Himanshu H. Shah‘s Shah Capital Management increased its activist holdings of Corinthian Colleges Inc (NASDAQ:COCO). A recent SEC filing shows that the fund now owns 4.97 million shares of the company, compared to the previous position of 3.27 million shares, with a reported value $5.81 million. The current stake represents 5.64% of the company’s common stock.
In an older letter attached to the filing (dated October 18, 2013), Shah Capital Management expressed concerns about the fact that vast majority management’s efforts have not materialized and that the Corinthian Colleges Inc (NASDAQ:COCO)’s stock price reaching record lows, suggesting that swift and meaningful actions must be taken. In addressing the Board of Directors, the fund expressed the following concerns: negative publicity pertaining to a shareholder derivative action brought against certain officers and directors of Corinthian Colleges, ground school capacity under-utilization, rising student-employee ratio, decline and loss of market share in Online Students, inefficient marketing budget, and large Board of Directors.
In a subsequent letter (dated March 18, 2014), Himanshu H. Shah reasoned that the increase in the stake in Corinthian is due to the fund’s trust in the quality of the education programs provided to the company’s students and that he believes the excessive negativity surrounding the company is truly overdone. The fund’s manager also urged all members of the board and top management to purchase stock of Corinthian Colleges as it continues to trade at a steep discount.
The full text of both letters can be accessed below:
With approximately 81,300 students and 15,200 employees, Corinthian Colleges Inc (NASDAQ:COCO) is a large post-secondary education company in North America, offering associate, bachelor’s, master’s degrees, and short-term diploma programs. Generating profits of $18.61 million in 2013, the company is expected to generate earnings of $0.03 per share this year. Corinthian lost roughly 80% of its market value in the past 5 years, currently trading at around $1.41 per share. The average analyst recommendation for the company’s stock is “Underweight”.
Other funds holding Corinthian Colleges Inc (NASDAQ:COCO) include Lisa Rapuano‘s Lane Five Capital and Robert Pitts‘ Steadfast Capital Management, with 1.84 million shares worth $3.28 million and 1.31 million shares worth $2.33 million, respectively.
A large portion of Shah Capital Management’s equity portfolio is invested in Technology and Industrial Goods. 36.15% of the fund’s equity portfolio’s value is represented by China Yuchai International Limited (NYSE:CYD), in which the fund holds 2.31 million shares worth $48.08 million.