$16 by September 28, 2012
$22 by December 31. 2012
$28 by April 30, 2013
$34 by August 30, 2013 Tipping point
$45 by December 31, 2013
Why the $10 jump from August 30 to Dec 31? because I believe investors will realize that it is inevitable we will hit the strike price once its into the 30s and rush in and sit on $45 and just wait for the common shares to catch up. After all we have until 5pm Tuesday January 2021
Bruce Berkowitz may even buy more at the end to seal deal as it will only help his shareholders
and bring him countless new investors since he already owns over 24 million of the 75 million warrants.
I haven't adjusted the strike price downward as dividends will not be introduced until next summer
or for other actions that could affect the lowering of the strike price.
Keep in mind we have been averaging $1 per month rise in share price since the start of 2012.
If the economy can improve by even a small amount then I think this is very achievable.
Of course making projections like this can remind oneself of how much we don't know but I already know that.lol
I am expecting a few corrections but I believe we will bounce back and continue our upward trajectory.
Remember AIG is just coming out of the emergency room as is the economy so if we can average over a dollar in this environment imagine if it gets a little better.
November 2012 big month AIG as earnings come out and the last of the government shares will be
sold giving us a substantial bounce.
Sentiment: Strong Buy
The warrants are still lagging. From my perspective, AIG's failure to commit to a 2013 buyback is the main reason. Holding their cash is, in effect, a commitment to a slow earnings growth strategy that undermines the time value of the warrants. Steady growth may ensure management's job security, but is not in the shareholders' interests in this instance. I wish Berkowitz would push them to get more aggressive.
I should add to my previous post that any dividend (as is being discussed now) in a slow growth environment will help the common much more than the warrants. If that $0.67 allowed before warrant adjustment is a larger portion of earnings, the warrants will experience little benefit.
If AIG had bought more stock back from treasury we would have hit your projections, but they will take a little longer. I will be patient and hold. Sucks last 3 months sideways at 14, but on the bright side, they don't sell off when the market does.
Sentiment: Strong Buy
We missed your first number by less than a buck- no big deal. Let's hope you're as close with the rest. I know, it's just speculation, but I'll be a happy camper if we can get to the 40's before 2014.
The warrants are derivatives and as such, must sell at a plausible price compared to the underlying.
For the warrants to sell for $45, the stock would need to sell for about $85 or more. The 'time value' would have decayed from being so deep in the money, and the majority of its value would be its intrinsic value (stock price - strake price).
Regardless of the recent performance of the warrants, they MUST move in some reasonable relationship to the underlying.
The pure black-scholes analysis ignores the anti-dilutive aspects of the warrants. The warrants should be exercising at a premium to black-scholes. Also the time-value decay is very small for extremely long term options.