Author: Riddhi Ruparelia
Covestor model: Long Term Growth
Disclosures: Long APEI, LRN
In June, the U.S. Department of Education provided clarity into the issue of students’ eligibility to continue to receive government loans for for-profit college tuition. The new ruling seems to be lot more lenient than feared by the market over the last year or so. This resulted into a quick uptick of many of the for-profit education stocks soon after the new ruling.
Since we are focused on long term growth, this ruling provide a good opportunity to enter this sector. Our thesis is that the sector will see significant growth following the removal of the overhang created by government uncertainty.
We took an initial position in American Public Education (APEI), a for-profit education company focused on providing online education to military and other government employees. This complements our existing position in another online education company, K-12 (LRN).
We reduced some of the existing positions to enable the APEI purchase.
Source:
“Some Relief, But For-Profit Colleges Still Face Challenges“ Mellisa Korn, The Wall Street Journal, 6/9/11 http://professional.wsj.com/article/BT-CO-20110609-711464.html?mg=reno-secaucus-wsj
