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j0n_48195 62 posts  |  Last Activity: Apr 24, 2015 3:21 PM Member since: Apr 2, 2001
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  • Reply to

    Greenberg still alive

    by j0n_48195 Apr 24, 2015 8:30 AM
    j0n_48195 j0n_48195 Apr 24, 2015 3:21 PM Flag

    I can't agree. That statement is at odds with several articles on the matter, including this most recent cited Why would the current AIG threaten to counter-sue if they had nothing at stake? We may be splitting hairs here. Overall I agree the risk is small. But I will say again the risk is nevertheless not zero. If I lose money because of this, it won't be because I had my head in the sand.

    Sentiment: Buy

  • Reply to

    Greenberg still alive

    by j0n_48195 Apr 24, 2015 8:30 AM
    j0n_48195 j0n_48195 Apr 24, 2015 10:58 AM Flag

    The article had it right. Technically, current AIG shareholders are liable. But the indemnification that makes that so would, in all likelihood, fall apart along with any verdict in Greenberg's favor. But the bottom line is still the same: the law works in mysterious ways. There's just no way to know for certain.

    Sentiment: Buy

  • j0n_48195 by j0n_48195 Apr 24, 2015 8:30 AM Flag

    "AIG Could Fall Up to 3.5% If Greenberg Wins, Credit Suisse Says at Bloomberg02:35pm EDT "
    The link is on yahoo. This article is somewhat vague, as is the issue, but does a pretty good job of quantifying the small, but real risk of a Greenberg victory for current shareholders. What they fail to mention is that AIG is hedging some of that risk by taking advantage of the market discount with buybacks. There's value here for those who can live with the overhang and uncertainty.

    Sentiment: Buy

  • Reply to

    aig

    by timone100447 Apr 22, 2015 7:02 PM
    j0n_48195 j0n_48195 Apr 23, 2015 12:33 PM Flag

    I'm assuming you meant to say Greenberg. The answer is no, either way- even in the remote chance that current shareholders are liable for any settlement. I know that infuriates some, but the odds of that happening cannot be entirely dismissed.

    Sentiment: Buy

  • j0n_48195 j0n_48195 Apr 22, 2015 11:14 AM Flag

    "We've met the enemy and they are us." That Pogo quote tells the real story. You are wrong that the housing collapse was due to a few companies and individuals. Virtually everyone was at the punch bowl. That includes politicians and borrowers who now loudly express moral outrage. Most didn't suspect they were doing anything risky or wrong. That lone villain mindset justifies bubbles in hindsight, so the rest of us can absolve ourselves of responsibility. It is also blinds the public to the next one. AIG is not Enron. AIG today isn't even that 2007 AIG anymore.

    Sentiment: Buy

  • j0n_48195 j0n_48195 Apr 21, 2015 1:03 PM Flag

    Wow, you must really be looking at the fine print. Schadenfreude aside, it's nice to know that all insurance companies are in the same risk/reward "boat". There are no geniuses out there that can defy the odds forever. Travelers has been the poster child for a well managed insurance company. Being added to the Dow confirmed that. AIG does have some structural problems, but none that can't be corrected by hard working and smart people over time. Let's hope you're right about AIG dodging that bullet.

    Sentiment: Buy

  • j0n_48195 j0n_48195 Apr 21, 2015 11:49 AM Flag

    It's a strange game of "chicken" countries are playing against each other. Individually, they are trying to marginally "out cheapen" their currencies for the sake of import stimulus. The problem is when too many countries play that game they push the world economy closer to hyper inflation, or the depression that corrective interest rate hikes will provoke. The only good news I see is that investors are so 'fear-worry" after 7 years of great recession they are unlikely to panic no matter what happens. In the meantime the social justice argument for real interest rates takes a back seat. I'm very risk tolerant, so I'm comfortable with stocks. But more prudent seniors have a right to question the wisdom of economy warping monetary policies.

    Sentiment: Buy

  • Reply to

    Warrants are doing well!

    by nei_401k Apr 17, 2015 3:15 PM
    j0n_48195 j0n_48195 Apr 19, 2015 12:33 PM Flag

    Thanks. Good stuff. It's nice to see someone rework the numbers every so often. I get lazy about that. If I could make one criticism, it's a big one. The article seems to think the jury's out on further buybacks. Are they kidding? Why would Peter RAISE recurring buybacks by a billion bucks, if he planned on ending it there? Even without AerCap, monetizing deferred tax assets will make AIG a cash cow for years to come. Where do they think that cash will go? AIG cannot make any major acquisitions. They're big enough already. They've tendered for most of their high priced debt. Dividends only make symbolic sense when the price of the common is this low. No. I'd be surprised if Peter doesn't hang tough refunding that $2.5B every quarter until the market gets a clue. In the meantime, he's making solid progress on improving profitability metrics.

    Sentiment: Buy

  • Reply to

    Warrants are doing well!

    by nei_401k Apr 17, 2015 3:15 PM
    j0n_48195 j0n_48195 Apr 17, 2015 4:55 PM Flag

    As follow up, I have to admit I expected to see the warrants red at the end of the day. It's such a thin market that anybody can hide the fact that they're accumulating by dumping a handful of shares at 4PM. That didn't happen though. To be green by 21 cents on hefty volume suggests the buyer was finished and didn't care if their accumulation was obvious. I hope I'm wrong though. I think the warrants have another buck or two to go before they catch up.

    Sentiment: Buy

  • Reply to

    Warrants are doing well!

    by nei_401k Apr 17, 2015 3:15 PM
    j0n_48195 j0n_48195 Apr 17, 2015 3:23 PM Flag

    We were overdue. Not only were the warrants trading below their traditional spread versus the common, but fear and volatility perversely favors the "option" quality of the warrants. Still, I'd rather watch the stock rise. Sooner or later that has to drag the warrants up along with them. Fear is not a long term driver of the warrants. But hey, I'll take what the market gives me- like I have a choice.

    Sentiment: Buy

  • j0n_48195 j0n_48195 Apr 17, 2015 11:11 AM Flag

    "Literally" money is almost as good as cash.... Yogi Berra... sort of

  • Reply to

    Warrants are the way to go here.

    by geepersman3 Apr 16, 2015 7:58 AM
    j0n_48195 j0n_48195 Apr 16, 2015 8:14 AM Flag

    The warrant behavior is beyond my reckoning. The time premium has consistently been in the $2-2.50 per year to expiration until recent months. It's somewhat under that range now. Given AIG's improving health and steps to improve long term market position and profitability, I think we should see something closer to the the top of that range- about $3 more than where we are now. As the stock rises and we approach 2021, that will matter less. We'll be in the money enough that the shrinking time premium will no longer matter.

    Sentiment: Buy

  • Reply to

    So we have a breakout

    by notagain_wtf Apr 15, 2015 1:45 PM
    j0n_48195 j0n_48195 Apr 16, 2015 8:03 AM Flag

    Hope you are both right, but AIG often ramps up a bit before earnings, only to fall into neglect after. Part of me wants that quick buck. The other knows cheap buybacks are in our longer term interests. Either way, I don't think any of us know when AIG will find that higher range for good. Ultimately, our fortunes have less to do with the market price than the operating metrics of this company.

    Sentiment: Buy

  • Reply to

    8 days since last real post

    by albundyz Apr 9, 2015 12:28 PM
    j0n_48195 j0n_48195 Apr 15, 2015 8:04 AM Flag

    There's only about 80M warrants, if I'm not mistaken. That's not even two quarters worth of buybacks. Why would they pay a premium for the warrants, with little balance sheet benefit until 6 years out, when they can continue to buy the common at a 40% discount? They've committed to double digit book value increases over the next few years. Warrant buybacks would make that impossible.

    Sentiment: Buy

  • Reply to

    Question about debt tender.

    by j0n_48195 Apr 14, 2015 11:54 AM
    j0n_48195 j0n_48195 Apr 14, 2015 3:16 PM Flag

    As a second followup: They are paying a premium, but not for the equivalent of the entire life of these loans. I would be looking for a 2-3 year payout on that $350M hit- meaning, they will save enough over 2-3 years to pay off that premium, the savings after that going directly to the bottom line. Do you have any better estimates? it would seem to take closer to 5 years at 8% to pay off that 40% premium to par. That seems like a long time though.

    Sentiment: Buy

  • Reply to

    Question about debt tender.

    by j0n_48195 Apr 14, 2015 11:54 AM
    j0n_48195 j0n_48195 Apr 14, 2015 3:01 PM Flag

    I get what you're saying, but just to clarify: This means AIG will report lower profits by $350M in the next quarter. Right? That would imply that they are cashing out DTAs by $125M-ish less though? At least in the short run? I get that over the life of the bond there is little difference. I also get that this benefits us as AIG depresses current earnings during the buybacks.

    Sentiment: Buy

  • By my crude math AIG is paying about $350M above face value for $1.25B spent to retire debt. My question: how does that accounting work? Will that be a charge to next quarter's income? Or just a balance sheet entry? Will that affect AOCI or deferred tax assets? My sense is that AIG welcomes near term write offs in order to improve profitability and cash flow a few years out. I'd welcome a more knowledgeable opinion about the time-frame for this transaction to payout.

    Sentiment: Buy

  • j0n_48195 j0n_48195 Apr 14, 2015 8:40 AM Flag

    Losing the lawsuit does not necessarily or even probably mean AIG will be on the hook. Indemnification aside, no private company has ever paid a dime under similar circumstances. It is doubtful, but not impossible, that AIG would. That's just a small risk that shareholders have to live with for the time being.

    Sentiment: Buy

  • Reply to

    Buffett-Buying?

    by axpkocop Apr 13, 2015 3:06 PM
    j0n_48195 j0n_48195 Apr 13, 2015 4:23 PM Flag

    Agreed, if you mean the kind of stake WB is usually interested in. He might be interested in a minority position, at least until those deferred tax assets are used up But there's no evidence of even that. What most of these posters don't realize is that $20B worth of those DTAs would expire when anybody, including WB, tries to take over the company. Since that is always his ultimate goal, I doubt AIG is a good fit for him.

    Sentiment: Buy

  • Reply to

    8 days since last real post

    by albundyz Apr 9, 2015 12:28 PM
    j0n_48195 j0n_48195 Apr 13, 2015 3:08 PM Flag

    I never could spell worth a dam (sic). But I think AIG has traded in "unreal" territory long enough to qualify under either spelling.

    Sentiment: Buy