Compass Knowledge Holdings CKNO
December 30, 2008 - 7:32pm EST by
dadande929
2008 2009
Price: 0.60 EPS
Shares Out. (in M): 0 P/E
Market Cap (in $M): 9 P/FCF
Net Debt (in $M): 0 EBIT 0 0
TEV ($): 0 TEV/EBIT

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Description

Compass Knowledge Holdings offers primarily graduate degrees via distance learing (on line) from name brand universities such as Boston University: Master of Music in Music Education , Doctor of Musical Arts in Music Education ,Master of Science in Health Communication,  Master of Science in Computer Information Systems,  Northwestern University: Master of Science in Medical Informatics, University of Florida: Doctor of Pharmacy , University of Cincinnati: Master of Science in Criminal Justice , Master of Education in Educational Leadership, Master of Science in Nursing – Nurse Midwifery , Master of Science in Nursing – Women’s Health Nurse Practitioner, Bachelor of Science in Clinical Laboratory Science , Bachelor of Science in Health Information Management and many others.

Background
As far as we can tell it is the only on line public company offering degrees from Universities and not it's own school and primarily graduate degrees. The significance of this is twofold: 1) that degrees can be earned from reputable name brand Universities and Colleges as opposed to the degrees of their own school such as those issued by such as Grand Canyon Education, hot IPO this year (which made new high today),  Strayer Education, Apollo Group, Capella Education and many others and 2) People who seek graduate degrees generally are doing so for career employment purposes i.e. to improve opportunity for job advancement and their salary level at their place of employment or to seek higher level paying jobs and hence are older people, more stable, more dedicated  nd more likely to complete and pay for their degree program than are undergraduate students.  

Financial Metrics
What is most interesting are the financial metrics of the industry participants and this Company in particular. The industry is characterized by substantial double digit profit margins and ROE  and capital, are debt free, cash rich, with high P/Es in high 20s and 30s and 40s, and as might be expected as well big multiples of BV and CF as well. Moreover, most are at or near their all-time high prices even today.

CKNO has P& L and balance sheet metrics among the very best. Last year (only an annual report was issued -- if another 200 or 300 or so holders of record were to show up on the shareholder list  -- CEDE is record holder for most of the 16.3 million shares outstanding, which is what enabled to get below 500 holders of record) the Company had a pretax PM of  25%,  ROE on average E of 36%, being debt free and cash rich an 80.4% E/A ratio, (current assets exceeded all  liabilities by 4.3 times) and yet the apparent P/E ratio was only 2.9X and the P/E based on price ($0.60 offer) less cash of $0.40 is an incredible .Last year revenues were 20.6 million, up 16.5 % and eps were flat at the $0.21 level as an above average 33.9% increase in marketing expenses was incurred as an above average number of university partners and degree programs were signed up. In 2006 revenues had advanced 34% and eps 40%. It normally takes some time, up to 18 months, to gain real revenue traction and significant profitability once new partners are taken on. Thus it is thought that 2008 was possibly up some and that 2009 can be up at an above average rate of increase in top an bottom line results.

Shares outsanding 16,295,592

Clues to growth today:
The WSJ in commenting on the Grand Canyon offering success wrote on Dec.1 "Rival colleges Strayer Education Inc., American Public Education Inc., DeVry Inc. and Apollo Group Inc.'s University of Phoenix all beat analysts' earnings estimates and said enrollments were growing in the weeks leading up to Grand Canyon's deal. At Grand Canyon, enrollment rose 33% in the third quarter." All signs would seem to point to CKNO being at the very least a "me too".

Additional clues is the fact that the Company expanded its Orlando, Florida office space several times over at the end of last year, has not only as mentioned been steadily adding University partners, but also expanding educational degree offerings and has proven it can compete very effectively by offering such services to its university partners as marketplace assessment, marketing, recruitment, retention, and curriculum support. The Universities supply the curriculum prepared by their professors for their school's eventual granting of degrees.

One could say what can be lost @$0.51 - $0.60 and P/E of 0.5 X.  The risk is what? Less than a T bill yielding 0% would one say? The opportunity clearly beats anything I or I would imagine anyone else might know of short off -- well if you can fill in the ________ space I will be all ears.

Catalyst

1 Recognition and Investor Exposure

2 Pealing back the covers on this stock's hideaway under the(Pink)sheets. Hence beingnoticed for first time ever with resultant P/E expanansion from same.

3 Suddenly finding Comoany has gone over 50 registered shareholders and having to file with SEC ....hence 10Ks,Qs,Proxies etc
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    Description

    Compass Knowledge Holdings offers primarily graduate degrees via distance learing (on line) from name brand universities such as Boston University: Master of Music in Music Education , Doctor of Musical Arts in Music Education ,Master of Science in Health Communication,  Master of Science in Computer Information Systems,  Northwestern University: Master of Science in Medical Informatics, University of Florida: Doctor of Pharmacy , University of Cincinnati: Master of Science in Criminal Justice , Master of Education in Educational Leadership, Master of Science in Nursing – Nurse Midwifery , Master of Science in Nursing – Women’s Health Nurse Practitioner, Bachelor of Science in Clinical Laboratory Science , Bachelor of Science in Health Information Management and many others.

    Background
    As far as we can tell it is the only on line public company offering degrees from Universities and not it's own school and primarily graduate degrees. The significance of this is twofold: 1) that degrees can be earned from reputable name brand Universities and Colleges as opposed to the degrees of their own school such as those issued by such as Grand Canyon Education, hot IPO this year (which made new high today),  Strayer Education, Apollo Group, Capella Education and many others and 2) People who seek graduate degrees generally are doing so for career employment purposes i.e. to improve opportunity for job advancement and their salary level at their place of employment or to seek higher level paying jobs and hence are older people, more stable, more dedicated  nd more likely to complete and pay for their degree program than are undergraduate students.  

    Financial Metrics
    What is most interesting are the financial metrics of the industry participants and this Company in particular. The industry is characterized by substantial double digit profit margins and ROE  and capital, are debt free, cash rich, with high P/Es in high 20s and 30s and 40s, and as might be expected as well big multiples of BV and CF as well. Moreover, most are at or near their all-time high prices even today.

    CKNO has P& L and balance sheet metrics among the very best. Last year (only an annual report was issued -- if another 200 or 300 or so holders of record were to show up on the shareholder list  -- CEDE is record holder for most of the 16.3 million shares outstanding, which is what enabled to get below 500 holders of record) the Company had a pretax PM of  25%,  ROE on average E of 36%, being debt free and cash rich an 80.4% E/A ratio, (current assets exceeded all  liabilities by 4.3 times) and yet the apparent P/E ratio was only 2.9X and the P/E based on price ($0.60 offer) less cash of $0.40 is an incredible .Last year revenues were 20.6 million, up 16.5 % and eps were flat at the $0.21 level as an above average 33.9% increase in marketing expenses was incurred as an above average number of university partners and degree programs were signed up. In 2006 revenues had advanced 34% and eps 40%. It normally takes some time, up to 18 months, to gain real revenue traction and significant profitability once new partners are taken on. Thus it is thought that 2008 was possibly up some and that 2009 can be up at an above average rate of increase in top an bottom line results.

    Shares outsanding 16,295,592

    Clues to growth today:
    The WSJ in commenting on the Grand Canyon offering success wrote on Dec.1 "Rival colleges Strayer Education Inc., American Public Education Inc., DeVry Inc. and Apollo Group Inc.'s University of Phoenix all beat analysts' earnings estimates and said enrollments were growing in the weeks leading up to Grand Canyon's deal. At Grand Canyon, enrollment rose 33% in the third quarter." All signs would seem to point to CKNO being at the very least a "me too".

    Additional clues is the fact that the Company expanded its Orlando, Florida office space several times over at the end of last year, has not only as mentioned been steadily adding University partners, but also expanding educational degree offerings and has proven it can compete very effectively by offering such services to its university partners as marketplace assessment, marketing, recruitment, retention, and curriculum support. The Universities supply the curriculum prepared by their professors for their school's eventual granting of degrees.

    One could say what can be lost @$0.51 - $0.60 and P/E of 0.5 X.  The risk is what? Less than a T bill yielding 0% would one say? The opportunity clearly beats anything I or I would imagine anyone else might know of short off -- well if you can fill in the ________ space I will be all ears.

    Catalyst

    1 Recognition and Investor Exposure

    2 Pealing back the covers on this stock's hideaway under the(Pink)sheets. Hence beingnoticed for first time ever with resultant P/E expanansion from same.

    3 Suddenly finding Comoany has gone over 50 registered shareholders and having to file with SEC ....hence 10Ks,Qs,Proxies etc

    Messages


    SubjectQuestion
    Entry12/31/2008 09:52 AM
    Membercanuck272
    Is mgmt friendly to shareholders? Do you think they want to be listed, or are going to avoid if at all possible?

    SubjectRE: Question
    Entry01/02/2009 11:19 AM
    Memberdadande929
    friendly is inteesting word dan devine is freindly but obtaining info has required a dentist if you follow

    he claims he prefers being or really gong private but makes no moves toward same. co had almost 7 mil cash and zero debt a tear ago and i belive has much more today. je turned down offer of 3 i believe. he claims justv weanting to keep hisd nose to grindstone and who can faukt that?

    Try calling him and don't be bashfull about eming as well and do not be bashful about doing each repeatedly until u get somewher is my experience and suggestion DDevine@compassknowledge.com

    (407) 656-3906 ext. 311

    i even got to obtain cell (321) 287-4415





    /
    /

    SubjectRE: financials
    Entry01/02/2009 11:25 AM
    Memberdadande929
    yes company annual reports (407) 656-3906 also DDevine@compassknowledge.com or let me know i can perhaps if vic allows attach reports. let me kbowe if vic allows this somehow. does not allowattaching pdf here

    SubjectRE: mgmt ownership
    Entry01/17/2009 08:56 PM
    Memberdadande929

    Dan Devine CEO owns over 40% but les than 50%. Rest of Management is believd to own very little. There are 4 Directors including DD and the other three may own a few hunderd thousand shares.


    SubjectRE: financials
    Entry01/17/2009 08:57 PM
    Memberdadande929

    I can supply or you can call Co.


    SubjectRE: RE: financials
    Entry01/23/2009 03:50 PM
    Memberbriarwood988

    Thanks for this write-up and idea. I spoke with the company today and they indicated that while they are open to existing shareholders sharing financials with prospective shareholders, they do not wish to make their reports available to prospective shareholders directly. Perhaps with this new version of VIC, you could copy and paste the report onto the message boards so that other interested VIC members can view as well? Other ideas? Many thanks again


    SubjectRE: RE: financials
    Entry01/23/2009 04:19 PM
    Memberbriarwood988

    dadande, if the entire report is too much to copy and paste, perhaps copying and pasting the balance sheet, income statement, and cash flow statement would be sufficient as a start. it is unfortunate the company does not have financials more readily available!


    SubjectRE: RE: RE: RE: financials
    Entry01/27/2009 12:59 AM
    Memberbriarwood988

    Same here. I was directed to him, we had a brief conversation but it was difficult without any financials. He indicated he had no problem with me reviewing financials from another shareholder and then setting up a time to speak further.


    SubjectRE: RE: RE: financials
    Entry01/28/2009 05:53 PM
    Memberdadande929

    Would be glad to provide report but all I have is paper copy and scanned copy. Can attachment be posted here? I have no idea; let me know or else ask VIC for permission to contact me by phone or em as I would be glad to accommodate you if they will give such permission


    SubjectRE: RE: RE: RE: financials
    Entry01/28/2009 05:54 PM
    Memberdadande929

    SUGGEST YOU SPEAK ONLY WITH DAN DEVINE CEO


    SubjectRE: RE: RE: RE: RE: financials
    Entry01/28/2009 06:05 PM
    Memberdadande929

    speak only with dan devine ceo and do not take no for an answer. i persisted and now he takes most of my calls. saying anything much is another story. he is the only ceo i have ever encounted in decades that wants his stock not to rise in price and is happy with a one times last year's (2007) earnngs multiple. why? unfathomable. you i hope is a better man than me gunga din and can and will find out and tell me.


    SubjectRE: RE: RE: RE: RE: RE: financials
    Entry01/28/2009 08:06 PM
    Memberbriarwood988

     

    Maybe because he wants to take it private on the cheap and hurt the public shareholders? Below is the email of a friend of mine who is not on VIC and not even an investor. Please send your scanned copy to him and he will forward to me. Thanks much for this help. Muni Jaitly - muni.jaitly@gmail.com.


    SubjectRE: CKNO financials
    Entry02/12/2009 10:02 PM
    Memberdadande929

    PLEASE ASK VIC FOR BETTER METHOD TO DELIVER ANNUAL REPORTS TO YOU
    THEY HAVE A BETTER WAY I BELIEVE


    SubjectRE: RE: RE: RE: RE: RE: financials
    Entry10/26/2010 10:56 AM
    Memberdadande929
    We submitted Buy recomendation on Compass Knowledge Holdings (CKNO) -at $0.60 on Dec 30, 2008.

    Today a sale of the company was announced.  Shareholders will receive approximately $253,000 per share in cash. Of course the stock was reverse split -for- 25,000 in May of last year so the adjusted price per  share of our write-up price of $0.60/share is $15,000/share.

    The price includes approximately an $8,000/share dividend and a tax refund of over $7,000/share
     
    Subject: BN CHICAGO & ORLANDO, Fla10/25 22:01  Embanet and Compass Knowledge Group Announce Merger to Create the Premier Provider of Online Learning Services for Higher Education

    http://www.compassknowledge.com/embanet-and-compass-knowledge-group-announce-merger-to-create-the-premier-provider-of-online-learning-services-for-higher-education/
     

    SubjectRE: RE: RE: RE: RE: RE: RE: financials
    Entry10/26/2010 11:13 PM
    Memberbriarwood988
    Congratulations. Where do we go to see the details of the acquisition consideration? I can't find anything more than the press release you referenced. Why would part of the consideration be via a tax refund? 
     
    Thanks again for the very profitable idea. 

    Subjectfinancials
    Entry11/02/2010 12:44 PM
    Memberdadande929
    1 Turns out total amount each share will recieve in cash is to be aproximately $254,000 per share

    2 A tax refund apparently (aparently due to timing of expenses and and rdes
    evenue ) is expected to arise in the 2010 period Jan 1 to Oct deal closing date from geration of an operational loss for that tax period and apparently they have engineered their situation to get a refund from by carryback to prior year or years payment(s)

    SubjectRE: mgmt ownership
    Entry11/02/2010 12:45 PM
    Memberdadande929
    70%
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