Eisman of 'Big Short' Says Sell Education Stocks

Daniel Golden & John Hechinger:

Steven Eisman, a hedge-fund manager whose bet against the housing market was chronicled in a best- selling book, said he has found the next "big short": higher education stocks.

The stocks of companies operating for-profit colleges could fall much as 50 percent if the U.S. tightens student-loan rules, said Eisman, manager of the financial-services fund at FrontPoint Partners, a hedge-fund unit of New York-based Morgan Stanley.
An Obama administration proposal to limit student debt would slash earnings of Apollo Group Inc., ITT Educational Services Inc. and Corinthian Colleges Inc. by forcing them to reduce tuition and slow enrollment growth, Eisman said yesterday at a New York investment conference. Without new regulation, students at for-profit colleges will default on $275 billion of loans in the next decade, he said.

Posted by Jim Zellmer at May 29, 2010 1:03 AM
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