Comments on: AIG’s positive valuation http://blogs.reuters.com/felix-salmon/2010/09/30/aigs-positive-valuation/ A slice of lime in the soda Sun, 26 Oct 2014 19:05:02 +0000 hourly 1 http://wordpress.org/?v=4.2.5 By: FrancineMcKenna http://blogs.reuters.com/felix-salmon/2010/09/30/aigs-positive-valuation/comment-page-1/#comment-18936 Thu, 30 Sep 2010 22:26:11 +0000 http://blogs.reuters.com/felix-salmon/?p=5584#comment-18936 @Felix

First, the government – we the taxpayers – will hold risk first for as long as it takes to dump the stock.

Second, delusional is not about being prescient but about ignoring reality, suspending it. How long can the superior delusional government, the ones who own AIG stock until someone else buys it, suspend reality?

Finally, mark my words, the government will not sell a portion of that stock but use it to quietly with no press release pay off the claims against AIG in settlement of the Crisis One 2002-2005 Ohio litigation. If more plaintiffs make more deals like that, the government will use it again to pay off the Crisis Two settlements that are surely coming. That may actually be the best and highest value use of those shares rather than open market sales, as long as AIG doesn’t need another taxpayer infusion after the debts for prior bad acts are paid by the taxpayer who thinks a return on investment is still coming.

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By: KidDynamite http://blogs.reuters.com/felix-salmon/2010/09/30/aigs-positive-valuation/comment-page-1/#comment-18934 Thu, 30 Sep 2010 21:20:09 +0000 http://blogs.reuters.com/felix-salmon/?p=5584#comment-18934 “the government is taking advantage of the bizarre positive valuation that the stock market is assigning to AIG” – not only that, they’re ENCOURAGING the valuation, trying to prolong it by giving out warrants to AIG shareholders.

Why are AIG shareholders being given ANY additional stake in the company? answer: to try to prolong the shell game so that the gov’t can puke their shares.

remember – giving AIG shareholders warrants doesn’t change the value of AIG, it just increases the value of the public’s holdings relative to the gov’ts.

felix – can you please send me an email – there may be another story here – i want to run some numbers by you.

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By: spbaines http://blogs.reuters.com/felix-salmon/2010/09/30/aigs-positive-valuation/comment-page-1/#comment-18925 Thu, 30 Sep 2010 16:27:33 +0000 http://blogs.reuters.com/felix-salmon/?p=5584#comment-18925 In my opinion the key phrase in this whole article is “[the US govt] certainly won’t be paid back with a level of interest commensurate with the amount of risk involved in the deal.” Given the risk of losing most of its investment in the style of the Irish govt in Anglo Irish Bank, the govt simply breaking-even in nominal terms should not be considered “getting repaid in full”.

http://cautiousbull.wordpress.com/

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By: absinthe http://blogs.reuters.com/felix-salmon/2010/09/30/aigs-positive-valuation/comment-page-1/#comment-18922 Thu, 30 Sep 2010 16:11:08 +0000 http://blogs.reuters.com/felix-salmon/?p=5584#comment-18922 If you’re willing to acknowledge the second view as a possibility, then the first view is immediately false since the stock has option value.

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By: MattJ http://blogs.reuters.com/felix-salmon/2010/09/30/aigs-positive-valuation/comment-page-1/#comment-18921 Thu, 30 Sep 2010 16:10:25 +0000 http://blogs.reuters.com/felix-salmon/?p=5584#comment-18921 This article and the one from the WSJ (http://online.wsj.com/article/SB1000142 4052748704483004575523261932975260.html? mod=WSJ_hps_MIDDLETopStories#articleTabs %3Darticle) do not seem to agree. According to the WSJ and my memory, the government already owns 79.8% of AIG common stock; the conversion will bump that to 92.1%. If that 12.3% of AIG is really worth $62B, that implies the company as a whole is worth over $500B. I find that hard to believe.

Shouldn’t the government keep the $49B of preferred, dividend paying (ha!) shares until it is ready to sell them as common stock? If we want to test the feasibility of recovering the taxpayers investment by selling common stock, use the 79.8% we already own. This strikes me as a huge dilution of the governments position in AIG, and a massive giveaway to the existing private shareholders. And what in the world is the point of the warrants going to the existing private shareholders?

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