DaveJ

AIG: Willumstad's Hard Choice

Agree with the first two posters. AIG should be valued as the sum of two things. One is a very good insurance company that is worth about 12 X forward earnings, roughly $70. The other is a box full of derivatives. Anyone investing in AIG needs to value this box of derivatives. A conservative estimate is that the present markdown is overdone. In other words, they will not produce losses going forward. So the sum of these two should be at least $70 which makes AIG undervalued at $26. There is enough margin of safety to allow a long term investor to wait for the inevitable recovery and ignore all of the noise being touted in the financial press.