Kingdon Capital Management Corp., a low-profile hedge firm, has made a sizable investment in Aames Financial Corp., increasing speculation that a sale of Aames is imminent.

Kingdon, based in New York, purchased 2.3 million shares, or 7.4%, of Aames outstanding common stock, according to an Aug. 24 filing with the Securities and Exchange Commission.

The purchase price was not disclosed, but analysts estimate that Kingdon paid $11 to $12 a share. Despite market rumors that Kingdon's move meant that a potential buyer had made Aames an offer, Aames' stock did not rise.

In fact, it fell to $10.81 on Tuesday from $11.187 on Monday, the day of the filing. The stock was trading at $10.125 at midafternoon Wednesday.

Aames has been up for sale since last August, when the company took a writedown because of poorly performing loan pools and retained Donaldson, Lufkin & Jenrette Inc. to help it explore options.

The company's stock has declined almost 50% since it went on the block- on Aug. 25, 1997, it was trading at $20.50.

In March investors Ronald Perelman and Gerald Ford purchased a 10% stake in the company, and options for an additional 10%, at a slight premium above Aames' price then of $14 to $16 a share.

Both Mr. Ford and Mr. Perelman control seats on Aames' board, and the two are generally considered the most likely purchasers of the entire company.

A wave of consolidation in the specialty finance industry has resulted in sales of several companies in the sector, including Money Store Inc. of Union, N.J., and Green Tree Financial Corp. of St. Paul, at prices substantially higher than their stock market values.

But not everyone is predicting a high-premium sale of Aames. "We think the company is experiencing some negative credit trends," said Jeff Evanson, analyst with Piper Jaffray Inc., Minneapolis.

"The company believes those are temporary," Mr. Evanson said, "but we don't see them going away," he added, saying he believes they could delay a sale and cut into Aames' purchase price.

Aames did not return calls, and a Kingdon representative declined to comment.

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