Tom Jacobs runs one of the “premium” newsletter services at the Motley Fool — they call it Special Ops, and I’ve written about it before … but that happened to be for the Irregulars in the Friday File, so many of you might have missed it.
Special Ops says it looks for, as you might imagine, special opportunities — that’s usually characterized as being picks that have potential that’s not really correlated with the markets, special opportunities like spinoffs, mergers, orphans that fall out of favor, deep value plays, asset plays and the like.
He gives a free idea also — Energy Solutions (ES), which does management for operating and closing nuclear power plants and has a nuclear disposal facility, but which got clobbered after the Japan earthquake in what they seem to characterize as a “baby thrown out with the bathwater” situation. It also carries a lot of debt, scaring off investors, though Jacobs says that a close look at the books and their big long-term contracts makes the debt look less frightening. Interesting idea, with a long-term business that may well be undervalued as Jacobs believes, and an example of the kind of “buy scary companies, buy cheap” philosophy that I tend to like.
Oh, and of course this is a “limited opportunity” to subscribe to this hush-hush newsletter, and if you don’t buy in for two thousand bucks (oops, wait, sorry! It’s only $1,999!) before midnight tonight, your chance will be lost!
So let’s see what the picks are that he won’t tell us about for free, shall we?
“A low-risk opportunity that could DOUBLE YOUR MONEY in less than a year!
“Here’s the story: the entire for-profit education sector has a bad name, and the stock prices prove it…
“But remember, we love ugly investments. They provide us opportunities to grab up shares for pennies on the dollar, and later sell for a spectacular gain when sentiment shifts…
“You just need a discerning eye for current value and future demand… So let me ask you this, do you think the NON-profit education system is meeting everyone’s needs in a perfectly efficient manner?
“I’d say with technology and jobs changing at a breathtaking rate, for-profit education has a considerable role to play. It’s just inevitable.
“Not everyone can take time off and go to college on the college’s schedule. And the cost of college today versus job earnings — come on. It’s becoming an expensive luxury and not practical for many in our country.
“And the market has dropped the entire industry into the trash bin. We love that! Because if we pick through the trash, somebody might just have thrown out a Rembrandt…
“The company I’m looking at started with real universities and built out online and remote campuses. It has an excellent institutional investor backer. And it’s selling at a price you associate with a company about to go belly up. But I don’t think it’s going to!
“Sure, it’s going to be volatile — so as with many of our stocks — you have to be able to take the ups and downs. But we see this as a low-risk double or more within a year.”
So who is Jacobs teasing here?
Well, we have to pull the tarp off the Thinkolator and fire it up for this one — the clues are not all that specific or precise, so we need some extra cogitationizing … but we get a high degree of certainty that this is …
Bridgepoint Education (BPI)
And no, it’s not just the “baby thrown out with the bathwater” play in the for-profit-education industry — to some extent, Bridgepoint was the bathwater, they’re nowhere near as high profile as larger players like Apollo (APOL) and their University of Phoenix, or Washington Post (WPO) and their Kaplan division, which are, respectively, by far the largest universities in terms of national enrollment. But Bridgepoint was certainly right in the middle of the muck in the recent investigations into misleading practices in recruiting students, poor graduation and employment rates and implications of wasted federal student loan dollars, etc.
But they’re also the best match for these clues, and the Motley Fool itself has disclosed separately that they own some shares of the company, too.
“Started with real universities and built out online and remote campuses?”
Yep, it looks from my brief glance as though Bridgepoint was formed as an acquisition vehicle to start up a competitor to the University of Phoenix — but in so doing they bought up a near-bankrupt midwestern University, then called the Franciscan University of the Prairies in 2005. They later and changed its name to Ashford University, but this gives them a nice ivy-covered 100-year-old (almost) campus to show in their brochures and give them some gravitas even as 98% of their students are online.
Their other main asset is a more profesional school — in 2007 Bridgepoint acquired the Colorado School of Professional Psychology. This one got a name change, too, to the University of the Rockies, though it’s still largely a professional online school for psychology.
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BPI has been around for a while, and can claim some history due to the longstanding nature of the colleges they’ve acquired, but the public company is almost brand new. They went public in April, 2009 — almost exactly the historic low point in the stock market, with a disappointing (of course) IPO that ended up being near $10. It shot up pretty quickly as the economy bounced back later that year, posting incredible earnings growth and substantially better margins than most of their peers — for the last year or so they have ridden the same ups and downs as other for profit education companies