Ok, I hopped back in today because of a few things: (1) They have already completed $10 Billion worth of sales, helping pay off the roughly $90 Billion remaining (remember that the $150 Billion figure includes what is essentially a $60 Billion credit line that they haven't tapped yet)
(2) The payments they have received of roughly $3 Billion, according to WSJ, is just a portion of the total outstanding credit default swaps they wrote that have since gone up in value.
(4) Current net tangible equity is about $55 Billion. After subtracting the share that the government owns, common shareholders are left with about $11 Billion in net equity.
(5) The market cap is $4.8 Billion, which is about .40 times the $11 Billion that makes up the share of net equity of common shareholders and only $2 Billion more than the $3 Billion WSJ estimates as what they have received from counterparties on their CDS trades.
You seem to have done your homework on AIG and have made some very good points. The one comment I have regarding AIG not to have lost as much business as was expected is that a good chunk of it's business...the insurance and pension business... is not something that can be unwound overnight. AIG's name is now quite tainted and it is probably seeing a pretty steady drain away to other companies that are seen as stable and with less financial baggage.
Why anyone would be short this name at these prices is crazy. Remember that this was a $200 Billion market cap company before the crash. The Fed removed a big portion of their CDS's so lets say it should have only been worth $150 Billion (givne the profits those contracts once provided). The outstanding debt they have is about $80 Billion so lets say the remaining potential equity is $70 Billion. The govt owns 80% of the remaining equity. So common shareholders own 20% of $70 Billion or $14 Billion. This is almost 3 x the current market price.
Good point although I think earnings will probably be right around the prior quarter level of $2.50. That still means it is trading at a big discount to tangible net worth after excluding the government's interest.