Bill Ackman Piled Into Wachovia and AIG Shares

Excerpted from Dow Jones Newswire - we'll have more coverage of the Value Investing Congress soon, as four SA contributors are attending on our behalf and will provide writeups for our readers:

Speaking at the fourth annual Value Investing Congress at Lincoln Center in New York, Ackman said his hedge fund has piled into Wachovia shares because he sees it as "one of the more fascinating investment opportunities" he's seen in recent times. Ackman, whose Pershing Square Capital Management now owns more than 7% of Wachovia's stock, said he started "aggressively" buying shares of the bank at $1.84 on the afternoon of Sept. 29, after Wachovia said it was being acquired by Citigroup Inc. (C). He then sold 9.5 million shares after Wells Fargo Corp. (WFC) came in with a rival bid last Friday, and then bought again when Citi challenged the Wells Fargo transaction.

The company is best sold off in two pieces because of the tax benefits of such a transaction, said Ackman, who acknowledged Wachovia is only his second investment in a financial-services company in the past five years. The other one is a "small" position in American International Group Inc. (AIG), which he took last month. He said Pershing Square is a "top 10 or 12" shareholder in AIG, and that he started buying the insurer's shares when they were trading at about the levels they're trading at now. AIG shares recently traded at $3.78, down 8 cents.

Comments

[Ishortyou:]

Now that the 'bail out' plan came through, Wachovia needs fast to take advantage of it, it needs to sell its toxic loan portafolio from its banking subsidiaries around 122 billion if not more to the government close to even cost prices and take serious advantage of the tax break plan and remediate their banking book of business. They also need to contact their customers that did the run on the bank like chickens without head to bring their deposits back and reassure them that they are ok and there is not reason to panic because of the talking heads of FOX news and rest of media and the incompetence of the FDIC. This strategy will demonstrate to the public that the current 'bail out' plan is working and that Wachovia is the first product of it.

2008 Oct 06 02:56 PM

[PeteK:]

Me too, AIG all the way.
Best time now ever !!!

2008 Oct 06 04:51 PM

[Ben Steinway:]

I've got to think Ackman had some inside information on plowing into Wachovia. I'd love to hook these guys up to lie-detectors and ask them how they REALLY discover their brilliant trading ideas!

2008 Oct 07 09:46 AM

[FirstCRM:]

You did not need inside information to see that the remaining part of Wachovia was worth more than $1 after Citi purchased it....you see it was only four years ago that Wachovia had acquired AG Edwards for about $6B and that brokerage was one of the remaining assets of the stub. I tried to buy Wachovia all day for $1.50 but Ackman beat me to it. Oh well, at least I bought AIG in the low 2's. The only difference between Ackman and I is that he buys in the millions and I buy in the thousands!

Next up BAC and RB.....perhaps V and MA too.

2008 Oct 07 04:36 PM

[Stone Fox C...:]

Well it was difficult to glean all the information on the remaining WB businesses. Helps to have a staff that can research in more detail. For one, i thought the stock was worth 3-5 bucks but i wasn't at the time aware of the tax loss benefit. It pays to have connections or staff that can figure that out for you.

2008 Oct 08 12:46 PM

[mallarde:]

All it took me was a Google search. I was not bold enough to recover much of my loss on the way down with WB, but I made a quick profit.

2008 Oct 08 01:35 PM