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Steve Eisman Is Shorting Strayer (STRA)

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CNBC's Herb Greenberg is reporting that hedge fund manager Steve Eisman has recently established a short position in Strayer Education (NASDAQ: STRA). On May 24th, Eisman revealed that he was shorting private education stocks in a presentation entitled "Sub-prime Goes To College." Strayer (STRA), however, was not one of the names that he mentioned in that presentation.

Earlier this month, the U.S. government said in a report that just 25% of former students of the for-profit school were repaying loans. According to a rule proposed by the Department of Education, schools that do not meet repayment rates of at least 35% would have their access to government-backed financial aid, which accounts for the bulk of the company's revenue, would be removed.

Strayer said that its own calculations show a repayment rate of 55.4%. This discrepancy is what Eisman appears to be focusing on. He believes that the government's numbers are correct and that Strayer's analysis is incorrect. Greenberg said that Eisman's short STRA position is a fairly new one.

Investors who piled into the private education sector after Eisman's presentation at the Ira Sohn conference have been richly rewarded, as the sector has been crushed. During today's trading session, STRA has lost 0.77% to $162.82.

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