We are seeing some serious buying in one name.
In Jeff Yastine’s and my Insider Profit Trader service, we monitor insider and institutional buying.
Insiders are officers, directors and investors who own more than 10% of a firm’s shares. Institutions manage more than $100 million of assets.
Each of these groups must report their activity to the Securities and Exchange Commission for all the world to see.
This is what we look for. We scroll through these filings each day in search of large buying from either group.
And we recently learned of a great opportunity…
The Opportunity
Apollo Global Management (NYSE: APO) is an “alternative asset manager.” It manages $270 billion of assets. It invests in equity, makes loans and buys real estate.
It uses the income from these assets to make big payouts to its investors. It has made them every quarter since it went public in April 2011.
Today, Apollo yields more than 7%. But the amount it pays out every quarter varies. This depends on the buys and sells in the portfolio.
Based on the $0.46 it paid to investors last quarter, though, its current yield is about 7.4%.
The Inside Institutional Buyer … and His Mentor
We’re seeing one of the most influential hedge funds buying shares of Apollo today.
Because of the size of its stake, this fund is an insider in the company. It owns 18% of the outstanding shares.
And that stake is growing.
Chase Coleman runs Tiger Global Management. The hedge fund manages assets worth about $20 billion.
Coleman is a protégé of Julian Robertson, a legend in the hedge fund world.
Robertson ran one of the first hedge funds. He started Tiger Management in 1980 with $8.8 million raised from family and friends. At one point, it oversaw $22 billion.
Robertson became known as the “Wizard of Wall Street.” He posted serious returns in the 1980s and 1990s. And he avoided the tech-stock rush.
Some missteps eventually caused his assets to fall, though. He closed the fund in March 2000.
But his legacy is solid.
In addition to investing, Robertson is known on Wall Street for mentoring many of today’s best hedge fund managers.
He helped start the careers of a number of the so-called Tiger Cubs. When he closed his fund in 2000, the Cubs he trained went on to found many of the largest and most successful funds. He provided early investment money and support to about 40 hedge funds.
Today, Cubs like Coleman control or manage many of the world’s top hedge funds. In addition to him, these include names like Andreas Halvorsen of Viking Global Investors and Stephen Mandal of Lone Pine Capital, among others.
Robertson’s top two factors for evaluating companies are:
- Is the management decent and honest?
- Is the CEO a competitor?
Apollo has passed the tests, as applied by Coleman.
In the first quarter of last year, Tiger disclosed a more than 23 million share stake in Apollo. It increased that stake by 100,000 shares or more every quarter thereafter … until the third quarter of this year.
It was a great strategy to wait.
Apollo shares traded up to $36.30 on July 18 … and then almost back to that level on September 25.
However, since the beginning of October, shares have dropped more than 25%.
Tiger has been buying into that weakness. In the fourth quarter alone, the hedge fund has bought more than 2 million shares.
It now owns 36.5 million shares.
Here’s the thing: You can make a lot of money investing with people who know what they’re doing.
And Coleman’s Tiger fund likes Apollo a lot.
Next Steps
Apollo has fallen as the market worries about interest rates, a potential trade war and recent weakness in stock prices.
But Coleman’s now-17-year-old Tiger fund knows what it’s doing. That means Apollo is worth looking at, especially at its new, cheaper price.
I suggest you wait until shares start moving higher to buy, though.
Good investing,
Brian Christopher
Editor, Insider Profit Trader