Adtalem Reports Strong Earnings, Yet Major Investor Cashes Out $10.7M Stake
In a move that has caught the attention of market watchers, Peregrine Asset Advisers, Inc. completely exited its stake in Adtalem Global Education (NYSE:ATGE) during the fourth quarter. A recent SEC filing reveals the sale of 69,012 shares, valued at approximately $10.66 million.
The divestment comes at a curious time. Adtalem, a key player in healthcare and professional education, has been on a solid growth trajectory. Its fiscal Q2 report showed revenue climbing 12.4% year-over-year to $503 million, while adjusted earnings per share surged 34% to $2.43. Student enrollment increased for a tenth consecutive quarter, and management responded by raising full-year guidance and authorizing a substantial $750 million share buyback program.
Analysts suggest the exit may reflect a strategic portfolio shift rather than a critique of Adtalem's fundamentals. "Peregrine's portfolio is heavily weighted toward mega-cap tech and passive strategies," notes Michael Thorne, a financial analyst at Veritas Insights. "A mid-cap education stock, even a high-performing one, might not fit a revised risk-return profile, especially if the fund sees greater momentum elsewhere."
The education sector faces headwinds from regulatory scrutiny and shifting demographic trends, potentially capping valuation multiples despite strong operational performance. Adtalem's share price, at $103.55 as of late January, has dipped slightly over the past year, underperforming the broader market rally.
Investor Reactions:
"This is a classic case of 'selling the news.' The numbers were great, but the forward outlook for the entire for-profit education space is clouded. Peregrine is smart to take profits and reallocate," said David Chen, portfolio manager at Horizon Capital. His tone was pointed: "The market is rewarding AI and semiconductors, not educators. Sentiment has shifted, and no amount of EPS growth can fight that tide right now."
"I see this as an opportunity," countered Sarah Gibson, an investment advisor specializing in the sector. "Adtalem is executing brilliantly in a stable, need-based field like healthcare education. The buyback announcement signals strong internal confidence. A fund's exit creates a potential entry point for long-term investors."
"It's a reminder to dig deeper than headlines," added Marcus Rivera, a retired accounting professor and retail investor. "One fund leaving doesn't negate 10 quarters of enrollment growth. It just means their strategy changed. I'm more interested in the company's fundamentals than one filing."
As the market digests this mixed signal, the focus returns to Adtalem's ability to sustain its growth in addressing critical workforce shortages, particularly in healthcare.
Jonathan Ponciano has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Adtalem Global Education, Alphabet, Apple, Microsoft, and Nvidia. The Motley Fool has a disclosure policy.