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Momentum21 (98.18)

Can I Short Steve Eisman?

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September 15, 2010 – Comments (6) | RELATED TICKERS: COCO , ESI , STRA

Now I am not going to try to make a case for the for-profit education space but this guy is a real piece of work. Yes...I was tuned into CNBC today to see his smug appearance that was extended like three times by the hosts and I am a bit ashamed to admit that.

When someone uses their fame to basically campaign against an entire sector (and they have a financial position in the outcome) it just doesn't sit well with me. If I was long COCO or Strayer I guess I would have better reason to be upset but I just think the guy is a squirrel. 

He did seem pretty desperate in his plea to America so I hope the ESI bulls take a piece out of him. He does have some sack to take on GS indirectly but I am still rooting against him. Am I wrong or should I just stop watching TV? : ) 

 

6 Comments – Post Your Own

#1) On September 16, 2010 at 1:14 PM, Momentum21 (98.18) wrote:

I have no idea where these stocks are going in the long haul but at least they are getting a little chuckle one day after his appearance. 

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#2) On September 16, 2010 at 1:17 PM, TMFElevenOClock (61.46) wrote:

Steve Eisman, wasn't this the guy from Michael Lewis' "Big Short"? What sectors in particular is he railing against?

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#3) On September 16, 2010 at 1:35 PM, Momentum21 (98.18) wrote:

TMFElevenOClock (42.67) - Yes, same guy...the piece aired yesterday on CNBC.    

"The difference between this [for profit education] and subprime is in subprime, the loans went bad no matter what the government did. Here, this scheme is going to go on until the government stops it," Eisman said. 

http://www.cnbc.com/id/39194343

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#4) On September 17, 2010 at 10:45 PM, dcrednek (81.94) wrote:

For-profit ed is a bit dependent on students' access to easy money. And it is easier to curtail subsidized student loans, rather than trying to stop the quadruple or quintuple exposure of credit default swaps on a common CMBS issue.  Simply put, there will never be a student loan bubble that grows as big or dangerous as was the credit bubble. 

 Now, on to the fundamentals of for-profit education. I see there being no real difference between them and traditional non-profits. The non-profit colleges and universities are as whorish as the for-profits, so let's not be too harsh on them.  Looking at their business models, there is plenty of room to reduce tuition rates and narrow margins before they become unappealing investments. Their professors are not (and will never be) tenured, so salaries are relatively low, and they don't fund money-losing athletic endeavors.

Be very careful to write these off. Instead, focus on pricing. Some are priced too high  right now (even in this crappy market) relative to future growth prospects. But conditions might change and this sector might be more appealing down the road. 

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#5) On September 17, 2010 at 10:57 PM, Momentum21 (98.18) wrote:

dcrednek (78.36) -  Never say never but I agree with you...I don't own any of these stocks but wouldn't get short at these levels.  

I was merely expressing my dislike for his appearance on CNBC.  

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#6) On September 20, 2010 at 8:06 PM, umps15 (22.65) wrote:

"   Simply put, there will never be a student loan bubble that grows as big or dangerous as was the credit bubble." 

Now there's an idea to make a quick buck. CDO's using student loans? Jackpot. I wish I was half kidding, but I have a feeling that someone could pull this off in five years when everyone forgets about the subprime stuff. (I wonder what percentage of America is even aware of the CDO's, credit default swaps, subprime loans... 5% maybe?  ) 

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