Tag - Nlci

Small-cap stocks have sunk mid-session, as the market continues to await details of the proposed government bailout plan and the new banking landscape on Wall Street. 

At 12:38 p.m. ET, the Russell 2000 (NYSE:IWM) was down 19.09, or 2.53%, at 734.65.

Though when initially announced the bailout was cause for celebration on Wall Street, as traders wait for the details of the deal the bears have found their place again. The administration’s leaders on the bailout plan have been meeting with congressional leaders today, who support the plan. President Bush said that failure to act on the bill would have broad consequences beyond just the pain on Wall Street, but that he was confident the legislation would move forward. Treasury Secretary Henry Paulson and Fed Chairman Ben Bernanke are expected to brief Congress on the economy Wednesday.

“Last time I checked, there’s no provision in the U.S. constitution to turnover the country’s check book to one plan, one department, and one man,” BMO Capital’s Andy Busch said in an email. “This is a huge leap of faith and I suspect that leaders of Congress and the Presidential candidates will urge caution or act cautiously. This is the time for action, but not the time to essentially restructure the entire financial system of the country that has worked well up until we had 1% interest rates. There are other solutions and ideas that need to be considered. Remember, this is not an RTC type situation where the government already had the bad assets put to them via the FDIC and then had to figure out what to do. This is a takeover of choice.”

In the mean time the banking landscape continues to change on Wall Street. Investment banks Goldman Sachs (NYSE:GS) and Morgan Stanley (NYSE:MS) said Sunday that they will be converted into commercial banks effectively ending Wall Street’s legacy of independent investment banks. The move will create easier access to credit, will enable them to better organize their assets as well as shore up their leveraged and riskier businesses in light of the now dead short-term financing markets. Investment banks thrived off of short-term financing for the past five years. Now that the leverage is obsolete, the oxygen is gone and the banks have no choice but to change their ways or to cease to exist.  The new move; however, will also create greater oversight from the Federal Reserve.

“It will be interesting to see whether Goldman and Morgan continue in the top ranks of businesses we historically have associated with investment banking,” said Bill Wilhelm, equities professor at the University of Virginia’s undergraduate business school and co-author of the recent book Investment Banking: Institutions, Politics and Law. ...

Nobel Learning Communities Inc. (Nasdaq:NLCI) gained nearly one-quarter of its value this morning following reports that it received an acquisition proposal from Knowledge Learning Corp for $17 per share.

Nobel Learning Communities is a West Chester, Penn.-based private school operator. Knowledge Learning Corp. is a childhood and early education provider with headquarters in Portland, Ore.

By late morning, Nobel is at $15.83, up $3.09 from Friday’s close. The stock has traded between $12.17 and $16.21 in the past year.

More than 13,000 shares have changed hands compared with a three-month average volume of 6,175 shares.

For detailed price information and news stories on Nobel Learning Communities, click NLCI.

The Russell 2000 (NYSE:IWM) is posting solid gains despite mounting fears of a recession. At 2:01 p.m. ET, the small-cap index had added 4.86 points, or 0.68%, to 718.43. The Dow Jones Industrial Average was up 44.61 points, or 0.35%, to 12,670.64.

Investors are in a bullish mood and the major U.S. indices have shaken their early losses and moved into the green despite news of a weak government jobs report.

The U.S. Labor Department reported before the opening that payrolls fell by 80,000 in March, the third consecutive month of declines. Economists were expecting to see a decline of 63,000.

Small-cap stocks stumbled out of the gate but surprisingly rose into positive territory shortly after 11 a.m. ET.

“Today started as if there wouldn’t be much reaction in the market place,” said Cem Hocaoglu, head of Quantitative Derivative Strategy at financial services firm Susquehanna Financial, in a phone interview. “It’s just . . .

Education has been a minefield for investors and has lost much of its luster in recent years. Remember Edison Schools, Inc.? This is the company that was going to revolutionize public school education by managing schools better. Its shares hit a high of $40 before plunging to $0.14 and being taken private at $1.75 a share in 2001. As a private company, it has moved away from managing schools to providing supplemental educational services.

Federal investigations of everything from student loan abuses to inflating enrollment figures hit stocks like Computer Learning Centers, now bankrupt, and ITT Educational Services Inc. (NYSE: ESI), taking the shine off the for-profit publicly traded education company and keeping the sector somewhat undervalued.
 
Some companies are trying to buck this trend. One of them is Nobel Learning Communities, Inc. (Nasdaq: NLCI). The operator of more than 150 private schools in the pre-school through middle school range reported significant double-digit increases in revenue and income for the fiscal third-quarter ended March 31, on top of regular gains in previous quarters. After hovering around $10 for nearly two years, the stock has moved upward in the past six months and now trades above $15, giving NCLI a market cap of $160 million. The 52-week high was $16.34 in March and the low was $9.98 last August.
 
The company has a new $50 million financing in place and is ready to take advantage of growth opportunities. After selling one school in the third quarter, the company announced in May the sale of six schools that had been targeted for sale as part of the company’s divestment of non-strategic assets. The schools that were sold had been a drag on earnings. Net proceeds of $2 million in the six-school sale –  yielding an after-tax gain of $600,000, or $0.05-0.06 a share, for the fiscal fourth quarter ended June 30 – were used to pay down remaining debt under the facility so that the full amount is available for future acquisitions or capital expenditure.