Apollo Group, Inc.
Thesis
Apollo Group is priced to perfection while the outlook is far from perfect. The company must increase its enrollment by more than 70% to maintain its current valuation, which is unrealistic given increased regulatory scrutiny, competition, and rising student defaults. Additionally, the shift towards Associate degree students, who have lower graduation rates and higher default rates, poses a significant risk to the company's financial health.
Did it work?
This was a short pitch, but the stock returned +93.4% over the 208 months since the pitch, nearly doubling against the position — a decisive loss for the short. While the thesis's fundamental concerns (regulatory scrutiny, rising student defaults, enrollment pressure in for-profit education) did surface in the sector over time, the provided cumulative price performance shows the market moved strongly against the short over the full window. With more than 17 years elapsed — far beyond any plausible stated horizon — the price outcome is conclusive.