Bridgepoint Education (NYSE:BPI)

CAPS Rating: 3 out of 5


Player Avatar bes0m3b0dy (72.65) Submitted: 3/20/2013 12:59:27 AM : Outperform Start Price: $10.47 BPI Score: -19.71

Net cash position (including investments) of $515 million, which implies $9.51 of cash per share. The main raincloud over this stock is Ashford University losing its accreditation, which accounts for 96% of Bridgepoint's revenues. Though I do not claim to predict the outcome of this situation, the stock is worth at least $18 even if enrollment at Ashford is more than cut in half. At a price of $10.47 this stock is such a bargain that there is a large margin of safety: the "worst-case" scenario of Ashford losing its accreditation means that revenues may slowly decline for a few years then fall precipitously (assuming management does absolutely nothing), but with the current cash position, Bridgepoint's stock is already massively depressed. The risk-reward on this one is quite favorable.

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