Apollo Investment Q2 Results Beat Estimates, Declares Q3 Dividend of $0.20 Per Share (AINV)

The shares of business development company Apollo Investment Corporation (NASDAQ: AINV) made a strong opening yesterday after the company reported fiscal 2013 second-quarter results that beat estimates. However, the selling pressure that came in after noon pushed the share price into negative territory. While reporting the quarterly results, the company also announced a dividend of $0.20 per share for the third quarter of fiscal 2013.

New York-based Apollo operates as a closed-end management investment company. The company prefers to invest in warrants, U.S. government securities, high-quality debt investments that mature in one year or less, high-yield bonds, distressed debt, or securities of public companies that are not thinly traded. Apollo also provides direct capital, mezzanine and senior secured loans. Apollo reported its fiscal 2013 second-quarter results before the market opened yesterday.

Total investment income for the fiscal 2013 second quarter declined to $83.83 million from $93.98 million in the similar period last year. The estimate of analysts was $82.84 million for the second quarter of fiscal 2012.

Net investment income for the quarter was $44.48 million, or $0.22 per share. The consensus estimate of analysts was $0.21 per share for the second quarter. The net investment income in the second quarter of fiscal 2012 was $45.53 million.

The net realized loss for the second quarter widened to $40.56 million from $20.19 million in the comparable quarter of fiscal 2012.

The earnings per share for the reported quarter was $0.35, compared to a net loss of $1.36 per share for the second quarter of fiscal 2012. The net asset value per share at the end of the second quarter was $8.46 compared to $8.30 on June 30, 2012.

Commenting on the results, James Zelter, Apollo’s CEO, said, “We continued to reposition the portfolio during the quarter, as we were able to take advantage of the rally in the credit markets to sell select investments and invest in securities where we see good risk adjusted returns. We have been able to improve our security position without sacrificing credit risk and with minimal impact to our overall portfolio yield. Looking ahead, we believe that we are well positioned to take advantage of future market opportunities.”

After going ex-dividend, the share price of Apollo fell to a 52-week low of $5.93 per share, much less than its book value, in the third-week of December 2011. A few days later, a report published by Forbes asserted that the share price of Apollo had entered an oversold territory. That information alerted investors and traders who led the recovery to $7.96 per share in the first week of February 2012. The rally fizzled out when Fitch downgraded the stock to “negative” from “stable”. After trading at around $7.00 for nearly four months, the shares went past the $7.50 mark by the last week of May 2012. The impressive fiscal 2013 first-quarter results took the share price to a new 52-week high of $8.30 on September 14.

Yesterday, the shares of Apollo opened at around $7.95 and climbed to $8.07 within the first hour of trading. At noon, the share price touched $8.09, which is 26 cents below the 52-week high. After trading above $8.00 for most of the trading session, the shares of Apollo succumbed to the selling pressure in the last two hours.

Apollo also announced that its board has declared a dividend of $0.20 per share for the third quarter of 2013. The dividend is payable on January 4, 2013, to stockholders of record as of December 18, 2012.

Apollo ended yesterday’s trading session at $7.79 per share, down $0.03 or 0.4% on a volume of 1.94 million shares.

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Published by Steve Hackney

Steve Hackney is a corporate finance professional with over 14 years of experience in cash management and investing. He earned a Bachelor of Science in Finance from Florida State University and holds a Certified Treasury Professional certification. Steve lives in Orlando, Florida with his family.