Bruce Berkowitz Says AIG (AIG) is Trading at Large Discount
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Fairholme Fund's Bruce Berkowitz commented on fund holding AIG (NYSE: AIG) in an interview posted today.
Berkowitz said while there are major concerns among investors because the government owns 77%, long-term investors should use the discount in the share price as a buying opportunity.
He noted the company has two strong core franchises intact. He said shares are cheap, trading at a large discount to tangible book value of $45 per share - which will be going to $55 per share with realization of tax deferred assets. Before the tragedy witnessed with the credit crunch, shares traded at multiples of 5-6x book value. He sees earnings power of $4 per share and balance sheet strength.
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Berkowitz said while there are major concerns among investors because the government owns 77%, long-term investors should use the discount in the share price as a buying opportunity.
He noted the company has two strong core franchises intact. He said shares are cheap, trading at a large discount to tangible book value of $45 per share - which will be going to $55 per share with realization of tax deferred assets. Before the tragedy witnessed with the credit crunch, shares traded at multiples of 5-6x book value. He sees earnings power of $4 per share and balance sheet strength.
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