Education Management's Shares Jumped: What You Need to Know
Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: Shares of for-profit college Education Management (NAS: EDMC) scored an A today, rising as much as 12.3% on strangely anemic trading volume.
So what:Private schools are booming today in general as the Senate Education Committee advanced revisions to the No Child Left Behind act last night. If approved, the 1,000-page bill would lower the performance standards for teachers and schools.
Now what: Education Management wasn't the only jumping school today, as peers Career Education (NAS: CECO) , Corinthian Colleges (NAS: COCO) , and DeVry (NYS: DV) all followed similar trajectories. While a potentially higher volume of freshmen from school systems with lower standards sounds great for these companies for a while, I wonder if it's not a long-term negative. After all, these schools depend on their degrees leading to jobs, and if kids come in badly prepared they're not likely to impress employers after grabbing that diploma. This is a trust issue, and the market is reacting backward to the whole thing.
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At the time this article was published Fool contributor Anders Bylund holds no position in any of the companies discussed here. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. You can check out Anders' holdings and a concisebio, follow him on Twitter or Google+, or peruse our Foolish disclosure policy.
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