Montreal-based Formula Growth reported a new position in Laureate Education (LAUR +1.08%) on November 13, acquiring 111,000 shares valued at $3.5 million, according to a recent SEC filing.

What Happened

Formula Growth Ltd disclosed a new investment in Laureate Education (LAUR +1.08%), acquiring 111,000 shares during the third quarter, according to a filing with the Securities and Exchange Commission dated November 13. The post-transaction value of the position was approximately $3.5 million, representing approximately 1.25% of the fund’s reportable U.S. equity assets as of quarter-end.

What Else to Know

Top holdings after the filing: 

• NASDAQ: SWIM: $7.53 million (2.7% of AUM)
• NYSE: JHX: $7.24 million (2.6% of AUM)
• NASDAQ: TEAM: $6.39 million (2.3% of AUM)
• NASDAQ: SSYS: $6.38 million (2.3% of AUM)
• NASDAQ: MU: $6.36 million (2.3% of AUM)

As of Friday, shares of Laureate Education were priced at $33.83, up a staggering 86% over the past year and well outperforming the S&P 500, which is up 16.5% in the same period.

Company Overview

Company Snapshot

• Laureate Education offers undergraduate and graduate degree programs in business, management, medicine, health sciences, and engineering through campus-based, online, and hybrid formats.
• The company generates revenue primarily from tuition and related educational services delivered via a network of universities and higher education institutions in Mexico, Peru, and the United States.
• It targets students seeking higher education, with a focus on emerging markets in Latin America and select U.S. locations.

Laureate Education, Inc. provides higher education services through a network of universities and higher education institutions in Mexico, Peru, and the United States. The company offers undergraduate and graduate degree programs in business and management, medicine and health sciences, and engineering and information technology through campus-based, online, and hybrid programs.

Foolish Take

Buying into a stock at all-time highs only makes sense if the underlying business is still compounding, not peaking. In a portfolio where top positions cluster between 2% and 3%, a 1.25% allocation reads as deliberate but restrained, a way to participate in upside without pretending this is a sure thing.

The fundamentals help explain the confidence. In the third quarter, Laureate Education reported revenue of $400.2 million, up 9% year over year, with adjusted EBITDA rising to $94.8 million. Enrollment trends remain solid, with total enrollments up 6% year to date and particularly strong growth in Peru. Just as important, the balance sheet is clean. Laureate ended the quarter with $241 million in cash against $102 million of debt, leaving it in a net cash position. Management also raised full-year guidance and expanded its share repurchase authorization to $250 million, signaling confidence in free cash flow durability.

For patient investors, consider this a steady cash-generating education business in emerging markets that appears capable of growing into its valuation, even after a sharp run.

Glossary

13F reportable assets: U.S. equity holdings that institutional investment managers must disclose quarterly to the SEC.
Assets under management (AUM): The total market value of investments managed on behalf of clients by a fund or firm.
New position: An investment in a security that a fund or investor did not hold in the previous reporting period.
Top holdings: The largest investments in a fund’s portfolio, typically ranked by market value.
Trailing twelve months (TTM): The 12-month period ending with the most recent quarterly report.
Outperforming: Achieving a higher return than a specified benchmark or index over a given period.
Quarter-end: The last day of a fiscal quarter, used as a reference point for financial reporting.
Reportable positions: Investments that must be disclosed in regulatory filings due to their size or regulatory requirements.
Stake: The amount or percentage of ownership an investor holds in a company.