This Day On The Street
Continue to site right-arrow
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

AIG: Like LinkedIn ... Without the Upside

Stocks in this article: AIG LNKD

NEW YORK ( TheStreet) - Talk about an anticlimax.

American International Group's (AIG) secondary offering that will likely be priced Tuesday will meet a collective yawn from investors, less than a week after traders sent LinkedIn's (LNKD) initial public offering skyrocketing.

AIG CEO Robert Benmosche

"It is not going to have the allure. The excitement of LinkedIn was like having a baby, while the AIG re-IPO is like a patient surviving a heart attack," says Steve Gerbel, founder and president of Chicago Capital Management.

AIG is expected to price 300 million in shares by close of business Tuesday, at around $29 to $30, said Scott Sweet co-founder of IPO Boutique. The offering of the government's 92 percent stake in AIG is actually a "re-IPO" of the shares acquired after the U.S. Treasury Department doled out $85 billion to bail out the insurer in 2008.

But despite three years of anticipation Wall Street is decidedly ho-hum on AIG's plans.

"LinkedIn was a far more speculative story compared to AIG, which has been around for many years. It is the government selling the stake after a bailout, so it doesn't have the same excitement," says Sweet. "In addition, AIG is a very large deal. They are selling 300 million shares compared to LinkedIn's 8 million."

Sweet added that the number of shares in the AIG IPO will limit the price sensitivity that made the LinkedIn IPO so exciting and caused some consternation in the markets. Critics have accused LinkedIn's underwriters of keeping outstanding shares to a minimum in order to ramp up demand. LinkedIn's IPO jumped from its $45 offer price to $94.25 on the first day of trading due to the demand for the shares.

Shares of LinkedIn are currently trading at $88.89.

But with hundreds of millions of AIG shares getting ready to flood the market, traders will the less than enthusiastic about getting in on the deal.

""The excitement of LinkedIn was like having a baby, while the AIG re-IPO is like a patient surviving a heart attack.""

"There is overhang in the AIG offering and there is a chance they may not be able to sell it all," adds Gerbel. "The LinkedIn deal had a specific amount to sell out. You know underwriters received calls from brokerages for the IPO where is AIG is saying 'please take this off our hands.'"

Ben Willis, a trader at Sunrise Securities agrees that the AIG IPO is nowhere near as exciting as the LinkedIn offering.

"If that were the case, the U.S. taxpayer could sell the whole position at a huge profit. This is the market pricing a deal over 5 months and the existing shareholders voted with their feet, not their check book," he said in an email.

Another factor that differentiates the IPOs is the business itself. White and Case partner Ernest Patrikis says the insurance business, "just isn't as sexy." LinkedIn has 100 percent growth opportunity, while AIG is in the process of restructuring its business in order to find growth opportunity, he adds.

1 of 2

Select the service that is right for you!

Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!


DOW 18,030.21 +6.04 0.03%
S&P 500 2,081.88 -0.29 -0.01%
NASDAQ 4,773.4720 +8.0480 0.17%

Brokerage Partners

Rates from

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs