Intriguing IPOs: Phoenix Education Partners (PXED)

The parent company of the University of Phoenix is hoping for better results.

Plato’s Symposium, Anslem Feuerbach, 1869, oil on canvas (Staatliche Kunsthalle Karlsruhe)

Second chances rarely work out in the public markets.

The term “winners keep winning” gets used often in investing circles, but we don’t hear the term “losers keep losing” nearly as much. Unfortunately, the latter is perhaps a more apt description of the market. With less than 10% of individual stocks beating the broader market average, there are far more losers out there.

So when a company comes back on the public market — either emerging from a bankruptcy restructuring or private equity taking the public again — the chances of it being an overwhelming success is rather low. Sailpoint (NASDAQ: SAIL) came back on the public markets in February following its time under Thoma Bravo. Despite the private equity investment, the company continues to post losses, and its stock has remained stagnant.

This brings us to Phoenix Education Partners (NASDAQ: PXED). The parent company of the University of Phoenix is going public again after its private equity overlords — Apollo Global Management and Vistria — took it private in 2017.

Considering the track record of private equity retreads isn’t great, part of me didn’t think it would be worth looking at the IPO prospectus. I assumed I would find a company with an overleveraged balance sheet and a bare bones cost structure that made the experience worse for its customers.

That doesn’t appear to be the case, though.

Let’s dig in.