Updates on two stocks
Happy Friday!
Markets are mixed which means we’re still at the levels we were at in 1998, 2002, 2008, 2010 and 2011. Apple’s up today and it’s up a lot over that same time period though, see what I mean about why we need to focus on finding the best longs and worst shorts to get anywhere?
One of our recent shorts, Apollo, reported earnings last night and the report was fine to good. The stock’s up 5% today mainly because the company confirmed revenue and earnings guidance for 2012 and the market was worried that there’d be another guide down.
That said, I’m feeling more emboldened about this long-term short because of phrases like this that pepper the company’s earnings press release. “The Company Believes…”
What the heck does that even mean in this context:
“The decrease in DSO versus a year ago was primarily attributable to reductions in gross accounts receivable principally resulting from decreases in University of Phoenix Degreed Enrollment, a shift in the mix of students from Associates to Bachelors degree level programs and the full implementation of University Orientation, which the Company believes has improved the student retention rate. Improved collection rates at University of Phoenix, which were favorably impacted by an initiative to address the Company’s oldest receivables in fiscal 2011, also contributed to the decrease.”
What we do know is that they’re going harder after their oldest deadbeat customers harder. That’s a helping to drive earnings. And that’s not a sustainable earnings driver and nothing has changed in our thesis here for Apollo.
I’m holding this one steady and plan to add to it in coming days after this pop settles itself down.
FIO’s popping again today and it’s now up nearly 40% from its recent lows. I’ve got some big gains in these calls and common stock in this one now and I’m going to trim put some sell orders above the market on about 1/4 of my calls. Time to lock in some of these gains and reduce some of this FIO exposure that’s gotten so outsized because of these big gains.
