Apollo Group Inc (NASDAQ:APOL)‘s stock is down by almost 10% in pre-market trading following a rather disappointing earnings release for the third fiscal quarter of 2015, which included an EPS of $0.44 that missed the estimated mark by $0.03. Revenues of $681.48 million marked a decrease of 14.1% on a year-over-year basis and fell short of the estimated mark by $17.09 million. Enrollment numbers marked a downtrend, as the University of Phoenix’s new Degreed Enrollment fell to 29,400 as compared with 33,900 for the same quarter a year earlier. A similar dip was seen in overall Degreed Enrollment, which amounted to 206,900 as compared with 241,900 posted previously. This resulted in an operating income of $101.6 million as compared with $140.3 million in the same quarter of the previous year.
It appears the smart money was wary about Apollo Group Inc (NASDAQ:APOL) leading up to its latest earnings release, as the stock experienced a decrease in hedge fund sentiment recently. Apollo was in 24 hedge funds’ portfolios at the end of March with the aggregate investment totaling $322.58 million. There were 27 hedge funds in our database with Apollo Group holdings amounting to $824.30 million at the end of the previous quarter. Even factoring in the substantial decline in shares during the first quarter, there was a substantial sell-off in Apollo by the smart money in the first quarter, as they clearly did not feel the stock was a good bounce-back candidate. They were certainly right, as shares have declined by another 35% in the second quarter to drag them down by nearly 62% year-to-date, making the stock one of the worst performers on the NASDAQ this year.
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We also track insider sentiment, as like with hedge fund sentiment, it can provide valuable information about how influential insiders feel about their company. There haven’t been any strong insider sales in Apollo Group Inc (NASDAQ:APOL) lately. James Fredrick Newton, who is the company’s Senior Vice President has sold about 6,218 of his shares so far this year. He still holds about 53,800 of the company’s common stock. Sean Martin, another SVP liquidated his entire holding of 6,905 shares in February of this year.
Keeping this in mind, let’s take a gander at the recent action encompassing Apollo Group Inc (NASDAQ:APOL).
How have hedge funds been trading Apollo Group Inc (NASDAQ:APOL)?
When looking at the hedgies followed by Insider Monkey, Larry Robbins‘ Glenview Capital had the largest position in Apollo Group Inc (NASDAQ:APOL), worth close to $102.1 million, corresponding to 0.5% of its total 13F portfolio. On Glenview Capital’s heels is First Pacific Advisors LLC, managed by Robert Rodriguez and Steven Romick, which held a $65.8 million position; the fund also has 0.5% of its 13F portfolio invested in the stock. Some other peers with similar optimism contain Donald Yacktman‘s Yacktman Asset Management, Cliff Asness’ AQR Capital Management, and David Harding’s Winton Capital Management.
Seeing as Apollo Group Inc (NASDAQ:APOL) has experienced declining sentiment from the smart money, it’s easy to see that there were a few hedge funds that decided to sell off their full holdings in the first quarter. At the top of the heap, Robert Pohly‘s Samlyn Capital said goodbye to the largest investment of all the hedgies monitored by Insider Monkey, worth close to $102.5 million in call options, while the fund also said goodbye to about $51.2 million worth of its long position in the stock. These transactions are intriguing to say the least, as aggregate hedge fund interest was cut by three funds in the first quarter.
The tightening competition in the online education space, and the downward trend for Apollo Group Inc (NASDAQ:APOL)’s stock, which has lost about 50% of its value over the last year, are two major factors going against the company, besides the loss of hedge fund interest and disappointing earnings. I would stay clear of this stock until some stability in earnings is reached.
Disclosure: None
