Short Sellers Continue to Show Interest in For-profit Schools

ProPublica has done some excellent reporting on the for-profit education industry. I certainly hope that retail landlords are doing their own due diligence before signing up for-profit schools as their tenants. In this piece ProPublica provides more insight into the role hedge fund managers are playing in this industry:

Short sellers have shown a steadily increasing interest in for-profit schools, according to Will Duff Gordon, an analyst at Data Explorers, a company that collects and analyzes data about short-selling. Since April, his company has also seen a spike in short positions in the sector, indicating a strengthening view that the stocks will fall. In general, short sellers place bets that a company's stock or some other financial instrument will decline in value.

"This is not an opportunistic bit of short selling," Gordon said of for-profit schools. "People have worked out that these companies are overvalued. They've put on bigger and bigger short positions as the price keeps going down. And they have been right because the price keeps dropping."

For their part, short sellers claim they are merely bringing to light the fundamental problems of an industry that survives in large part on taxpayer largesse.

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