Mr. Sakellaris: On the long side, I'd have to say it's the growth. Most industries have been pressured by the economy, but this one is somewhat acyclical or even counter-cyclical, and most of the companies in the space are posting accelerated enrollment and double-digit earnings growth. On the short side, I'd say it's the volatility coupled with potential regulatory changes in the next year.
TWST: What positions the industry to be kind of counter-cyclical?
Mr. Sakellaris: People that lose their jobs may choose to go back to school, and
I think this downturn provides evidence to say that happens in this industry. I
view it more acyclical, since the term "countercyclical" implies no growth as
the economy recovers. There are secular trends that bode well for the education
industry over a multi-year period. They operate a much less capital-intensive
model compared to traditional schools that allows them to gain share
consistently. They also focus on some faster growing segments like adult
learners and online programs They have the ability to quickly focus on higher-
demand areas of study and are not hindered by inefficient tenured professors and
large facilities like traditional colleges.
Tickers included in this excerpt: APOL, DV
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