The Next "Big Short"

On Wednesday's edition of The Strategy Session, hosts Gary Kaminsky and David Faber brought on special guest Steve Eisman of FrontPoint Partners. Eisman is most well known for betting against sub-prime mortgages in the recent housing crisis. Eisman was brought on the show to shed some light on a new short that could prove to be critical for for-profit education. Eisman said, "the financial packages that these schools offer are designed to ensure students don't take on too much debt." But the students havn't been able to pay them (the loans) off. He said "this means there will be fewer people going to these schools and will pay less. This basically means less revenues for companies like Strayer Education STRA, DeVry DVCOCO to name a few. David Faber asked if the industry would eventually reset. Steve added that the shrinkage would be rapid and he was unsure at the moment what the impact would be but the turnaround would most likely take a couple of years. For-profit college shares have been beaten down lately as Strayer is down 25% in the past month, Corinthian Colleges is down about 15% over the past month, and DeVry has also been down about 25% over the past month. STRA is trading down about 1% today COCO is trading flat on the day DV is trading flat on the day