David Safier by David Safier h/t to Politico's Stephanie Simon for noting this in her article, From China to Chicago, K12 Inc. markets more than virtual schools. (You also might like her Cyber schools flunk, but tax money keeps flowing). K12 Inc. has a recently added new venture, Insight Schools, targeted to low achieving students who are … Read more
by David Safier
Once again, I address my concerns about K12 Inc. to Craig Barrett, Gov. Brewer's spokesman on education, president and chairman of BASIS charter schools, one of the prime movers behind the Common Core, rich ex-CEO of Intel, and also one of 10 members of the K12 Inc. Board. I don't expect a response from Mr. Barrett. I'm only a lowly blogger, after all. But I hope someone with more stature than I asks him about K12 Inc. His silence on the subject speaks volumes. A response to a few key questions would speak even more voluminously.
So there's this guy, Whitney Tilson, who runs Kase Capital hedge fund. He's shorting K12 Inc. stock big time. Since I posted about this last time, Tilson has put together an amazingly detailed, very long document supporting his case, complete with graphs and quotes. The man makes a very good case. I've read countless negative stories about K12 Inc. — I've written a number myself — and Tilson creates the most comprehensive argument against the corporation I've seen.
Here's the funny thing. I don't agree with Tilson on most things educational, but I have to give him credit for having some idea what he's talking about. His parents were educators. He was one of the first people to teach for Teach for America. He supports the conservative "education reform" and for profit education — if he thinks it's good education, that is. He has his own School Reform blog, where he brags about being on what he calls "Diane Ravitch's Enemies List." So he's not my kind of education guy, but he knows whereof he speaks. He's far closer to Craig Barrett than to me, both in net worth and educational viewpoint. But he thinks the for-profit company whose board Barrett sits on — K12 Inc. — stinks.
According to Tilson,
Like subprime lending and for-profit colleges, the business [K12 Inc.] makes sense on a small scale
but, fueled by lax regulation and easy government money, the sector has run amok.
by David Safier The Republicans at the state lege decided not to boost its budget for schools to account for inflation. That's been going on since 2010. The court said that's illegal and ordered the lege to add $82 million to this year's budget — still far below the approximately $200 million needed to make … Read more
by David Safier
As I posted Wednesday, Whitney Tilson, who runs Kase Capital hedge fund, is shorting K12 Inc. On Sunday, he explained why.
Before I go into Tilson's reasons for the short, I feel the need, once again, to ask for Craig Barrett's views on this. Barrett, Gov. Brewer's spokesman on education, president and chairman of BASIS charter schools, one of the prime movers behind the Common Core and rich, savvy ex-CEO of Intel, is also one of 10 members of the K12 Inc. Board. While he talks in public and to the press regularly, he has never, so far as I know, talked about K12 Inc. or its Arizona Virtual Academy for the record. Yet K12 Inc.'s Arizona school alone enrolls over 4,000 students, which is similar to the number of students enrolled in all Arizona BASIS charters combined — and that's only in Arizona. Certainly the subject deserves a mention from a high profile educational spokesman like Barrett.
Tilson goes into his reasons for shorting K12 Inc. at some length. They are based both on recent earnings and what he sees as an untenable educational model. He notes that "year-over-year revenue growth – critical for a stock trading at nearly 50x earnings – has been falling sharply over the past two years, and is projected to fall further in the next year (to 16%)."
He says that, while there are a small number of students who are well suited to the virtual school model, K12 Inc. needs lots of students, which means aggressive recruiting for students, most of whom are a bad fit. "Since going public in late 2007, numerous former employees have told me that K12 has adopted a growth-at-any cost mentality in order to support its richly priced stock."
by David Safier On "Education: The Rest of the Story," the public access show I do with Ann-Eve Pedersen, I discuss the growth in the number of parents who are protesting against high stakes testing. Unfortunately, the protests are strengthening just when a whole new round of testing connected with the Common Core is being … Read more