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Dear Mr. Berko:

Dear C.H.:

Apollo Investment Corp. (AINV – $10.58) looks like a fair-to-good bet for a stock with an uncommonly high $1.12 dividend yielding 10.6 percent. Apollo is a specialty finance company that invests in middle-market businesses with revenues between $100 million and $2 billion, and may provide mezzanine financing as well as secured loans. The Apollo boys do a fine job of choosing the 74 companies in their investment portfolio.

Though Wachovia, Merrill Lynch and Value Line suggest that AINV may not be an attractive equity for the next few years, Reuters, Argus and RBC rate Apollo as “outperform.” I agree with the latter, because competition is declining while banks and large commercial lenders are focusing on existing investments and trying to exit riskier markets.

This bodes well for AINV, which will soon raise additional capital (stock offering) because management believes there’s a lot of good-quality businesses that myopic banks can’t see. The company expects to report 2009 earnings of $1.32 per share and post earnings of about $1.49 per share for 2010. So the 2009 dividend of $1.08 per share and the potential $1.12 per-share dividend for 2010 are well covered. I think the stock could move to $15 in the coming 12 months and would be comfortable owning 1,000 shares as a speculative income investment.

Yahoo Inc. (YHOO – $17.25) doesn’t butter my bagel, toast my bread or open my door. In fact, Yahoo gives me the cold fuzzies, makes my teeth itch and turns my tongue numb. I can’t give you the YHOO preferred stock symbol sequence, because I don’t know it.

I called Yahoo, and some idiot answered the phone with an ear-piercing rebel yell, screaming, “YAAAAHHOOOOO!” That shriek nearly shorted my pacemaker and shattered two of my crystal wine glasses. I did speak to several Yahoo dudes who sounded dumber than a flock of Arctic woodpeckers, and they didn’t know “chirp.”

I don’t care for this company because: (1) Management is unable to deliver its new advertising platform. (2) Management fails to recognize that Facebook, YouTube, MySpace and other trendy sites are sucking away YHOO users. (3) Management underestimates the stiff competition from AOL, Google, TWX and MSN, whose advertising platforms are eating Yahoo’s lunch. (4) A good portion of Yahoo’s revenues derive from a search that has almost zero switching costs. Unfortunately, management has allowed Yahoo to fall light-years behind Google in technology. (5) Yahoo Finance, once a popular site for stock market data, is full of hiccups and untimely and incorrect information. And finally: (6) Yahoo’s management really “sphinx.”

Please address your financial questions to Malcolm Berko, P.O. Box 1416, Boca Raton, Fla. 33429 or e-mail him at malber@adelphia.net. © Copley News Service