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Jim Chanos on Why He Has Been Shorting For-profit Education Companies
Posted by: guruek (IP Logged)
Date: September 26, 2010 04:27PM

Jim Chanos, founder of Kynikos Associates, talks about his decision to short shares of for-profit education companies. Chanos talks with Carol Massar and Matt Miller on Bloomberg Television's "Street Smart."

Chanos discloses that he has been shorting these companies for a number of years. He thinks these companies have a fraud business. Their business model is really an abuse of tax payers’ dollars, producing degrees holders who are not really much more employable than before.





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Rating: 3.8/5 (6 votes)



Re: Jim Chanos on Why He Has Been ...
Posted by: paulwitt (IP Logged)
Date: September 26, 2010 07:09PM

According to GuruFocus Richard Blum has 17.9% of his portfolio in ITT Educational Services (ESI)

and 21.2% in Career Education Corp (CECO). That makes education 39.1% of his portfolio.

I wonder who is right on this one............











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Rating: 3.0/5 (5 votes)



Re: Jim Chanos on Why He Has Been ...
Posted by: batbeer2 (IP Logged)
Date: September 27, 2010 03:36PM

Interesting stuff, thank you.

I have respect for Chanos and the way he thinks; but I think he has a weak thesis here.

He is basically discussing the rationale of title IV funding. This debate was settled for political reasons a long time ago. The reasons to put that system in place remain. Title IV funding is not going away because someone suddenly discovers it's a fraud.

It's an old debate and it has been settled. It's now law. The ED may toughen up but there is no indication they wish to abolish that system. Just more rules and regulations. In fact, Obama has some pretty specific targets for college education. Cutting down on title IV will not help meet those targets.


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Re: Jim Chanos on Why He Has Been ...
Posted by: AlbertaSunwapta (IP Logged)
Date: September 28, 2010 09:19AM

Fraud or flawed business?



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Re: Jim Chanos on Why He Has Been ...
Posted by: batbeer2 (IP Logged)
Date: September 28, 2010 09:51AM

I beleive Chanos uses the word fraud. The case would be stronger if he succesfully argued "flawed".


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Re: Jim Chanos on Why He Has Been ...
Posted by: batbeer2 (IP Logged)
Date: September 28, 2010 01:28PM

Listened again, you are right. He said "flawed". I think this is the stronger argument. Food for thought. Maybe there are more ways to kill the business than abolishing title IV.


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