Bloomberg – Steven Eisman is shorting, or betting against, shares of higher- education companies because of the parallels he sees to the housing market, where prices began to fall in 2006 as loan defaults by homeowners with poor or limited credit history began to climb, he said. Like the lenders to these subprime borrowers, for-profit colleges boomed by saddling low-income people with debts they can’t repay, he said.
“Until recently, I thought that there would never again be an opportunity to be involved with an industry as socially destructive and morally bankrupt as the subprime mortgage industry” said Eisman, 47, one of the sellers featured in “The Big Short: Inside the Doomsday Machine” (Norton, 2010), Michael Lewis’s book about investors who anticipated the housing bust. “I was wrong. The for-profit education industry has proven equal to the task.”
