William Blair Small-Mid Cap Core Fund on Grand Canyon Education
Thesis
Grand Canyon Education provides online program management and shared services to higher education institutions through a revenue-share model that scales with partner enrollment. The company delivered better-than-expected quarterly results and favorable guidance, but the stock fell on fears that generative AI could reshape higher education. The fund believes its competitive offering, continued program build-out and campus expansion can drive positive new enrollment growth. It also expects those drivers to support strong future free cash flow generation.
“continued build out of programs and campus expansions position the company for positive new enrollment growth and strong free cash flow generation”
Key risks
- Potential disruption to higher education from generative AI