AIG Management Needs to Realize Buybacks are Key...
Did you know that IBM's annual revenues have been flat from 2004 to present? Meanwhile, the shares are up 300%....Why? Because of buybacks....IBM had 1.7 billion shares outstanding in 2004, today they have 1.05 billion shares outstanding. This aggressive buyback policy has helped massively ramp up eps for shareholders, and created stock price appreciation. I hope Mr. Bemosche announces that AIG will start aggressively buying back shares.
They already are. The big difference between IBM and AIG is IBM is buying shares at above book. AIG is buying it at a huge discount. The more they buy, the higher the book value grows. Next quarter BV will be higher than $71, and by the end of the year, probably $75. In a 2-3 years, BV will be $100. The price must catch up sometime. I'm buying the dips and reinvesting the div.
you said it right. Until the stock gets some momentum howevever I sell puts. If they ever put the shares to me I will get a steal when compared to BV. In 2016 my 55 strike will represent a net cost of about 48 against a book value projected to to around 78. I like the value. Especially as AIG buys back stock.