March 23 (Reuters) - Regulatory issues, a sudden drop-off in business and the resulting volatility in stocks have changed the way investors look at the U.S. for-profit education industry.
Many funds exited or reduced exposure to the sector last year. Short selling was also a popular theme. Apart from Steve Eisman, fund managers Kynikos Associates' James Chanos, T2 Funds' Whitney Tilson are also known for their bets against the sector.
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However, a few funds did hold on to their positions betting on the long-term growth prospects and/or patiently waiting for their prior investments to reap some benefits. Some of them were:
- Maverick Capital, which has $9.44 billion of assets under management, is the second largest shareholder in Apollo Group with a 6.41 percent stake. As of Dec. 31, 2010, Maverick's stake in the company jumped 77 percent from a year earlier. In the last quarter alone, its stake rose 20 percent.
Maverick Capital's Lee Ainslie is one of the 'Tiger Cubs' -- as the fund managers who used to work under hedge fund industry pioneer Julian Robertson at Tiger Management LLC are called. These funds have been the most ardent believers in the sector's prospects.
Funds created by other Robertson proteges -- Steve Mandel's Lone Pine Capital and Andreas Halvorsen's Viking Global Investors -- also accumulated stakes in for-profit schools.
- Kornitzer Capital has put money in 9 of the 15 publicly traded for-profit colleges. The firm's largest exposure in the education group is to Corinthian Colleges -- a company in which 29.3 percent of outstanding shares are shorted.
- Providence Equity Partners took a stake in ITT Educational in the third quarter of 2010, and is now the sixth biggest shareholder of the company. It already owns 40.1 million shares of Education Management , which it bought along with Goldman Sachs for $3.8 billion in 2006.
- Warburg Pincus LLC owns 66.23 percent, or 34.6 million shares, of Bridgepoint . The firm disclosed its stake in a 2009 filing and has not changed its position since.
- Washington Post , a big player in the education business with its Kaplan chain of colleges, has an 8.14 percent stake in Corinthian. (Reporting by Megha Mandavia and A. Ananthalakshmi)