Bridgepoint Gets Detention and Green Mountain's Down the Cliff
Written by: Robert Weinstein
Tickers in this article: BPI GMCR COCO
NEW YORK (TheStreet) -- Two notable stocks under pressure Friday include Bridgepoint Education(BPI) and Green Mountain Coffee Roasters(GMCR) . Investor fear of looming declines in earnings drove lows in shares down 26% and 10%, respectively, from the previous closing price.
I recently wrote about Bridgepoint and the failing of accreditation in Will Bridgepoint Be Held Back a Year?.Shares in Bridgepoint would normally begin rebuilding value today, but it didn't happen. Just as management and investors thought it could not get worse, Bridgepoint received a pop quiz. Bridgepoint owns Ashford University in Iowa. Ashford received accreditation from the Higher Learning Commission, or HLC, of the North Central Association of Schools and Colleges. Ashford also is an online school and is moving towards greater use of the online delivery model. Part of the moving towards online delivery includes receiving accreditation from the Accrediting Commission for Senior Colleges and Universities of the Western Association of Schools and Colleges, or WASC. Unfortunately, Ashford's request for accreditation from WASC was declined, causing Bridgepoint's shares to crash from $21.50 to Thursday's closing price of $12.97. On Thursday Ashford received a letter from the HLC it has now put Ashford into a special "monitoring status." It sounds a lot like double-secret probation to me. Apparently it sounds a lot like double-secret probation to investors as well because the company has lost a quarter of its value overnight. Ashford has until Aug. 10 to create a report, and submit it to the HLC demonstrating how marvelous everything is and demonstrate all is well. Hopefully, someone at Ashford knows how to add scrolling text and pictures to PowerPoint. The HLC will conduct an Advisory Visit within 60 days of the Commission's receipt of its report. Subsequently, at its meeting in February 2013, the HLC Board of Trustees will examine all the facts and decide what action if any to take. While I have followed Corinthian Colleges(COCO) and the for-profit education space for several years now, this one is admittedly new to me. That said, the selloff does not pass the smell test other than the large short interest. Rumors of Corinthian's death have been exaggerated several times during the past couple of years. Corinthian also has a large and well-known group of traders shorting the stock.