Seeking Alpha

The Treasury fills in some details on its public offering of AIG (AIG) stock, saying it agreed...

The Treasury fills in some details on its public offering of AIG (AIG) stock, saying it agreed to sell 163.9M shares at $30.50 each vs. AIG's Friday close of $32.83. The move lowers the government's stake to 63% from 70%. AIG will buy $2B worth of shares from the $5B total being sold.
Comments (4)
  • DeepValueLover
    , contributor
    Comments (8526) | Send Message
     
    Hopefully, AIG can buy @ least $7 billion of shares at around $30 during the next two sales.
    7 May 2012, 02:28 AM Reply Like
  • CapVandal
    , contributor
    Comments (232) | Send Message
     
    Late last week, the S&P dropped 2%.

     

    Global markets are getting hammered as we speak, based on general unease, the election in France, &c.

     

    Both of which contributed to an offering price of $30.50 rather than the $34 that seemed likely a week ago.

     

    I would advise anyone to not over simplify the market dynamics of the government divestiture.

     

    Short term price weakness is accretive to AIG earnings per share.

     

    AIG could well end up with another large chunk @ $29/share.
    7 May 2012, 04:59 AM Reply Like
  • CapVandal
    , contributor
    Comments (232) | Send Message
     
    What happened since the market closed on Thursday:

     

    1. AIG beat expectations on 1Q 2012 earnings.

     

    2. FRBNY announced sale of $2.5 billion face (approximately $2 billion cash) residential CDO's.

     

    3. AIG to buy $2 billion in stock @ $30.5/share.

     

    Book value/share in 10q was $57.66. Is now over $1 / share higher after buyback.
    7 May 2012, 05:56 AM Reply Like
  • $CLU
    , contributor
    Comments (207) | Send Message
     
    Is there any reason against why the Treasury could not have purchased put options before the sale? Then after the sale, (if there were extra proceeds in excess of the original sell price) the extra could be returned to the company for distribution to the shareholders as a one time dividend (maybe even tax exempt). This way a collapse in the price would have been somewhat negated by the put options sale.
    It's likely the options exchange would not have held (or minimized) any changes in the stock price so that they could capture the put investment or kept their noses very clean while the government did its business.
    7 May 2012, 03:54 PM Reply Like
DJIA (DIA) S&P 500 (SPY)
ETF Tools
Find the right ETFs for your portfolio:
Seeking Alpha's new ETF Hub
ETF Investment Guide:
Table of Contents | One Page Summary
Read about different ETF Asset Classes:
ETF Selector

Next headline on your portfolio:

|