This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
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: Not Too Late to Jump In

Stocks in this article: AIG

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

Shares will open sharply higher Friday following strong earnings and a surprise announcement of capital returns. 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 versus an average of 119% for the largest U.S. multiline insurers.

"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.

Bears note that much of AIG's 30% earnings beat comes from investments

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.

-- Written by Dan Freed in New York.

Disclosure: TheStreet's editorial policy prohibits staff editors, reporters and analysts from holding positions in any individual stocks.

Select the service that is right for you!

COMPARE ALL SERVICES
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!

Markets

DOW 17,630.41 +273.54 1.58%
S&P 500 2,045.51 +32.62 1.62%
NASDAQ 4,727.5970 +83.2850 1.79%

Brokerage Partners

Rates from Bankrate.com

  • 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