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American International Group, Inc. Message Board

  • hedgehog25 hedgehog25 Dec 27, 2010 2:29 PM Flag

    Could it be the lawsuit?

    As good a deal as the warrants might be, I don't see them explaining what we're seeing. I think the warrants could have explained what happened until today, and they could have explained continued upward price pressure, but not a massive surge like this when it's already this high. We can tell from the volume that it's not being driven by day traders and small-time speculators, this is institutional money pouring in with the force of the Niagra Falls.

    We all know, bulls and bears alike, that AIG in the mid 50's was already trading at a hefty premium to what current fundamentals would justify. That's assuming the dilution will actually happen - but will it?

    There is a lawsuit wending its way through Federal courts, Murray v. Geithner, which could declare the government's stake illegal, cancelling the anticipated dilution:

    Without dilution, AIG would instantly be worth at least double what it is right now, arguably more. This is all speculative, since AFAIK nothing has been made public indicating which way the lawsuit is likely to be decided. However, another poster astutely pointed out recently that the sudden price and volume spike on March 9 that kicked off the trend reversal took place on a day when closed hearings on this lawsuit took place:

    So, could it be that those with inside info know that a judgment against the government is imminent, and that's what's driving the price surge? It's at least a realistic possibility, and I don't see anything else that would explain what we're seeing.

    Sentiment: It's gotta be the lawsuit!

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