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Non-Tech : Aames Financial (AAM) - Undervalued or what???
AAM 10.64+0.1%Nov 6 3:15 PM EST
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To: Tom Schmitz who wrote (429)11/17/1998 9:03:00 PM
From: Sinasi Ugraskan  Read Replies (1) of 510
 
I think there is hope. it can recover. Today's rate cut should help and especially if there is sequential similar cuts all the way to 4%.

The main reason for today's price decline was no doubt yesterday's press release on $100 Million equity investment by a private fund. This fund was supposed to buy up to $100 Million worth of stock at a substantial discount to current stock price. This, no doubt, caused the panic and today's sell off. The press release didn't give details on how many shares would be bought by the fund. But, if you look at the financials, there are only 50 million authorized shares and about 31 Million shares outstanding. That leaves only 19 Million shares for that fund to buy which means they have to pay about $5 1/4 per share.
Any additional shares must be approved by the current shareholders, unless of course there is a loophole they can use.

Also, if you read today's press release, they aren't completely down and out. They have resalable assets and some credit lines still available. However, they may have to take some cost cutting measures, including personnel reduction to help current cash flow problem.

It is also good to know that they are looking into other means to resolve the current crisis.
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