Jose Betancourt is one of Covestor’s model managers. He works as a Portfolio Manager for Betan Group, a holding company, where his role is to make decisions on where to invest the company’s capital through a fundamental analysis of the market. He also works in the capacity of Director for an insurance brokerage firm; his main role is to find international insurance alternatives for an exclusive client’s portfolios.He considers himself a conservative long term investor, and he finds it often takes him months to find companies that may adapt themselves to his principles.
Jose’s approach is 100% fundamental. His first contact with a potential investment prospect consists of figures reported by the company, and its business model. At the beginning, he is not attracted by the name, brand, news or any external variable related to that company which may cause distortion regarding share price. He believes knowledge of the product or services offered by the company and how each dollar is earned is essential to determine if further analysis will be necessary.
Jose manages Covestor’s Cash Flow model, which focuses on free cash flow and negative net debt. Current top holdings include Acorn International Inc (NYSE: ATV), Vimicro International Corp (Nasdaq: VIMC) and ChinaCast Education Corp (Nasdaq: CAST). On 3/29, Jose added Apollo Group Inc (Nasdaq: APOL), the for-profit education provider that owns The University of Phoenix, Institute for Professional Development, The College for Financial Planning Institutes, and Meritus University.
Wall St. Cheat Sheet recently summarized APOL’s earnings release:
Although fiscal Q2 EPS of 83 cents beat estimates by 14 cents, shares closed down 4.25% after earnings on Tuesday. Revenue decreased 2.2% from last year to $1.05 billion.
Despite the market’s apparent view of the results, at least one analyst is bullish. According to the Associated Press,
Fortunes for the for-profit education sector will get worse before they get better, but Apollo Group Inc. should get the worst of it before most of its rivals and could mount a turnaround after 2013, a BMO Capital Markets analyst said Wednesday.
…
In a research note Wednesday, BMO Capital Markets analyst Jeffrey Silber said he expects the company is closer to a turnaround than other for-profit school operators.
Silber anticipates that, after 2013, the company could begin posting mid- to high-single digit growth in revenue growth and roughly 10 percent growth in operating profit.
The analyst also said the stock’s price is attractive following a sell-off on Tuesday as investors reacted to the company’s quarterly results.
Barron’s recently noted the mixed analyst views on APOL:
Morgan Stanley analyst Suzanne Stein reiterated her Overweight rating on the stock, although she reduced her target price by $5, to $50.
…
Sterne, Agee & Leach analyst Arvind Bhatia maintained a Neutral rating on the stock, writing: “New student start growth (-45% in 2Q) is expected to stabilize and show positive growth sometime next year as the company anniversaries the steep declines this year.”
…
Height Analytics’ Jarrel Price was also cautious about the near term, writing: “Although we are somewhat surprised by APOL’s 2Q11 new student enrollment of ‐44.9% (roughly in line with management comments, but slightly worse than consensus among investors), the real disappointment is the outlook for similar enrollment declines in 3Q11; suggesting that the inflection point to average enrollment stabilization and positive revenue growth is further out than anticipated.
Sources:
“Did You Catch These 4 Interesting Earnings Announcements?” Wall St. Cheat Sheet, 3/30. https://finance.yahoo.com/news/Did-You-Catch-These-4-wscheats-3814354781.html
“Analyst upgrades Apollo Group shares” Associated Press, 3/30. https://finance.yahoo.com/news/Analyst-upgrades-Apollo-Group-apf-1541279360.html
“Mixed Views on Apollo” Teresa Rivas. Barron’s, 3/29. http://blogs.barrons.com/stockstowatchtoday/2011/03/29/mixed-views-on-apollo/
