There's no doubt that all the ED has to do is, as you say, "choke them to death". They can pull the plug at any time. But will they? I think they will hold off using the nuclear option until they see they cannot shut down ESI any other way.
I also think ACICS is more than a little irritated (I can't use the words I'd like to) with the ED and will not pull ESI's accreditation in August. They'd really like to say some choice words to the ED and not look like the ED's lap dog.
Anyway, we'll see. I'm both long and short, via options, and just want things to happen quickly with LARGE price swings.
Volatility = profits.
P.S. I am very rarely sad but sometimes mistaken.
You're right. I would expect at least one 13D next week if they are truly interested. Tuesday's volume was 429K so they should have picked up some then. With all the negativity, I'm a bit surprised we are hanging in the $1.80+ area. Guess that's the pivot point between the longs, the shorts, and the don't cares.
My dear dahn, the technique was not neutralization, the technique was equalization.
ESI = Enron? Let me count the ways it is not. 1,2,3,4,5,6,...
YOUR equalization technique has poor execution and no details.
and the number of times the government loses those cases.
"But critics argue that too often the administration’s focus on outcomes – both in the accreditation space and elsewhere in the higher education space – unfairly targets for-profit colleges and ignores similar intransigencies at other types of colleges and universities."
"Case in point: A new report from Third Way, a nonpartisan policy think tank in Washington, D.C., shows that nearly half of students enrolled in four-year private, nonprofit colleges aren’t graduating. And many of those who do graduate aren’t earning sufficient incomes even years after completion and are unable to repay their loans."
Federal Courts are notoriously SLOW to make decisions and the ACICS case will be no exception.
News Item: "a federal panel, the National Advisory Committee on Institutional Quality and Integrity, voted Thursday to shut down the largest accrediting agency (ACICS) of private sector colleges and universities amid intense criticism in recent years for loose oversight of educational institutions."
"The ruling is far from the final execution for the accrediting agency, which plans to appeal the decision, first to the secretary of education and then the federal courts."
Why is buying ESI stock now a smart move by the Zhangs?
Suppose they plan on offering, for example, $4 per share for ESI.
Every share they buy now below $2 reduces their cost of buying ESI by millions of dollars.
This is gonna be good!
The Zhangs must be up to something and it's likely they are either trying to buy ESI or take control of ESI with the ED apparently in the loop.
The ED reported that a buyout of ESI "fell through" but did not elaborate. My guess is the Zhangs want to buy ESI or become majority owners so they can get rid of the current management (very helpful) and get rid of the BOD (another helpful act). The fact that the ED is aware and monitoring the actions of the Zhangs implies that, they too would like a change of control and a change of management.
The Zhangs are buying as much of ESI as they can on a daily basis without sending ESI skyrocketing.
On June 15th, they bought 24K shares of the 219K traded, i.e. 11% of all shares traded.
On June 16th, they bought 132K shares of the 341K traded, i.e. 38.7% of all shares traded !!
On June 17th, they bought 104K shares of the 267K traded, i.e. 39% of all shares traded !!
The Zhangs have 2 priorities right now:
1) Buy as much of ESI as they can on a daily basis.
2) Work with the ED to gain control of ESI.
They are telegraphing what they are doing because they are required to file a 13D anytime they add more than 1% of ESI to their current position. They can only buy 240,000 shares and then they have to report. (see below).
What the Zhangs would like to see are a few very big volume days. They need news and it doesn't matter if it's good or bad. They might prefer bad news.
The Zhangs have a lot of free cash and would have no trouble posting a LOC that would make the ED happy.
This is going to be fun!
"Schedule 13D is an SEC filing that must be submitted to the US SEC within 10 days, by anyone who acquires beneficial ownership of more than 5% of any class of publicly traded securities in a public company. A filer must promptly update its 13D filing to reflect any material change in the facts disclosed, including the acquisition or disposition of 1% or more of the class of securities that are the subject of the filing."
Expect a very, very lengthy court fight if the ED tries to shut down ACICS. Meanwhile, ESI will continue operating normally.
From Inside Higher Ed (May 4, 2016)
"A chorus of powerful critics wants to shut down the Accrediting Council for Independent Colleges and Schools, a national accreditor, for allegedly being too lax with Corinthian Colleges and other controversial for-profit institutions.
In December, however, ACICS tried to slap the most severe sanction available to accreditors on a small for-profit, Bristol University, by denying Bristol’s bid to renew its accreditation. ACICS’s final decision in March, which resulted in the university shutting down immediately, was based on 24 identified deficiencies.
Yet a federal judge last week blocked the accreditor’s move, citing “irreparable harm” to the university if it permanently lost accreditation. The judge said Bristol now may operate as it did before the sanction and can enroll new students.
The drama shows that even when an accreditor moves aggressively, as many accuse them of doing too rarely, they often hit a brick wall with the courts or politicians who are sympathetic to colleges.
Bristol in March sued to block ACICS’s “unreasonable” denial of its renewal application, claiming the accreditor violated its own procedures and denied the university due process.
“It’s clear that ACICS in this case acted in a way that was a rush to judgment,” Josh Richards, a lawyer with Saul Ewing, said in an interview. “The fact that ACICS is under pressure from Congress and the Department of Education to improve its own performance doesn’t give it licenses to disregard the rights of the institutions it accredits.”
Last week a federal judge agreed with Bristol, finding that the university “made a sufficient showing” with its legal arguments.
The “plaintiff will suffer irreparable harm in the absence of immediate injunctive relief since without accreditation,” wrote Anthony Jenga, a U.S. disdistrict judge for the Eastern District of Virginia, where ACICS is based, “it will cease operations and its currently enrolled students will no longer be able to attend classes.”
The court previously had issued a preliminary injunction that prevented ACICS from revoking Bristol's accreditation. In issuing the preliminary order, the judge did not rule on the merits of Bristol's due-process claims but found that the university would likely prevail in a full-fledged hearing.
What's the result if they do?
1) ESI has an 18 month reprieve to find new accreditors.
2) The "show cause" directive gets flushed down the toilet.
edu, you conveniently omitted the fact that if ACICS is shut down, ESI and all the other schools accredited by ACICS will have 18 months to find other accreditation.
The result is that ESI would basically get an 18 month reprieve from any accreditation problems.
You usually post pretty good arguments but this one is not great.
Maybe the ED wants the real estate, too?
ESI management is hiding out hoping no more bombs drop on them. They have always been poor at pr. They don't even allow analysts to ask questions at conference calls. Then again, their paranoia is justified. The other for-profits are breathing a sigh of relief that ESI is getting all the flak. They hope ESI can hold out as long as possible so their own demise is delayed.