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American International Group, Inc. Message Board

  • uws.nyc45 uws.nyc45 Oct 16, 2012 9:53 AM Flag

    The Rain Man was Right -- Warrants were the Call

    This is an annoying sight -- and I haven't checked it in 6+ months. But The Rain Man was correct. AIG was a great value play over the last year. But the serious money (and this was the Rain Man's call) was made in the AIG warrants (AIGWS) and they have 8+ more years to run. So....if people are finally piling into AIG and driving this towards intrinsic book, then the real play is AIGWS for return on equity -- limited liquidity but look at the charts. And there were guys arguing on this board -- the "the combined ratio is too high" and "portfolio investment yield is low" etc. but the Rain Man in Finance seems to see through this, long before the market -- even before Bruce Berkawitz did. Based on the Rain Man I bet the farm on warrants. If the stock is a 3 bagger from here over the nextg 8 years -- it goes from $36/share to, say, $100 per share. The warrants will be in the money $55 per and they sell for $15 now. So there is more ROE potential still. If AIG kicks #$%$ and drives higher, the warrants go higher still. One really needs to look at the big picture and not get involved with #$%$. and minor details. The company still trades at .6x book -- the gov't "over hang" will be gone in 6 months and this puppy goes higher. When the stigma is gone and the AIG market weighting is added to the S&P index, forced and institutional buying. Then it will move faster. Any upwards surprises and it pops. That's when the warrants break out. But over the last year they were at $5 and now at $15. 3 bagger if timing was perfect -- impossible to be perfect. But the Rain Man was right after all.

    Sentiment: Strong Buy

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