A Calculated Risk: Speculation on Adtalem Global

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On February 13, 2026, First Sabrepoint Capital Management LP disclosed a position in Adtalem Global Education (ATGE +2.56%), acquiring 135,000 shares at an estimated cost of $13.97 million. Such transactions, viewed in isolation, are little more than noise. However, a closer look suggests a calculated, if not entirely rational, bet on a sector increasingly divorced from genuine value.

The Transaction Itself

First Sabrepoint’s investment, amounting to $13.97 million, represents 5.39% of their reported assets. This is not a trivial sum, nor is it a commitment born of exuberant optimism. It is, rather, a positioning maneuver, a stake planted in what appears to be a slow-motion realignment within the education market. The fund’s holdings, as of the same date, reveal a preference for established, if uninspiring, names – NYSE: TPB ($43.36 million), NASDAQ: FCFS ($31.08 million), NASDAQ: LAUR ($16.84 million), NASDAQ: CVCO ($15.95 million), and now, NYSE: ATGE ($13.97 million). A pattern emerges: a flight towards perceived stability, even if that stability is built on foundations of student debt and questionable accreditation.

It is worth noting that shares of Adtalem Global Education, at $92.92 as of February 12, 2026, have underperformed the S&P 500 by a considerable margin – a decline of 11.5% over the past year. This suggests the market, in its collective wisdom, has already cast a skeptical eye on the company’s prospects. That First Sabrepoint chose to invest despite this underperformance is a detail that demands attention.

The Company: A Brief Assessment

Adtalem Global Education operates in the increasingly crowded field of workforce-oriented postsecondary education, offering programs through Chamberlain University, Walden University, and various medical/veterinary schools. Their revenue, reported at $1.89 billion, and net income of $253.25 million, are not insignificant. However, the source of that revenue – tuition and related fees – is inherently vulnerable. The reliance on students taking on substantial debt to finance their education creates a precarious business model, one susceptible to economic downturns and regulatory scrutiny.

Metric Value
Revenue (TTM) $1.89 billion
Net income (TTM) $253.25 million
Price (as of market close 2/12/26) $92.92
One-year price change (11.50%)

What Does This Mean for Investors?

The narrative surrounding this transaction is one of “momentum” and “growth.” Adtalem recently reported a 12.4% increase in quarterly revenue and a 34.3% increase in adjusted EPS, with enrollment climbing 6.3% to 97,010 students. These figures are presented as evidence of a thriving enterprise. However, it is crucial to ask: at what cost? Is this growth sustainable, or is it simply a temporary surge fueled by aggressive marketing and unsustainable financial aid packages?

The company’s revised full-year EPS guidance of $7.80 to $8.00 and net leverage of 0.9x are similarly presented as positive indicators. But these numbers tell only a partial story. A low debt ratio is not necessarily a sign of strength; it could simply reflect a lack of investment in future growth. And a healthy cash flow of $368.0 million does little to mitigate the underlying risks of a business model predicated on student indebtedness.

Walden revenue surged 27.0% year over year, and adjusted EBITDA margins expanded to 30.8% companywide. This is presented as evidence of the company’s ability to capitalize on the demand for online education. But the proliferation of online programs has created a crowded market, and the quality of many of these programs is questionable. If healthcare workforce shortages persist, scale and profitability could prove far more valuable than recent share price underperformance suggests. This is a conditional statement, predicated on a continued crisis. It is a gamble, dressed up as analysis.

Long-term investors should approach this transaction with caution. The market, in its often-imperfect way, has already signaled its skepticism. To assume that First Sabrepoint has identified a hidden gem is to ignore the fundamental vulnerabilities of the education sector and the inherent risks of a business model built on debt.

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2026-02-13 23:03