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- A New Director Just Bought $30 Million of This Education Stock
A New Director Just Bought $30 Million of This Education Stock
A new board member just put roughly $30 million of his fund's money into this cheap education stock.
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Weeks after an investor group won two board seats and a new capital allocation committee, its founder spent roughly $30 million buying shares on the open market. The stock trades near 10 times earnings, and the company still has hundreds of millions of dollars left on its buyback authorization.
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Stride, Inc.
Date – Pre‑market
Ticker: LRN | Sector: Consumer Defensive (Education and Training) | Market Cap: $3.1B
30‑Second Take
Stride (NYSE: LRN) runs one of the largest networks of online public schools in the U.S., plus a growing career-learning business. On October 9, it agreed to add two directors, including Fivespan Partners founder Dylan Haggart, and to form a new Capital Allocation Committee to review its capital structure and capital return options.
Then the buying started. Form 4 filings show Haggart, through Fivespan funds, bought roughly $29.8 million of stock on the open market between October 23 and November 3. Fellow director Brian Shepherd added about $1.7 million on November 2 and 3. That is more than $31 million of insider buying in under two weeks.
The backdrop is not clean. Total enrollment slipped to 241,400 from 247,700 a year earlier, and the stock has drifted lower since the October 20 report. That is what makes the buying worth your attention: these directors added shares into weakness, not into a rally.
Trade Setup
Timeframe: Swing to medium-term (three to six months)
Edge type: Large director open-market buying plus a new capital allocation review
This is not a bet that enrollment snaps back next quarter. It is a bet that a board with a fresh capital allocation committee, a low multiple, and a buyback authorization that runs through October 2027 finds ways to return more cash to shareholders. You get to buy near the prices the new director paid, with a clear list of signals to track.
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Snapshot Table
Metric | Value | Current Stance |
|---|---|---|
Price | $75.00 | About 28% below its 52-week high |
52-Week Range | $60.61 to $103.67 | Lower half of the range |
Market Cap | $3.1B | Small-mid cap |
P/E Ratio | 10x trailing | Low multiple for a profitable company |
Buyback Room | $311M remaining | Authorization runs through Oct. 31, 2027 |
Avg Daily Volume | 840K shares (3-month) | Heavier during November insider buying |
Next Catalyst | Fiscal Q2 2027 results | Typically late January; date not yet set |
Chart
1-Month Trading Summary: LRN is down about 6% over the past month, slipping from around $80 to the mid-$70s. It popped after the board agreement in early October, then gave that back after the October 20 report showed lower enrollment and second-quarter guidance below Street estimates, and it slid further as growth stocks sold off in early November.
The insider buying landed right in that pullback, and volume ran well above its three-month average during the first week of November.
Bull Case
Why It Works
Stride is profitable and inexpensive. The stock trades near 10 times trailing earnings, on roughly $2.5 billion of trailing 12-month revenue. Its online schools are paid largely through state per-student funding, which tends to hold up better than discretionary consumer spending when the economy slows.
Career learning gives the company a second engine beyond its general-education schools. If the core enrollment trend stabilizes, you are left with a cash-generating business priced like it has stopped growing.
The Catalysts
The first catalyst is the new Capital Allocation Committee. Stride formed it under its cooperation agreement with Fivespan to evaluate the company's capital structure and capital returns. With about $311 million left on a buyback authorization that now runs through October 31, 2027, the tools are already in place.
The second is execution under new leadership. Bob Knowling became CEO at the end of July and has said enrollment came in below expectations, and Stride just named Darlene Williams Chief Information Officer to lead its technology work. Management's second-quarter outlook assumes enrollment grows during the school year, so mid-year enrollment updates are the numbers to watch.
What The Numbers Say
Haggart's purchases ranged from about $74 to $80 a share, and Shepherd paid roughly $74 to $77. In the fiscal first quarter, revenue rose 3% to $639.4 million and adjusted EBITDA rose to $111.8 million, while second-quarter revenue guidance is $625 million to $645 million. A profitable company that can buy back stock at about 10 times earnings does not need a big growth surprise for this setup to work.
Bear Case
What Could Break It
Enrollment is the core risk. Total enrollment fell about 2.5% year over year, and the second-quarter outlook depends on enrollment growth during the school year. If that does not show up, a low multiple can stay low.
Scrutiny is the other risk. Stride depends on state funding formulas and partnerships with school districts, and a November 2 Bloomberg investigation questioned attendance and test scores at its Texas virtual school, reporting that Stride has collected more than $1 billion in Texas taxpayer money. Any state-level funding or oversight change in a large market could hit results.
The Valuation Risk
A cheap stock can stay cheap. Shares sit roughly 28% below their 52-week high, and the stock has already dipped below many of the directors' purchase prices. Insider buying does not set a floor, and in a broad market sell-off this stock can keep sliding with everything else.
How To Size It
The next hard data point is the fiscal second-quarter report, which Stride typically releases in late January. Until then, you are leaning on the board and the buying. Start with a half position, add only if enrollment updates or capital return news support the thesis, and use the same stop discipline you would on any small-cap.
Quick Checklist
✅ New Form 4 filings from Haggart, Shepherd, or other directors on EDGAR
✅ Any update from the Capital Allocation Committee or a larger buyback
✅ Mid-year enrollment commentary ahead of the fiscal Q2 report
Deep‑Dive Links
That’s all for today’s Everyday Alpha. We’ll have a new pick for you every morning before the market opens, so stay tuned!
Best Regards,
—Noah Zelvis
Everyday Alpha