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AIG agrees to the sale of an 80.1% stake in its plane-leasing unit - ILFC - for $4.23B, valuing...
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Sunday, December 9, 2012, 8:31 PM ETAIG agrees to the sale of an 80.1% stake in its plane-leasing unit - ILFC - for $4.23B, valuing the entire business at $5.28B, a bit less than the $5.5B bandied about on Friday. The good news: AIG's continued refocus on core operations, and the raising of cash to buy back shares. The bad news: The sale price is about two-thirds of ILFC's book value, and certainly less than what AIG had hoped it might fetch when it began talking about an IPO many moons ago. (PR)
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Insurance companies like AIG should be bolstering their reserves so we don't have to bail them (or really their counter parties and policy-holders) out again.
Buying back shares at their current level is EXACTLY what the AIG management team should do when their share price book value is basically double of the current share price. AIG is doing everything right. They have paid back the majority of their government bail-out loan while they continue to focus their business on the core operations for increased profitability. Once the US Treasury sells their remaining shares (at a profit, by the way) watch this stock take off. CEO Robert Benmosche is doing a terrific job righting this 2008 disaster. Bravo!
AIG management knows a good deal when they see one. And so do I. Sad you have let your political leanings obstruct your opportunity to get in on a tremendous opportunity for capital appreciation in the next 12-24 months.
AIG is a strong buy RIGHT HERE with very limited downside and a tremendous upside potential.
One question I have is why is everyone waiting for US treasury to sell their remaining stake? Why is their pending sale keeping the stock price down?
Been hearing much praise about AIG these days. I wish I could dig through their 300+ page annual report!
(1) The market hates uncertainty. Once the ownership of shares by the government is removed, then the company will be free to act in the best interests of the shareholders without restrictions from government regulators.
(2) Once #1 is completed, then AIG will most likely reinstate a dividend. That will definitly move the share price higher.
(3) People quickly forget that AIG was a very profitable business before the idiots who ran the company back then almost took the financial world down with a lot of bad insurance on worthless investments. Can they return to that type of profitability?
(4) The book value of AIG stock is approximately $60+. It doesn't take a math genius to think that if parts 1-thru-3 (above) actually take place, the share price should move up accordingly significantly.
Personally, I believe in what CEO Robert Benmosche is trying to accomplish here. But it isn't going to happen overnight. If you can afford to wait this out a bit, the return could be very nice.
There are several interesting articles on investing in AIG that are currently posted on this site. I'd advise you to browse them and come to your own conclusions. My opinion is that the floor for the AIG stock price is maybe $29 while it is not inconceivable that the stock price could double in the next 12-24 months (assuming the economy stays steady).
Disclosure - I am long AIG shares and currently hold multiple levels of AIG calls.
Have you considered warrants? If so, what are your thoughts on them?
Cheers!
Read and learn:
http://bit.ly/UPvzuo
People like to toss hate at AIG before learning about how it got into its mess.
...and no credit is ever given to how deftly they got OUT of their mess, either.
And who is bailing whom out? The treasury (read tax payers) are making money here. If the govt had taken this company and its liabilities over, they would have lost anything they put in. (Read our money)
The govt is not very good at running real businesses where they have to take in more than they spend.
selling off assets and buying back govt shares is easy. now we need operational improvement to get this back to full book valuation.
How many of you can analyze and discern the facts from fiction present in the 400 page annual report of AIG? I simply don't think most of the proponents of AIG currently have the ability/chutzpah to dig into AIG's financial statements as well as one ought to, in order to make a rational decision and invest intelligently.
I, for one, find it extremely daunting to fairly value its assets, let alone forecast the changes in asset values in case of macro-economic headwinds (read: interest rate changes).
Until and unless I'm able to analyze the nitty gritty of the business I'm best advised to stay away from a 50 billion dollar business and stick to non-financials.
Then simply buy back as many below TBV AIG shares as the Fed will allow.
A very accretive move indeed!
I won't claim to know everything about their form 10-K. It is daunting. But if you've read through a CMG balance sheet, and a BJRI balance sheet (two restaurants, which are relatively understandable) then you have read through an AIG balance sheet. I wouldn't say you need to read through it all. Half of it is redundant as the same risks in each section of the company are repeated. I feel you are provided the information you would want though. You can't let the length deter you, it really is full of a lot of informative stuff.