Wednesday, January 6, 2010

Apollo is my Creed

Ok, sorry.  'Rocky' movie puns certainly date me.
Time, though to call attention to Apollo Group (APOL). They are the country's largest for-profit education operator.  This stock has long been a love 'em or hate 'em stock, with vehement voices on both sides.  Those bullish on the stock, like me, see it as a beneficiary of the weak job market.  In this kind of environment, many unemployed and underemployed folks go back to school to upgrade the education portion of their resume in hopes of being more attractive on the job market.
After a nice run earlier this year, the stock was devastated toward the end of October on the heels of a report that the Feds were looking into some of their internal processes. We started our position toward the tail end of the decline and are now seeing the stock move again above our purchase price.  The action has been very positive over the past month, even in the face of a lackluster market.

From my perch, I think the market is saying that the investigation will turn ut to be a non-starter and we could see Apollo continue to march back up to where it was (mid $70's) before the announcement.
As of noon today, Apollo is up 4% to @$64 in an otherwise down market.
Disclosure:  Apollo is widely owned in our accounts.

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