Trade #88 – School Room Educational Software

In Trades by JCLeave a Comment

I was at a baseball game the other night with my wife’s family. The conversation somehow turned to education, that’s when I overheard someone mention their 5 year ago was handed a laptop on the first day of school.

I work in the IT industry. Recently I’ve been hearing more about public and private schools making the switch from traditional classroom teaching to interactive technology based learning. A few years back, the Kansas City, Kansas School district purchased MacBooks for each of their students at a great expense.

 

For each laptop purchased by the school, additional software licenses are purchased for each student. If you know anything about software, you know that sometimes it can cost more then the computer.

With just about every school in America making the switch to technology based learning, it creates a huge demand for educational software companies.

I live near one of the larger Cerner complexes in the KC area. I’ve seen first hand what a software company can do in a short period of time once they gain momentum and fight to dominate the market. Cerner creates, then leases its software to hospitals. 

Cambium Learning Group, (ABCD) creates educational software for schools.

I went long $ABCD at the close today with a $5.14 cost basis.

It’s been going up since the beginning of 2015. If you look at their Quarterly Report, you can see the companies ongoing progress.

Management owns 72% of the 45 million shares outstanding. Funds and other large Institutions own 22%. (According to IBD)

The number of funds that own $ABCD went from 43 on March 15th, to 78 on June 15th. As much as 94% of this stock is held by Management and Institutions. With an estimated 6% of the shares available to the general public, this could create a low float situation if the stock catches fire and goes parabolic.

This was originally a MOJO pick. I’ve been watching it now for months. It just keeps going up. I plan to take profits after I’ve made 20 to 25% on the trade. My stop loss will be around $4.80. I’m expecting to be out of this trade within 30 days.


Leave a Comment