As Career Education Corporation (CECO)'s cash flow problems and decreased enrollment issues continue in an atmosphere of controversy, its largest stakeholder is on a roll of reducing his ownership stake. Investor Guru Richard Blum, Blum Capital Partners, still holds 14.81% of CECO shares outstanding after this week’s reduction in the education company. At the same time, veteran educator Scott Steffey comes on board as the new president and CEO of Career Education Corporation.
Steffey said, “We will meet our challenges head-on and view them as an opportunity to continue to build respect and trust among all stakeholders. Career Education has the clear opportunity to achieve sustainable long-term growth by providing outstanding experiences and outcomes for our students and rewarding opportunities for our employees.”
Career Education Corporation is part of the for-profit education sector that began to dive after the U.S. Government Accountability Office (GAO) investigated student recruitment, loan-making and job placement issues. As of June 2011, new, more stringent regulations were set in place by the Department of Education. Tighter regulations and closer monitoring have resulted in an enrollment drop for some schools. Based on declining enrollment numbers, Career Education Corporation is closing 23 schools and cutting 900 jobs. The company currently offers over 100 programs at 95 schools in five countries.
The company has a market cap of $140.34 million, and a P/S ratio of 0.0946. Down 69% over 12 months, CECO’s current price is $2.13, with a change from average up 1%. According to GuruFocus research, the company experienced a 2012 net loss of $142.79 million, despite 2012 revenue of $18.84 billion. The company’s free cash flow is also negative, at $54.7 million. Career Education Corporation will report first-quarter 2013 financial results on May 6, 2013.
Blum’s holding of Career Education Corporation (CECO) shows five years in the red. His quarterly buying and selling of CECO across 13 quarters shows only double-digit decreases.
His holding history:
With current CECO shares at 2,091,062, Guru Jim Simons has held CECO since second quarter 2008. His average cost per share is $9 with a 76% loss.
Starting last fall, other investor Gurus, including Steve Cohen, Jeff Auxier, Joel Green Blatt, Chuck Royce and Paul Tudor Jones, reduced or sold out their CECO positions.
See a detailed analysis of CECO.
Blum Capital Partners is a value-oriented investor. As of April 15, 2013, Blum Capital Partners held 10 stocks with a total value of $6.2 billion and a quarter-over-quarter turnover of 0%. The company portfolio shows a large real estate sector of 48.5%.
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