| NEW YORK, Sept 17
NEW YORK, Sept 17 Hedge fund manager Whitney
Tilson said on Tuesday he is betting against online education
giant K12 Inc, pushing the shares lower.
"This is a growth story that is about to crash," Tilson, who
runs Kase Capital, said at the Value Investing Congress where he
spoke publicly about his short betfor the first time.
Tilson has been short the stock, where he borrowed the
shares in the hopes of repaying the loan for less after the
shares drop, for roughly a year. The bet has clearly weighed on
his returns as the company's stock price has shot up 70 percent
Tilson criticized the company's aggressive recruitment
policies, saying that even students who are unsuited to online
learning and might perform better in a bricks-and-mortar school
are signed up.
"They will do business with anyone who has a pulse," Tilson
told Reuters after making his case against the company with a
power point presentation.
K12 did not immediately return an email seeking comment.
He also said K12 might face obstacles if tax regulators were
to investigate how the for profit-company is making money on
charter schools that are generally non-profit operations. "If
the IRS starts to challenge them on this, it is game over," he
said, referring to the Internal Revenue Service.
The stock price closed the day off 0.71 percent at $34.90
but had fallen as low as $33.75 when Tilson was speaking.
Looking head, Tilson said the stock price might fall
further. "There are a lot of warning flags and the company could
miss earnings guidance soon," he said.
But Tilson's position is a small one, roughly 3.7 percent of
his roughly $70 million dollar fund, he said.
"I've been short this for a year but I only pulled this
together for a public presentation now. This is not like Bill
Ackman making his public presentation for his $1 billion short
against Herbalife," Tilson said of his college friend who runs
$11 billion Pershing Square Capital Management. "This is tiny."