It’s time to short Apollo Group, Inc. (APOL)

Submitted by Eric Cheshier on Fri, 01/30/2009 - 19:02

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Financial News

In 2008, one of the toughest years for stocks in recent history, Apollo Group, Inc. (NASDAQ:APOL) shares have climbed like nobody’s business. In April ’08 shares traded at $44. Shares are currently trading at $82.00 today.

No where left to go

Apollo was a great stock to hold in 2009. The problem is, shares have risen so high that they have no where to go but down.

Apollo 1 Year Chart

You could make the case that with unemployment levels rising to some of the highest levels since the great depression, more consumers will be enrolling back in school to further their eduction. According to their last earnings call, this is exactly what’s happening:

Efforts to boost enrollment and increase retention paid off in Apollo Group Inc.'s first quarter and helped push the University of Phoenix parent's shares to a four-year high Friday.

The Phoenix-based company said Thursday its fiscal first-quarter profit soared 29 percent and revenue climbed 24 percent to $970.7 million.

Low turnover among admissions representatives will continue to benefit enrollment of degree-seeking students, which jumped more than 18 percent, analyst Corey Greendale of First Analysis Securities Corp. said in a research note. Better retention will enhance the school's brand over time, he said.

In spite of their recent earnings release which blew estimates out of the water, Apollo group is facing a student-led lawsuit - at issue is whether the University of Phoenix is manipulating what's called a "cohort default rate" and thus protecting its eligibility to offer the government-backed student loans responsible for more than 75% of its revenue.

Is this the reason why insiders have dumped $103,650,861.00 worth of stock so far in 2009? You be the judge. All I know is I’d rather be short Apollo Group than long right now.

Insider Trading	Relationship	Date	Transaction	Cost	#Shares	Value ($)	#Shares Total
SPERLING JOHN G	Exec Chairman of the Board	1/22/2009	Sale	88.23	250,000	$22,057,709.00	13,525,639.00
SPERLING PETER V	Vice Chairman	1/22/2009	Sale	89.37	51,179	$4,573,785.00	6,186,416.00
De Concini Dino J	Director	1/16/2009	Option Exercise	41.83	6,500	$271,895.00	15,022.00
WRUBEL ROBERT W	VP of Marketing	1/16/2009	Option Exercise	53.35	5,071	$270,538.00	10,871.00
SPERLING PETER V	Vice Chairman	1/16/2009	Sale	88.78	188,900	$16,771,119.00	6,492,201.00
SPERLING JOHN G	Exec Chairman of the Board	1/16/2009	Sale	87.92	190,500	$16,748,301.00	13,775,639.00
De Concini Dino J	Director	1/16/2009	Sale	87.23	6,500	$566,995.00	8,522.00
WRUBEL ROBERT W	VP of Marketing	1/16/2009	Sale	87.01	5,071	$441,209.00	7,200.00
D'Amico Joseph Lawrence	President CFO Apollo Group	1/15/2009	Option Exercise	58.03	166,667	$9,671,686.00	235,141.00
Pepicello William John	President - UOPX	1/15/2009	Option Exercise	51.33	40,000	$2,053,200.00	53,070.00
SPERLING JOHN G	Exec Chairman of the Board	1/15/2009	Sale	87.74	59,500	$5,220,398.00	13,966,139.00
SPERLING PETER V	Vice Chairman	1/15/2009	Sale	87.99	61,100	$5,376,061.00	6,681,101.00
Pepicello William John	President - UOPX	1/15/2009	Sale	87.36	40,000	$3,494,336.00	13,070.00
D'Amico Joseph Lawrence	President CFO Apollo Group	1/15/2009	Sale	87.32	166,667	$14,553,129.00	68,474.00
Redman K. Sue	Director	1/13/2009	Option Exercise	76.38	8,000	$611,040.00	15,015.00
Redman K. Sue	Director	1/13/2009	Sale	86	8,860	$761,960.00	7,015.00
Reis James Richard	Director	1/13/2009	Sale	83	2,500	$207,500.00	6,265.00