Conclusion
Apollo has an excellent business model, which Morningstar awards a 'wide moat', great, experienced, management and good financials.I'm not entirely comfortable with the current valuation, 'past performance is not indicative of future performance', 57 is an extremely high PE and it would be foolish to assume a company with a PE of 21 would revert back to that high a PE. Quicken assumes 6% terminal growth which I would downplay greatly (growing 6% for eternity will make Google look overvalued) and will not take the Quicken assumption very seriously. The valuation I feel most comfortable with is the DCF, this implies a 23% margin of safety, thought I would pay up for a business of this quality, I want at least a 30% margin of safety before committing the money in my concentrated portfolio.
To read Mike's analysis, please visit:
http://mikesnewsletterinvesting.blogspot.com/2006/03/apollo-grp.html
All the best,
Dah Hui Lau (David)
dahhuilaudavid@gmail.com
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