On May1st AIG will report earnings...There will be no Hurricane Sandy losses, no loss from sale of ILFC, a likely announcement of dividend plans/buyback, announcement of progress in entering China Life Insurance market again, etc. I expect AIG to once again blow analysts expectations out of the water.
Yeah, the market has been going up and we have been stuck in a range....but much of this has to do with the fact that hedge funds became ultra long the stock, while mutual funds/pensions etc are avoiding it because many of their charters require dividends on the stocks they buy. Hedge funds are the most impatient capital in the world anyway. As soon as a hedge fund manager hears that a stock is the most widely held stock in thye hedge fund universe, his natural inclination is to bail on the stock? Why? Because hedge fund managers get paid by the amount of assets the gather, and the only way the can attract assets is by being different than other funds and trying to consistently outperform, month after month after month.
I know some longs here are probably bored while they wait around, but do consider the following...
AIG trades at .58x tangible book value. They will easily trade at 1.5x book at some point in the future. (During the Hank Greenberg days they traded at 5X book value). Book value will continue to grow at about an 8% basis for the next ten years. That puts us at $187 per share in 2023, not including buybacks and/or dividend payments collected in between. Anyone who knows anything about insurance knows that AIG basically insures 1 out of every 4 factories, smokestacks, lumberyards, etc in the world. The company is positioned in 130 different countries and has raised its P&C rates 14% year over year. Additionally, in Berkshire Hathaway's latest annual report, Warren Buffett reminded us that "the world will always need."
Anyways, I know this was a long winded post, but I just wanted to remind people that the story at AIG is getting better daily, and I ....
No way they'd get 50 cents on the dollar. Something on the order of 10% to 20% (one or two $B) is reasonable and fair. There were several layers of misconduct here. This wasn't all BAC's fault.
Earnings are actually May 2nd after the close. I also disagree that hedge funds are inclined to dump now. Other than that, I agree with your post and hope buybacks can cheaply pump those book projections higher. I'm "all in" on the warrants. If I'm right I'll see you at the beech in the virgin Islands. If I'm wrong I'll be answering your questions about our value meal specials from the other side of the counter. Please don't tease me about the hat.
LMAO John....Notice TRV just posted earnings and like I predicted, take out Sandy and the insurance industry is roaring back. If people think the TRV beat was impressive, just wait until May 2nd when AIG reports.
...truly believe that this quarters earnings will finally mark a turning point that even the greatest skeptic will not be able to deny in terms of AIG global earnings power. Good luck to all, and revisit this post in ten years to see if I am right!
I agree though dividends/buybacks may not be announced on May 1st but it is coming within the next couple of months. Sale of ILFC will have the effect of modestly increasing the P/B ratio but will free up significant capital. Bank sale will likely occur soon after earnings too. You gotta think many rating upgrades (including AM Best) will follow should it receive a positive capital adequacy rating by Feds. I don't believe next earnings will be a Netflix type event (though I wouldn't mind) but it should be a solid driver well through the $40 barrier.
Funny that on Feb 22 mikerock1973 posted on AIG "By end of next week it will hit 42-45" so only off 20% in the space of a few weeks.
However, holding this stock for next 18 months will see this stock at least double and 5X in four years. AIG is about to begin realizing its potential so don't lose patience now.
Sentiment: Hold / Buy Dips
5 more weeks to go.. it's a good time to sell other positions and invest funds in this extreme underpriced corp. The return will be so much more than any other blue chip.
Sentiment: Strong Buy