This Day On The Street
Continue to site
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

AIG: Not Too Late to Jump In

NEW YORK ( TheStreet) -- Waiting for a pullback to get into AIG (AIG - Get Report)? 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.

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

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
Stocks Under $10

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

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

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
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
AIG $55.83 -1.41%
AAPL $95.03 -2.90%
FB $116.73 7.20%
GOOG $691.02 -2.10%
TSLA $247.54 -1.60%


Chart of I:DJI
DOW 17,830.76 -210.79 -1.17%
S&P 500 2,075.81 -19.34 -0.92%
NASDAQ 4,805.2910 -57.85 -1.19%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs