Aames Financial (AAM) - Undervalued or what??? Message Board

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Non-Tech : Aames Financial (AAM) - Undervalued or what???

AAM 10.60

0.0%

Nov 26 10:42 AM EST

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To: James Wang who wrote (44)	6/9/1997 11:26:00 PM
From: Steve Pimpis	of 510

I agree if we go to $25 sell and take the profit. here's my reasoning for a higher p/e than history shows. I am basically a tech stock investor, what caught my eye on this sector was something I saw happen with FPFG. The Pres. bought 400,000 shares followed by the cfo buying 50,000. So I looked into it, bought some shares at the time fpfg was at 21 and a p/e of about 6 and it took off from there. This industry isn't growing because people are buying boats and such with a second mortgage. It is that people are overwhelmed with Credit Card debt and are using the equity in their homes to repay the loan with a better rate and spread out over 10 - 15 years. The bottom line is that this is a perceived method to save a few hundred dollars a month (and it can be) in Credit Card payments. In short I think that the market will recognize the tremendous potential of these home equity lenders given this new opportunity that didn't exist 5-10 years ago. There are also new accounting laws that allow these companies to recognize revenues in advance. All this combined I think that a p/e of 20 for this sector in the future will be much more widely accepted because the underlying eps growth rate will also change positively. Now for some real speculation my guess is that FPFG is the company hot on the trail of AAM. THey are growing through acquisition and are trying to capture as much of this home equity market as they can as quickly as they can. The news release had this quote which I found intersting. According to the magazine, the money manager believes an ``acquisition-hungry franchiser and financing company is hot on the trail of Aames.'' Anyway that's my two cents. I'll probably be with you if we go to $25 I pocket my cash and move on. Good luck.

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