Rule No. 1 for companies engaged in battles with short-sellers should be: Don’t attack them and if you do—don’t make it personal. Doing so is often viewed as trying to divert attention away from the issue.
That’s why I was surprised to see just that in a press release from Harris Miller, president of the Career College Association, which represents the for-profit post-secondary education industry. His comment, posted on the Career College Education’s website, was in anticipation of a hearing scheduled for 10 a.m. Thursday morning at the Senate Committee on Health, Education, Labor and Pensions.
He wrote: “What we will hear from one of the witnesses—a Wall Street short-seller born with a silver spoon in his mouth, who got his first big paycheck the old fashioned way, through his parents—will be self-serving attacks on non-traditional students designed to fatten his wallet, not to inform the American people on how best to get unemployed and underemployed Americans educated and back to work.”
The short-seller, Steve Eisman of FrontPoint Parnters, is perhaps best known as being immortalized in Michael Lewis’ book, “The Big Short: Inside the Doomsday Machine,” as having warned about the sub-prime mess when nobody cared.
Now Eisman’s focus, which he detailed last month at the Ira Sohn Investment Conference in New York: The for-profit subprime industry, which for years has been engaged in an on-again-off-again tug-of-war between the shorts and longs. The title of his 48-page report: “Subprime Goes to College.”
Among the companies he mentioned: Apollo Group, ITT Education and Corinthian Colleges.
Eisman is among those who will testify.
In a 45-minute conference call Wednesday directed at Eisman’s testimony, Harris disputed Eisman’s claims. “Comparing the for-profit career college sector to the subprime mortgage banking industry is as silly as it is simplistic,” he said.
Or not. Stay tuned.