Berkowitz Dives Deeper Into AIG Stock

Fairholme Capital Management increased its stake in the insurance giant to 26.6%.
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Editors Note: Story updated to reflect Fairholme's status as a registered investment adviser

NEW YORK (

TheStreet

) -- A high-profile fund manager has once again increased its stake in

American International Group

(AIG) - Get Report

- the latest sign that the bailout out insurer is regaining investor support as it moves toward independence.

Fairholme Capital Management, the largest private shareholder in AIG, increased its stake in the insurance giant to 26.6% from 24%, according to a regulatory filing on Thursday.

The Miami-based fund run by Bruce Berkowitz was the first big investor to show support in AIG, buying into the stock months before CEO Robert Benmosche outlined plans last month to repay the U.S. government in full.

See Bruce Berkowitz's Stock Holdings >>

Fairholme said last week that it also planned to acquire a stake in a life insurance unit that AIG is priming for an IPO in Hong Kong. Fairholme plans to plunge $1 billion into that offering, of AIA Group. The IPO is expected to take place before the end of October.

On Sept. 30, AIG outlined a comprehensive plan to pay off the last of its $70 billion in taxpayer funds. In addition to previously announced plans to divest AIA and another unit that

MetLife

(MET) - Get Report

is acquiring, AIG is allowing the Treasury Department to swap its $50 billion preferred stock into common equity. The Treasury will sell down its 92% stake in coming quarters as AIG's other businesses continue to get their bearings.

For his part, Berkowitz outlined an increased ownership of 36,657,349 in a 13-D filing with the

Securities and Exchange Commission

.

AIG shares were down marginally at $42.68 in recent trading, but have remained above the $40 mark for the past seven sessions. The stock is now at the higher end of its 52-week trading range of $21.54 to $46.55.

-- Written by Lauren Tara LaCapra in New York

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