how to put a rocket under the share price, page-5

I had a long chat with Christine today who agreed to put my proposition directly to Gordon Fell (Rubicon's CEO) that he consider lowering the purchase price for Rubicon.

Although this is very much a long shot, I think it true that Fell stands to make more money out of a cheaper deal because he will benefit from the likely dramatic turn around in market sentiment towards AFG.

Christine has promised to convey Fell's response to me ASAP.

It would help my cause if other AFG shareholders could email Christine as per my previous post.

If Fell refuses to lower the Rubicon purchase price, the only other way get this stock trading at reasonable levels again over the short term is for the market to begin to divorce AFG from the negative sentiment associated with the US credit crunch.

So I also asked Christine to update the market on how AFG is tracking with the dec half. Specifically, I asked her to tell AFG management to update the market as to whether or not AFG's earnings are going to be materially effected by the US sub-prime mess. My personal expectation is that, to date, the credit crunch will have had no material impact on AFG's earnings and that AFG's outlook is actually pretty decent (if cautious). Unlike many US investment banks, who are suffering massive write-downs and heavy losses, I think AFG will actually experience an EPS INCREASE this FY. So, at least at the present time, there is no good reason for AFG's share price to track the worst performing US investment banks. If AFG's december half actually shows EPS growth, and if its full year outlook is half decent, then the recent heavy selling in AFG will have been shown to be completely irrational. At some point AFG's share price needs to start reflecting the company's hard earnings numbers.

Christine said she would also convey my request for a market update ahead of the EGM to AFG management.