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American International Group, Inc. Message Board

  • teamonfuego teamonfuego Nov 3, 2009 10:55 AM Flag

    Historical Earnings for AIG

    Look at the historical earnings for AIG:
    http://quicktake.morningstar.com/StockNet/Income10.aspx?Symbol=AIG&Country=USA

    They didn't start getting heavily into the CDS contracts until around 2004/2005. In 2003, they earned $9 Billion in net income. Assuming the common shareholder gets 20% of that, you're talking about net income of $1.8 Billion, which is almost half of the current market cap. Well, we know that AIG in terms of its operations got larger than when it was in 2003 but it has also lost business during its downturn. UBS estimates they lost about 20% of their business. So let's call it a wash. You're still talking about a company that should earn $13/share 2010 after taking into account the government's 80% stake.

    So the stock is trading at less than 3 times its earnings and it has assets that can easily wipe out the debt owed to the government should they have to sell them.

    No brainer to me...

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