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, a 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