Blum Capital Partners Reduce Position in Career Education ~ market folly

Thursday, April 18, 2013

Blum Capital Partners Reduce Position in Career Education

Richard Blum's hedge fund firm Blum Capital Partners has filed an amended 13D and various Form 4's with the SEC over the past few days regarding their stake in Career Education Corp (CECO).  According to the filings, Blum has disclosed a 16.1% ownership stake in CECO with 10,803,834 shares.

This marks a decrease of around 19% in their position size since the end of 2012 when they owned over 13.3 million shares.  The latest 13D amendment was made due to portfolio activity on April 12th.

Looking at Blum's Form 4's, we see that they've been selling from April 4th through the 13th at prices ranging from $2.1 to $2.18.

It's also worth mentioning that Blum owns another large stake in the for-profit education space: ITT Educational (ESI).  As of the end of 2012, this was an even larger position for them, though they were out selling some shares in the fourth quarter according to their last 13F filed with the SEC.

The for-profit education sector has been under scrutiny from some time by regulators and has been shorted by numerous hedge funds as student loan debt has grown rapidly over the past few years.  Back in 2010, Steve Eisman laid out a bearish view on the sector in his presentation: subprime goes to college.

Per Google Finance, "Career Education Corporation ((CEC) through colleges, schools and universities that are part of the CEC family, offers education to a diverse student population of approximately 100,000 students in a variety of career-oriented disciplines through online, on-ground and hybrid learning program offerings. The Company has approximately 90 campuses that serve these students are located throughout the United States and in France, the United Kingdom and Monaco. It offers doctoral, master’s, bachelor’s and associate degrees, diploma and certificate programs. It institutions include, among others, American InterContinental University (AIU); Brooks Institute; Colorado Technical University (CTU); Harrington College of Design; INSEEC Group (INSEEC) Schools; International University of Monaco (IUM); International Academy of Design & Technology (IADT); Le Cordon Bleu North America (LCB), and Sanford-Brown Institutes and Colleges."

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