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ITT Educational Services Inc. Message Board

  • oxledge oxledge Aug 14, 2012 11:33 PM Flag

    Shorts covered 1.5 million shares

    In the last two weeks, the shorts have been taking advantage of the gift horse by covering 1.5 million shares, which is over 20% of the current short interest. Why are the shorts covering their position so aggressively if ESI is supposedly a basket case at least according to some of the posters on this board. The only conclusion is that they see no financial opportunity relative to the risk involved.

    With ESI down based on general industry perceptions and with shares now trading at less than 4 times earnings, the shorts are certainly not beating on ESI being some kind of value trap.

    For the many years that I have followed ESI (which dates back to the original IPO) and includes the full extent of the "short" story on ESI (Chanos appearing on CNBC and moaning about his poorly performing education stock short of over 5 years), ESI's earnings have never collapsed for all the time the short sellers were squawking about ESI. The number of short stories on the company has continually changed as each story failed to materialize. Chanos claimed that fESI would have all sorts of bad debts that fwould appear on their financial statements. Zdidn't happen. Then there was the revenue recognition accounting accusation. then their was a claim years ago the ESI earnings would collapse in the immediate future. Amazing how none of these things panned out in the least for the shorts. And here we are with the shares at less than 4 times earnings and the stock price down in 8 days with ESI earnings at levels hugely above what the shorts have been projecting fog years.

    Alas, the marketplace can be a strange place and I have seen similar craziness many times before. anyone remember Apple Computer being days away from bankruptcy just a few years ago? High flier Enron going to zero. Nokia almost being bankrupt, then becoming the largest market cap company in Europe, only then to have their shares collapse again.

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ESI
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