This response is to everyone. In the past I have been bullish on Aames. However, I believe they are now a sinking ship with a crew that does not know how to read a compass. I guess now reality is telling me that this company may be a worthless cause.
My reasons are as follows. Since November, 1996 the executives of this company have lost over 70% of market capitalization. Since August 25 the company has lost 39% of it's market capitalization. The stock since June 1996 has not been able to sustain a positive upward trend. It would go up 1 point only to give at least 75% of it back within a day or two. It is my intention that the only reason that the stock did so well from June 1997 to August, 25 1997 was people thought that Aames would be acquired. No body seemed interested in the fundamentals or the techhnicals. Just the profit that could be made on an acquistion. And of course I was one of those people.
As you know the stock whent from approximately $23 per share on August 25 to a neww low of $9 per share in October. During that time there was nothing but bad news about Aames and the stock acted accordingly. At one time Aames had an analysts rating of 1.6 and was rated as number 12 out of the 27 companies in it's group. Now it is down to a 2.1 and rated about 22 out of 27. So the acquistion now seems to be a dead deal (or is it). From reading this group someone said that they turned down an offer for $25 a share. So, with no acquistion would the company be attractive to investors. I think not--just look at todays price.
Then all of a sudden they announce earings which beat the stree by 1 cent. In addition, there has been at least one upgrade fron netural to buy. Of course the stock reacted by moving from $9 a share to $15 3/4. And that my friends has been it. Not only can't it go upward to $16 and above but now it is heading back to the celler.
What else do we know? According to their press release things are great and they are doing what ever they can to maximize shareholder value. According to them they still have DLJ on board. But what are they really doing? As of last month Aames had more than 5 million shares shorted which represents approximately 20% of the company. One of the highest %'s on the NYSE. The officers do not even hold 20% of the company (including options). Last year the company based on market capitolization was worth three quarters of a billion dollars.
Today at it's currwent price it is worth about $435,000,000. And yet no body wants to buy it. If it can't be acquired at the current price why would any company buy it for $25-$29 per share?
I have chatted with a couple of anaylysts who follow Aames and their feeling is that Aames deceived investors for three quarters and they are no longer trusted. One anaylyst even said that they told the current management that.
So now we have good news about the company and investors are still selling. Why? I have realtime quotes and I watch every day only to see that the stock can not sustain a drive and there are huge blocks (10,000-200,000) being sold on a daily basis. At one time there were 255 institutions that held over 50% of the shares and now ther are dumping the stock.
I spoke with two Vice Presidents a couple of times within the last couple of weeks and I do not believe they have a clue. Unless there is a take over within the very near furture I do not see Aames even reaching $18 per share. The one comment that really intrigued which I heard from one VP is "we do not know why the market is reacting this way to the stock". My response is what is the current management doing to bring the company to the attention of it's investors. Nothing, not a thing other than increasing their salaries to $900,000 a year and investors are paying for it with stock prices that can not increses over $15 per share.
The interesting thing is that even the executives are not buying Aames stock at these low prices. Why? Niel Kornsweit is the only executive that ownes any substantial shares (1,800,000 including options).
I am going to E-Mail this to one of thier VP's. Matbe other investors who are no holding Aames should also do the same and let them know that maybe they should get someone who can run the company and MAXIMIZE SHAREHOLDER VALUE. At best this is a long term sistuation and I am not sure that it is worth the wait. There are too many better companies to invest in.
If I am wrong, please someone knock some sense into me. In my opinion, unless Aames is acquired it is nothing more than a cheap stock with no future. |
