Pershing Square's Ackman Is Excited About AIG
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At the Value Investing Congress, Bill Ackman told us why he made a small investment in AIG (NYSE: AIG). Ackman made this investment in AIG in the past couple of weeks. He made the investment after the government struck its deal and AIG's shares outstanding skyrocketed. He said the government got a great deal with its investment in AIG.
As we reported earlier, AIG is Ackman's first investment in the financial services sector in five years. Ackman said AIG's Book Value is almost $6 per share, AIG is currently trading at $3.90. The Book Value has been adjusted for the mark to market losses and the government dilution.
Ackman says if you pay $3.80 and AIG goes for more than book, then you have a decent return. However, Pershing Square's Bill Ackman said where it gets really exciting is if AIG sells assets, and pays back the government quicker. Ackman thinks the government could make a concession and perhaps reduce its AIG warrants from say 80% to 15% to 20%. Ackman joked that with the 80% the government got, Hank Paulson should be running a hedge fund, not the treasury. Mr. Ackman said a lot of investors (working class owned it through pensions) were hurt with the AIG deal. But, by the government reducing its warrents, taxpayers could get paid back, shareholders get paid and money will move further down the line.
Ackman says AIG is interesting and a very good risk/reward. Finally, Ackman said he thinks AIG's CEO is thinking about AIG the right way.
American International Group, Inc. (AIG) is a holding company which, through its subsidiaries, is engaged in a range of insurance and insurance-related activities in the United States and abroad.
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As we reported earlier, AIG is Ackman's first investment in the financial services sector in five years. Ackman said AIG's Book Value is almost $6 per share, AIG is currently trading at $3.90. The Book Value has been adjusted for the mark to market losses and the government dilution.
Ackman says if you pay $3.80 and AIG goes for more than book, then you have a decent return. However, Pershing Square's Bill Ackman said where it gets really exciting is if AIG sells assets, and pays back the government quicker. Ackman thinks the government could make a concession and perhaps reduce its AIG warrants from say 80% to 15% to 20%. Ackman joked that with the 80% the government got, Hank Paulson should be running a hedge fund, not the treasury. Mr. Ackman said a lot of investors (working class owned it through pensions) were hurt with the AIG deal. But, by the government reducing its warrents, taxpayers could get paid back, shareholders get paid and money will move further down the line.
Ackman says AIG is interesting and a very good risk/reward. Finally, Ackman said he thinks AIG's CEO is thinking about AIG the right way.
American International Group, Inc. (AIG) is a holding company which, through its subsidiaries, is engaged in a range of insurance and insurance-related activities in the United States and abroad.
Never miss market moving news again and sign-up now at EasyStockAlerts.com for FREE.
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