For a small company that's in the time-share and land-development business, Mego has collected an array of savvy investors, including financier Bob Nederlander, a minority partner in the New York Yankees, and Wilbur Ross Jr., a restructuring pioneer at Rothschild Inc. The successor to the toy company Mego International, which went into Chapter 11 in 1983, the new Mego is currently trading at 1 1/2 a share. Some pros are betting that Mego could be worth 5 a share in about two years, based on Nederlander's plans for Mego.
The primary objective of Nederlander, who is chairman and CEO, is to convert Mego into a financial-services company. President Jerry Cohen says the company is on the prowl for acquisitions in the consumer-finance business. Mego changed its name in mid-May to Mego Financial.
John Boland, editor and publisher of the newsletter Bankruptcy Values, believes that even before any acquisitions, the company will earn 25 cents a share in the year ending Aug. 31, 1992, and 30 cents in fiscal 1993. Depending on what acquisitions are made, profits could be much higher next year, he says.
One investor believes the company's first acquisition will be a mortgage banking company, with operations in more than a dozen states. He says a deal is very close to being done. If that comes to fruition, he says, it will add revenues of about $25 million to a current total of $46 million. Earnings, as well, would increase significantly, says this investor.