Given the pounding that ESI has taken in the last 9 days, I would have thought that Blum Partners was unloading stock, but I have not seen any SEC filings for such. As a +5% owner, Blum has to file within 2 days of any transaction. Maybe Blum's clients are all locked up until the end of the August, end of the third quarter, end of the year or longer. Who knows? 5.4 million shares have traded in the past couple of weeks, which is a fair amount of stock for ESI, and particularly alot if BLUM has not been in the market.
Hard to tell if the shorts have covered any of their positions or in fact were shorting more into the decline. Will have to wait for the latest short interest stats.
I still remain a bit confused to the level of the decline in ESI shares in the past two weeks as the company has had no change in its 2012 earnings forecast. I figured that a p/e of 5 was good enough to offer support for the shares when they were in the $50's and fully reflected two years of negative press in the education sector. Now the p/e is 3.7 - 4.0 times. I can not recall ever seeing anything like this in terms of valuation for a profitable company with a clean balance sheet and a huge stock buyback program. I cant ever remember seeing any company trade at this level except when Mexico was bankrupt and inflation there was running 1500% a year. When that happened the national telephone company Telmex traded at 1 times earnings.
The stock is getting smashed due to longterm concerns about the future of the company and industry. PE means very little in an industry that is facing drastic changes. While ITT will probably survive, it may be much tougher to make money down the road.
Having said that, at some point it is time to buy and there is an opportunity for a quick 30%-50% pop over a period of a 4 to 6 weeks. I just can't see this staying at $32. How can you not be bullish on this stock at this price level???