AIG: Not too late to jump in

Don't wait for a pullback to get in the action with this mega-insurer.

By TheStreet Staff Aug 2, 2013 11:29AM

thestreet logoAIG logo from headquarter offices in Manhattan's financial district (© Bebeto Matthews/AP Photo)By Dan Freed

 

Waiting for a pullback to get into AIG (AIG)? Don't wait.

 

Shares opened higher Friday following strong earnings and a surprise announcement of capital returns. But many investors are still waking up to the fact that AIG is back, which is why the shares still trade at 75% of book value.

 

"With the firm making progress on their underwriting, starting to grow in Life, and now buying back stock and adding a dividend, we see the company making clear progress, and with this once feared and still under-owned name trading at less than 75% of book, we doubt this clear value will long persist," wrote Josh Stirling, analyst at Sanford Bernstein, in a note published Friday.

 

Stirling has an "outperform" on AIG, but many of his peers still rate AIG a "neutral." They were on AIG's earnings call Friday morning, trying to clear the fog from their brains. They didn't understand, for example, how AIG could start returning capital before it has sold or spun off its ILFC aircraft leasing unit. They wanted to know if ratings agencies think AIG is being too aggressive. They are, in short, still waking up to the AIG turnaround.

 

There is a reason Fairholme Capital CEO Bruce Berkowitz made AIG his largest holding as he bought every beaten up financial stock he could find in 2010. He saw tremendous value there. The company remains his largest holding.

 

Insurance is a conservative business, and in that context, AIG CEO Bob Benmosche looks like a wild man to some analysts. But he's making sensible decisions. He's turned this company around.


The fact that AIG imploded in 2008 is not relevant to today's company. Once everyone wakes up to that, AIG will still be a solid insurance stock delivering a steady dividend. At the moment, however, it still trades at a discount to the rest of the industry. The discount is unwarranted. Meaningless. It pertains to a company that no longer exists. It won't last long.

 

 

More from TheStreet.com

1Comment
Aug 2, 2013 2:02PM
avatar
AIG  ripped off the America public for billions of dollars ! Now go ahead and invest your hard earned cash in this criminal organization !
Report
Please help us to maintain a healthy and vibrant community by reporting any illegal or inappropriate behavior. If you believe a message violates theCode of Conductplease use this form to notify the moderators. They will investigate your report and take appropriate action. If necessary, they report all illegal activity to the proper authorities.
Categories
100 character limit
Are you sure you want to delete this comment?

DATA PROVIDERS

Copyright © 2014 Microsoft. All rights reserved.

Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.

STOCK SCOUTER

StockScouter rates stocks from 1 to 10, with 10 being the best, using a system of advanced mathematics to determine a stock's expected risk and return. Ratings are displayed on a bell curve, meaning there will be fewer ratings of 1 and 10 and far more of 4 through 7.

122
122 rated 1
288
288 rated 2
472
472 rated 3
638
638 rated 4
628
628 rated 5
704
704 rated 6
609
609 rated 7
489
489 rated 8
275
275 rated 9
129
129 rated 10
12345678910

Top Picks

SYMBOLNAMERATING
AAPLAPPLE Inc10
ATVIACTIVISION BLIZZARD Inc10
CTSHCOGNIZANT TECHNOLOGY SOLUTIONS10
FOXATWENTY-FIRST CENTURY FOX Inc CLASS A10
ITUBITAU UNIBANCO BANCO MULTIPLO S.A.10
More

VIDEO ON MSN MONEY

ABOUT

Top Stocks provides analysis about the most noteworthy stocks in the market each day, combining some of the best content from around the MSN Money site and the rest of the Web.

Contributors include professional investors and journalists affiliated with MSN Money.

Follow us on Twitter @topstocksmsn.