A month ago I mentioned Corinthian Colleges (COCO) in a post. I sort of tuned them out because I don't really think they add value to society. Their business model is a hustle (signing people up for loans to pay for expensive education that is not that valuable). But in the investing world, a dollar from a hustle is worth just as much as a dollar from a brilliant invention. Buying stocks, you are simply trading money today for a set of assets plus a stream of cash flows in the future.
A company with a decent balance sheet, trading at 1/6 of annual revenues profitable two out of the last three years, may not be a bad bet. The two things to watch out for would be an industry change, such as a change in the education loan laws, or fraudulent accounting practices.
Anyway, COCO is up 30% today on good earnings. So the lesson is to keep an open mind even if you find a stock distasteful.
Update: this company is now worth nothing, and my original idea was correct not to buy it. Lesson: only buy companies that add value to society.
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