the negative cash flow is particularly telling. Of course, Ox is just not smart enough to understand these basic concepts. Instead he just pumps the buybacks and posts false information. Of course he's paid for his ignorance, riding the stock all the way down from $120 for over a 70% loss! Ha Ha Ha!!!

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    • swing,

      ok. here is my proposal. let's curtail the personal bashing, name calling, etc. it is doing no one any good and is a waste of both our time.

      However, let's just say that we can agree to disagree. Post your viewpoints and I will respect your opinion, although I may offer a counter argument with all due respect given. I will continue to post things that I think are relevant and you can of course offer constructive criticism and/or a differing opinion.

      Neither of us can control the ESI stock price. I gladly admit that your view on the price has proven correct since July. The price is where it is and I will not argue a point that is obvious.

      We can leave all te negativity in the trash can.

      Along these lines, earlier today I posted some thoughts about the Wall Street Journal article in today's paper. No one responded to it at all. What are your thoughts about the article and some of my commentary (which is clearly favorable towards ESI, but ONLY in comparison to the not-for-profit schools).

      I have long worried that the huge tuition increases and high tuition levels at the not-for-profit schools was going to generate trouble. I few years ago I served on the board of a private not-for-profit secondary school in Conn and I told the board many times that their never ending large tuition increases were going to cause a real problem someday. I was pretty much ignored by other board members who clearly felt that they could always raise money from alumni and others to alleviate any future problems. The school then started to accept full paying students from foreign countries (particularly Korea) in order to be able to keep the tuition money train flowing. I see the same happening at the not-for-profit colleges, in addition to the things I mention in my post.

      The for-profit schools offer a completely different proposition, although it is not perfect by any means. In any event, I see no way that students and parents can continue to pay these outrageous amounts charged by the not-for-profit schools. Their tuition levels set the pricing standard for all schools in the country. This means that to get educated students have to change their approach. Community Colleges are a reasonable choice although these are taxpayer subsidized and are being cut back. That leaves no other choice than the for-profit sector to take up the slack.

      Furthermore, I was reading about how many major not-for-profit colleges are now taking in 15-30% foreign students. Well, that means there are 15-30% less slots for American kids. These kids need to go to school too. Where are they going to go?

    • I'm neither bitter nor old

    • swing, I have to laugh at your claims about taking about "negative cash flow all along". You have been posting no such claims "all along". You have been a no-added value gnat on this investment board for some time all during which ESI has generated monstrous amounts of free cash flow year after year and you have never mentioned anything about "negative cash flow" "all along because there has been no such thing. So, in the last quarter ESI has negative cash flow as it bought back $61 million in stock against a net income of $46 million and you now cite this as some big new thing? Well, in the previous (first) quarter ESI repurchased $145 million in stock (approximately 8.2% of total shares outstanding) against a much lower net income (cash flow) number, and this resulted in "negative cash flow". You weren't saying a word about "negative" cash flow then, or in any prior quarter.

      Dude, get a life. Anyone with a brain knows that your "research" and investment perspective on ESI is completely shallow. You got lucky on the stock price as the p/e went from 6.7 to 3.7 while earnings for 2012 are well higher than the initial company and Wall Street projections at the beginning of the year.

      Regarding my gains or losses in ESI, as I have said many times, I am a long term holder in ESI. I am long in the $50's. For the my core positions, I am not some deadbeat swing trader who has no faith in any investment they may make and needs to trade every position on a short term basis because of the lack of balls to stay with something for longer than a day or a week. In addition, I have traded ESI shares around my core long position for gains of over $100 per share. I have also been short APOL shares as a hedge and have +40% gain on that position. I am also now long BPI shares at well below $10 and have a 15% gain on that education position. Overall, I have made a huge amount of money in the education space, even factoring the recent decline in ESI.

      And so to "support" your lack of research and investment thinking, all you can do is attach a link to your post to that lame web site "Seeking Alpha" and still not provide any analysis in the least on your own. I got to say, if you are relying on stuff like this, you are in a bad way.

      • 1 Reply to oxledge
      • My previous post said that the Seeking Alpha article articulated the same thing I have been saying all along - not that cash flow has been negative all along. The negative cash flow is new this quarter and is a signficant confirmation of how quickly the fundamentals are deteriorating.

        It's pretty hilarious, you are the one that said ESI was a buy when it was over $100 and I'm the idiot? I'd say my research has been signficantly better than yours, really the only error I've made is not being even more bearish. If you had listened to me, you wouldn't have massive losses. I also love your claim that I just got lucky. A 70% drop is a whole lot of luck!

        All of your losses must be getting you pretty upset to resort to posting straight out lies and other nonsense.

    • swingtrader no matter how misguided one is I for one don't think other peoples losses are funny.

      • 1 Reply to wpamntnman
      • wp, i am not in the least misguided about anything. I fully understand the risks in ESI and the education space. Simply because I do not share your view or the view of others hardly makes me misguided. I find it amusing that a few people here take exception to my posts because they do not agree with what I or other people may think. Furthermore, I have seen several posts from people who have complimented me on my objective viewpoints on ESI and the education space. I am not in the least put off by these people hurling insults because I stand up and say what I think and post what I think is reasonable analysis to support my statements. Let them throw their insults. These are simply "little" people of no character and of no values.

        My viewpoints regarding ESI do not mean in any way that I will be correct in how ESI's share price acts over any time frame. Earlier in the year ESI shares were up on the order of 40% for the year. At that time I never rubbed such in the face of the people who are now crowing about the shares being down for the year. Yet these same people are more than happy to crow about ESI shares being down in the last month and hurl barbs at me.

        But no worries, I am not in the least concerned about what dell, swing and some of the other short sellers post here about me. They may be proven right in the end re ESI. They may not. Time will tell.

 
ESI
6.22-0.09(-1.43%)Apr 21 4:02 PMEDT