The Resurrection of AIG?

I want to believe that AIG (AIG - commentary - Trade Now) can one day repay the government. The pledge new CEO Robert Benmosche gave us today says that AIG deserves to sell at a much higher price because it will not be run as a runoff concern.

Given that about half the shareholder base is short and that you are still dealing with a stock that is under $2 from when it split, I cannot see how this stock can be stopped here given that Benmosche is the real deal, an executive that led MetLife (MET - commentary - Trade Now) in a conservative way. But I have to tell you I am deeply suspicious of these claims.

I think that AIG simply doesn't have anywhere near the earnings power that Benmosche says and the whole company is being alternately dismantled and built up. It is a company so hard to understand that I don't know why Benmosche even makes these statements. Previous management promised a great deal and couldn't get their arms around this company at all.

It wasn't like previous CEO Edward Liddy was a piker. The man ran Allstate (ALL - commentary - Trade Now) and was considered to be a pretty serious guy even as I totally objected to his way of going about business and his attempts to right the ship.

AIG's a wishful thinking outfit, I guess.

Remember that AIG's earnings power came largely from its rogue London office. All of those financial insurance contracts had steep fees and looked like huge-reward/no-risk products. Of course they turned out to be the opposite. In fact, even if the government wasn't owed fortunes, I doubt this company could make much money.

Still, the company's been left for dead. The vast, vast majority of 20-for-one reverse splits have almost immediately led to a reversion to much lower levels. That's what the shorts were betting. That's not going to happen with these promises.

I am amazed that people would short it so aggressively. We are seeing the error of their ways right now on our screens and, given the promise a serious CEO just made, I don't know how the stock possibly stops here.

Not with that short position.

Random musings: If any of our writer/analysts has a strong feeling on Redbox vs. Netflix (NFLX - commentary - Trade Now) please put up a comment in Columnist Conversation. I don't know which I like better.

At the time of publication, Cramer had no positions in the stocks mentioned.

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