Mr. Greendale: Within our private equity fund we have some investments focused on the K-12 market, but our public coverage focuses on postsecondary education. And the names we cover are Apollo, American Public, Career Education, Capella, DeVry, ITT, Strayer and UTI.
TWST: Brandon, obviously the recession has been a boom for these companies, how
long will this growth spurt last?
Mr. Dobell: I think it's somewhat dependent on what sector of the job market or
what sector of the education market you're focused on. But in general, I think
there is a continuing need for people to assess their own skill sets and, if
that's not sufficient, to go back to school whether it'd be a certificate,
diploma, associate's, even for a master's degree program, depending on what kind
of career they want to be in. If you look at the job numbers over the last year
and a half or two years, just the sheer mass of people that have been put out of
work is pretty staggering - the size of the overall postsecondary space. Then
from one different perspective, a lot of people who have lost their jobs in the
last two or three years were in positions that may take a long time to come
back, which just accelerates or exacerbates the need for re-skilling. From the
education company's perspective, we've seen some companies with a nice
acceleration in enrollment growth, ITT in particular, followed by Apollo and so
many other ones that we don't follow, like a Corinthian or a Lincoln. But they
tend to be either ground-based students, younger students, and some medical,
health care and vocational programs. Those are probably the ones where you could
see some slowdown at some point next year. But the structural demand for
education I don't think is going to change even if the job market stops getting
worse and starts to get a little bit better. I think one good piece of evidence
from our point of view is looking at the education companies from 2003 to 2007.
In arguably what was a very strong labor market they still managed to put up
very good growth, with the exception of the companies that serve an on-ground
student in a shorter-term program - that's where you've seen the biggest pickup
in the last two or three quarters.
Tickers included in this excerpt: APEI, APOL, BBBB, BPI, CECO, CPLA, DV, ESI, LOPE, RST, SKOL, STRA, UTI
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