PROXIMO

Scrutinizing Apollo: The Deeper You Look, The More Problems You See

Nat---Not sure that comparing a fake school to Harvard and Yale is comparing apples to apples.


On Apr 23 04:32 PM Nathaniel C wrote:

> The idea that Apollo is bad because it is for profit is misguided.
> ALL colleges are in fact for profit--they just dont pay taxes. That
> is why Harvard has a slush fund of $22 billion. Yale has $15 billion.
> It seems Harvard and Yale are for profit after all.

Apollo's Big Dirty Secret Exposed

When it comes to discovering and analyzing troubled companies, this author is world-class. He's batting nearly 1000. A small amount of research easily validates his performance. Discarding his advice because of emotional reasons could prove costly. Especially if you are long this POS company.

Even with Aggressive Valuation, For-Profit Education Stocks Seem Overvalued

You indicate that your sense is that Citron is most likely involved in a smear campaign to support their short position. Regardless of whether that is the basis of Citron's analysis, it may be in your best interest to take a peek at their website. Unless their website is based on fraud and lies, and I seriously doubt that it is, you may want to give careful consideration to their short calls. They have been EXTREMELY accurate in their calls----I mean lights out accurate. No way I'd go long against any of their shorts. NEVER.


On Jan 28 11:19 AM User 217100 wrote:

> here is what you wrote:
> "...If we start that DCF analysis with Y1 FCFs of $2.50 and use a
> 4% constant growth rate, we come up with a valuation closer to $45.
> I’d argue that would be the most realistic of the bunch if it were
> not for the other problems at APOL."
>
> you clearly state that you think a yr 1 FCF of $2.50 is the "most
> realistic". This is roughly a 50% discount to where APOL should
> realistically be in the current fiscal year. This could not be further
> from the most realistic. APOL should do close to $5 in FCF in the
> next year and FCF will probably grow at least 20% in year 2. I never
> said your STRA estimate was 50% of the current fiscal year. Your
> $8 assumption is perhaps 5-8% too high, but it is not that far off
> for STRA based on current consensus estimates.
>
> Of course i have not seen your DCF models, so i am not trying to
> dissect them. I am only basing my comments on the details you provided
> which for the most part seem kind of silly. i agree that an 8% cost
> of capital is way too low. but some of your yr 1 FCF assumptions
> do not make sense and your growth assumptions really do not make
> sense either. Your assumptions just all seem to be very arbitrary.
> A traditional DCF model is highly sensitive and easily manipulated
> based on the assumptions. For that reason I think it is pretty unrealistic
> to assume a 5% growth rate in yr 1 or 2 when the real growth rates
> will likely be 3 or 4x that level.
>
> I do consider myself an expert on valuation, but that is not the
> issue here. I am long APOL, but i'm not trying to argue whether
> the stock is over or undervalued. i'm just pointing out that your
> claim that a $2.50 yr one FCF and a 4% growth rate are extremely
> unrealistic and misleading.
> And i did not say valuation does not matter. I said a stock does
> not go up because it is cheap or go down because it is expensive.
> A stock that is expensive may very well go down, but the stock will
> not go down simply because it was expensive. It would likely go
> down because earnings expectations got too high and the company could
> not grow at the rate assumed in the stock price. This is a subtle
> but very important difference in what drives a stock.
> Again, i'm not trying to argue whether APOL is going up or down.
> I've done my analysis and i'm very comfortable with it. The research
> done by citron is interesting, but my sense is they are mostly involved
> in a smear campaign in support of their short position on the stock.
> If you want someone with an agenda it is them. I'm simply stating
> that your assumptions used to justify a $20 valuation for APOL are
> very unrealisic and misleading.
> I'm happy to discuss my opinions on the education sector with you
> offline, but for the purposes of this website, i will remain ananymous.
>
> thanks.
>
>
>
>
> On Jan 28 10:09 AM H.J. Huneycutt wrote: