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ITT Educational Services Inc. Message Board

  • ejschultheis ejschultheis Feb 28, 2013 7:14 PM Flag


    ESI has been crushed ove rthe past 2 years. Short interest is near 30% so you have to be careful. Shorts do their homework and get it right more often than longs....they have to. if they get it wrong they have unlimited losses.

    where does ITT stand?
    1) falling sales
    2)falling enrollment
    3) declining persistence
    4)higher losses on peak bonds.

    None of these bother me if the stock is at the right price.
    What keeps me from pulling the trigger?

    These private schools must keep government student loan (most of revenue) defaults below 25%.
    It appears to me that the peak loans bonds were structured to keep these losses below the threshold that would limit government funding. a) Were the notes structured to pay interest and principal for some loans that were in default to keep the overall portfolio above the minimum government requirement. b) if this were the case, would the portfolio of student loans show losses above the minimum acceptable levels the government set? c) if these portfolios are deemed to below acceptable government standards will the company be eligible for future student loan funding? d) will the company be forced to pay fines for the past activities?

    I don't know the answers but the large short position lead me to believe that this company may have more pain prior too reaching bottom. With 50 years of education experience I believe that there is considerable value with this company but in the next months the outlook is too cloudy to see any meaningful rise in the stock. I think that the stock needs more time for the legal system to do its job (9-18 months). This will certainly bottom prior to the legal outcome but that is in the distant future.

    Good Luck

    No position but looking

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