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# American International Group, Inc. Message Board

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• #### 0 users liked this posts users disliked this posts 0 Reply AIG Target

strgets by strgets May 10, 2016 1:19 PM Flag

FBR lowers AIG target to \$53 from \$56. Maintains Market Perform.

https://www.stocktargetprices.com/company/American%20International%20Group

• #### 0 users liked this posts users disliked this posts 1 Reply PennyStocksWeekly sees AIG hitting 214.2120 in 11 months

walisterfrank May 8, 2016 3:43 PM Flag

interesting analysis

by harleynace May 2, 2016 4:38 PM

Here is the formula by which strike price and number of shares are adjusted:
The anti-dilution adjustment has two elements. First, the strike price gets reduced. Second, the purchasing power per warrant (i.e. the number of shares that can be purchased with one warrant) increases. Both formulas can be found in the warrants' prospectus.

The formula for the strike price adjustment is as follows:

SR1 = SR0 * (SP0 - C) / SP0 where,

SR1 = the strike price after the record date

SR0 = the strike price before the record date

SP0 = the stock price on the record date

C = the dividend minus \$0.675 (hereby referred to as the "excess dividend")

Or, in plain English:

1. Calculate the excess dividend as a percentage of the stock price.

2. Reduce the strike price by that percentage.

Based on that formula, one can make a very interesting observation: the higher AIG's stock price, the less the strike price is reduced.

Thus it seems long-term warrants holders get a slight boost if AIG's stock price lags. But that's not the whole story.

The formula for adjusting the purchasing power of each warrant is shown below:

SH1 = SH0 * SR0 / SR1 where,

SH1 = the shares that can be purchased after the adjustment

SH0 = the shares that can be purchased before the adjustment

In other words, if the strike price goes from \$45 to \$22.50, then that doubles the purchasing power of each warrant.

Interestingly, this provision means that a higher stock price results in a more favourable adjustment.

#### AIG Coverage today...tgt..\$63

by lawstuff22 May 5, 2016 8:55 AM

j0n;

I guess like some of us, heavily invested in AIG, lately it has demanded an intestinal fortitude which has been challenged. I am starting doubting myself on this investment, but I still think I must continue and wait for better times.

#### will spinning off the mortgage insurance business

by kbkhkmartz May 6, 2016 11:46 AM

The spinoff represents a change in the composition of shareholders equity. Plus cash - minus 20% ownership of the mortgage insurance business. No distribution to shareholders, so there should be no change in strike price of warrants.

#### will spinning off the mortgage insurance business

by kbkhkmartz May 6, 2016 11:46 AM

If shareholders got the proceeds (or the new shares) the answer is yes. But if the money from the IPO and subsequent market sales of the remainder go back into the company's coffers, then I don't see any cause for adjustment. It's really common sense, but as we all know, common sense doesn't always prevail. I'm comfortable that the warrants will be treated fairly, so I must confess I haven't paid much attention to how this deal is structured.

#### AIG Coverage today...tgt..\$63

by lawstuff22 May 5, 2016 8:55 AM

That \$75 seems high- not because I don't think AIG could be worth that, but because I think they want to get most of their buybacks done before we get that close to book value. I expect AIG to keep taking reserve and restructuring charges as long as cash flow allows hefty buybacks. I know in theory they don't have that much discretion, but my experience suggests otherwise.

#### AIG Coverage today...tgt..\$63

by lawstuff22 May 5, 2016 8:55 AM

BTIG Research Reiterates American International Group (AIG) Outperform \$75.00
Goldman Sachs Reiterates American International Group (AIG) Buy \$66.00

• #### 0 users liked this posts users disliked this posts 0 Reply Just close out my position on AIG. Too many bears for my liking

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• #### 0 users liked this posts users disliked this posts 0 Reply AIG Coverage today...tgt..\$63

lawstuff22 May 5, 2016 8:55 AM Flag

Morgan Stanley Initiates American International Group (AIG) Equal Weight \$63.00

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spammer

• #### 0 users liked this posts users disliked this posts 3 Reply Grab your stuff and grab AIG quick! 30% in just 17 minutes…

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#### Uncle Carl is fit to be tied

by wilsonhank88 May 2, 2016 9:08 PM

I voted against for him on my proxy ballot. Hopefully others did the same.

by harleynace May 2, 2016 4:38 PM

That's what I love about this investment. Even under the conservative assumption of keeping the dividend the same until 2021, and assuming share price of \$75 in Jan 2021, we would have a strike of \$42, and each warrant could buy 1.07 shares. This equals a warrant value in total of \$35.31 which is over 100% increase from today. And this is the low end of the models.

• #### 0 users liked this posts users disliked this posts 1 Reply Be Prepared!

kaderdewar May 4, 2016 12:56 PM Flag

StockMarketVideoc recently updated analysis for AIG

by harleynace May 2, 2016 4:38 PM

Thanks for the shout out. Like the Enron off-balance sheet deals, when the terms were written the extreme scenarios were "off the radar". Maybe they should have known better, but they didn't. What raises my eyebrows is how modest the "excess" distributions have to be for that formula to hijack the balance sheet. For now, this formula doesn't seem to matter at all, until it starts to matter a lot. Expect AIG to quietly and nervously buy as many warrants as they can. Their "Plan B" to modularize and sell units that fail to meet profitability goals cannot proceed, unless they can pave the way by shrinking that warrant float.

by harleynace May 2, 2016 4:38 PM

Your point is well taken even though the zero strike scanario is extreme and would represent a meltdown of the company. I also don't recall any floor on the strike price (as well as a ceiling on the number of shares per warrant). Sounds like a suicide recipe....thanks for bringing it up

• #### 0 users liked this posts users disliked this posts 1 Reply ust close out my position on AIG. Too many bears for my liking

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