JRH Posted September 10, 2012 Share Posted September 10, 2012 I wouldn't call Berkowitz involvement heavy,... at least not compared with a young Buffett of the early 1950's, prior his partnership. He had almost 75% of his personal net worth in only one stock,... GEICO. I encourage you to reread some older article which has been posted here before. Yes, I'm very familiar with the situation. However, I have not cajoled my way up to Benmosche's office on a weekend yet to pick his brain. ;) Link to comment Share on other sites More sharing options...
finetrader Posted September 10, 2012 Share Posted September 10, 2012 AIG stock used to be punished because there was a huge government stake in AIG (causing a lot of stock to be sell in the months to come ). Now AIG stock is getting punished because government ownership is getting too small ( causing AIG to become regulated like a bank)... Try finding logics in short term thinking... Link to comment Share on other sites More sharing options...
Cardboard Posted September 10, 2012 Share Posted September 10, 2012 I am afraid that they are thinking of some kind of acquisition. The size of the buyback being small relative to their buying power and the fact that Benmosche has talked a few times recently that buying back stock is good, but that they would look also at other opportunities make me think that they may be looking at some form of expansion soon. Cardboard Link to comment Share on other sites More sharing options...
merkhet Posted September 10, 2012 Share Posted September 10, 2012 Try finding logics in short term thinking... That's a sure fire way to make yourself crazy. :) Link to comment Share on other sites More sharing options...
finetrader Posted September 10, 2012 Share Posted September 10, 2012 Posted by: merkhet « on: Today at 07:16:09 AM » Insert Quote Quote from: finetrader on Today at 06:22:02 AM Try finding logics in short term thinking... That's a sure fire way to make yourself crazy. In the meantime, I've added to my position this morning. I must be crazy.. ;) Link to comment Share on other sites More sharing options...
racemize Posted September 10, 2012 Share Posted September 10, 2012 Posted by: merkhet « on: Today at 07:16:09 AM » Insert Quote Quote from: finetrader on Today at 06:22:02 AM Try finding logics in short term thinking... That's a sure fire way to make yourself crazy. In the meantime, I've added to my position this morning. I must be crazy.. ;) I'm certainly considering it myself--I don't see how it will be lower later, but I suck at predictions too... Link to comment Share on other sites More sharing options...
berkshiremystery Posted September 10, 2012 Share Posted September 10, 2012 I work it out to the Government holding about 23% after this. The share count should drop by 165 m to around 1450 m. The accretion to book value will be roughly 3.50 per share. BerkshireMystery: to be fair Berkowitz runs a public mutual fund and is limited by regulation. Buffett was investing his own private cash at the time. By the time Buffett reached the low billions he was pretty diversified as well. As always I love your posts, and would vote you within our top few contibutors, if I could. :-). Al Uccmal,... sure I understand these limits for Berkowitz and the later Buffett. I only wanted to show that some of us, we as private investors, that with our own personal private net worth aren't tied to those rules. So as some prudent manager of public funds, like our Sanjeev or Mohnish might put up to 10% into any single idea,... I myself being not obligated to such limits feel much more comfortable with some higher weighting,... percentage wise. I have been progressing,... from first,...some very low portfolio weightings to gradually rolling my portfolio heavier into them. Also exchanged some of my beloved BRK/A into AIG. Some position I had from the mid 1990's. Emotionally some hard dicision, logical wise hopefully some good. Somehow, I always let my mind and thoughts play some slowly progressing/evolving Darwinian-type of ping-pong,... over weeks and months. Thus, I divide my thoughts in my brain into two parts,... comparing the pros and cons,... letting my mind play some evolutionary type of competition with new inputs of information. Maybe I should just refer to Robert Axelrod's groundbreaking book: "The Complexity of Cooperation: Agent-Based Models of Competition and Collaboration". Simply asked,... what is intelligence in general in the universe,... some evolving and evolutionary process of learning through new inputs,... some ping-pong playing mind, searching for patterns, almost comparable like in Jodie Foster movie "Contact", where she is searching the universe radio frequencies for extraterrestrial life. As does James Simons on a similar quantum level. Buffett is doing it the old fashioned way, only by reading and play ping-pong with his thoughts,... like his bathtub episode last year. My personal slowly equipped human mind is searching for similar and easy to follow patterns, i.e... comparable to the AMEX salad oil scandal 1963, GEICO in the 1970's, WFC in 1992. Thus, currently my personal comfort level for my upper limit 25%+25% BAC+AIG of portfolio weighting (this calculation would include: mostly equity, also warrants and some LEAPS). Of course public funds are prudent to stay in in some 10% weightings, but any private investor who's below 15% weightings... does it already the arche noah way of investing. Link to comment Share on other sites More sharing options...
gokou3 Posted September 10, 2012 Share Posted September 10, 2012 I am afraid that they are thinking of some kind of acquisition. The size of the buyback being small relative to their buying power and the fact that Benmosche has talked a few times recently that buying back stock is good, but that they would look also at other opportunities make me think that they may be looking at some form of expansion soon. Cardboard I think other than acquisitions, another reason for the "small" buyback is that Treasury wants to exit their position fast. They will sell18-20B this week, then have another large offering in each of the next 2 months. AIG simply can't accumulate so much capital quickly, so they have to save some firepower this time to have funds available for the next Treasury sale. (They have a 90-day lockup for their remaining AIA stake) Just my 2 cents... adding a graph summarizing the UST sales.http://si.wsj.net/public/resources/images/P1-BI020A_AIG_NS_20120909220003.jpg Link to comment Share on other sites More sharing options...
racemize Posted September 10, 2012 Share Posted September 10, 2012 Gokou, I think that makes a fair amount of sense. Also, since AIG bought a fair amount of the MLIII oferrings they may not have as much cash around. One other thing to note--I don't think the cash from IFLC will be available for the treasury stock anymore as the treasury is exiting so fast. Perhaps they can get the money from AIA freed for a final buyback from the treasury though. Link to comment Share on other sites More sharing options...
Guest rimm_never_sleeps Posted September 10, 2012 Share Posted September 10, 2012 I think the possibility they will buy something with the stock trading at 55% of book is under 20%. big picture, AIG and us gov are way way ahead of plan. the hedge funds and fast money crowd are a bit disappointed because the latest episode didn't match their script exactly. BB is just being careful and measured. I believe aig will have so much capital next year that it will be able to buy back stock even under FED supervision. I believe the ultimate plan, whether current aig management knows it or not, is to break up remaining aig into 3 pieces. Link to comment Share on other sites More sharing options...
MYDemaray Posted September 10, 2012 Share Posted September 10, 2012 flyonthewall just reported that offering already oversubscribed and will price tonight Link to comment Share on other sites More sharing options...
racemize Posted September 10, 2012 Share Posted September 10, 2012 flyonthewall just reported that offering already oversubscribed and will price tonight yeah, I clicked on that one too--it literally is only a title. Link to comment Share on other sites More sharing options...
PlanMaestro Posted September 10, 2012 Author Share Posted September 10, 2012 AIG - grounded enthusiasm Financial Times When a company's majority shareholder announces that it will dump most of its position, a big share price hit usually follows. Yet AIG shares responded with equanimity to news that the US Treasury would sell $21bn of its stake, more than a third of the company's market capitalisation. The Treasury had already sold $23bn in shares in small chunks. But the latest sale is much bigger than expected and the response shows how bullish investors remain on the stock, which is up nearly 50 per cent this year. The enthusiasm is grounded in the wind-down of government ownership, non-core asset sales, tax assets, and a share buyback plan that is highly accretive because of the stock's low valuation. Link to comment Share on other sites More sharing options...
Uccmal Posted September 10, 2012 Share Posted September 10, 2012 BerkshireMystery, I meant over the long term.... about your contributions. :-). I too spend time mulling things over in my mind, building positions slowly as I get more comfortable with investments. It keeps me from panic selling. I bought some AIG Leaps - $40 -2014s, and a few hundred warrants in my retirement account. Based on amounts invested my main positions are FFH (for safety and long term gains), BAC and AIG, with smaller amounts in SSW, RBS preferreds, CFX,JPM,WFC, and a few tiny residual positions. I would say the first 3 make up well over 50% right now. Link to comment Share on other sites More sharing options...
enoch01 Posted September 10, 2012 Share Posted September 10, 2012 $32.50 - not bad at all! http://www.reuters.com/article/2012/09/10/us-aig-offering-idUSBRE8891DW20120910?feedType=RSS&feedName=innovationNews&rpc=43 Link to comment Share on other sites More sharing options...
berkshiremystery Posted September 11, 2012 Share Posted September 11, 2012 I guess that the recent SeekingAlpha article about AIG hasn't been posted yet. Deep Value AIG Is A 'Must Buy' Up To $60.58 Sep. 5th, 2012 http://seekingalpha.com/article/847291-deep-value-aig-is-a-must-buy-up-to-60-58?source=yahoo http://static.cdn-seekingalpha.com/uploads/2012/9/56271_13468071982946_rId8.jpg Source: http://static.cdn-seekingalpha.com/uploads/2012/9/56271_13468071982946_rId8.jpg Link to comment Share on other sites More sharing options...
mhdousa Posted September 11, 2012 Share Posted September 11, 2012 I guess that the recent SeekingAlpha article about AIG hasn't been posted yet. Deep Value AIG Is A 'Must Buy' Up To $60.58 Sep. 5th, 2012 http://seekingalpha.com/article/847291-deep-value-aig-is-a-must-buy-up-to-60-58?source=yahoo Anyone else get nervous when ALL the comments on a SA article are positive? Link to comment Share on other sites More sharing options...
Guest rimm_never_sleeps Posted September 11, 2012 Share Posted September 11, 2012 nervous? that it might go down? most of us want to buy more of it. Link to comment Share on other sites More sharing options...
fareastwarriors Posted September 11, 2012 Share Posted September 11, 2012 nervous? that it might go down? most of us want to buy more of it. +1 Bought some today and probably will buy some more tomorrow. Link to comment Share on other sites More sharing options...
MrB Posted September 11, 2012 Share Posted September 11, 2012 Just reading the 10Q, there is another $950 million that will be freed up to AIG on Aug 31 from an escrow account that was put in place for the sale of Alico to MetLife. Regarding AIA, what is the latest thinking by AIG management regarding its remaining 19.9% interest? While I like buybacks very much at current level, I would like to retain this investment. Cardboard The following is a somewhat related question. American International Group Inc Announces Pricing of Sale of Ordinary Shares of Aia Group Ltd; Board Authorizes Repurchase Of Shares 09/06/12 18:42 AIG.N Significance: High Topic(s): Divestitures / Spin-offs, Share Repurchases American International Group Inc announced that it has priced the sale of approximately 591.9 million ordinary shares of Aia Group Ltd (AIA) by means of a placing to certain institutional investors. Immediately following the sale, AIA Aurora LLC, a wholly-owned subsidiary of American International Group, expects to transfer all of its remaining interest in AIA to its parent. Upon the closing of the placing, which is scheduled for September 11, 2012, American International Group will receive gross proceeds of approximately USD2 billion, based upon a purchase price of HKD26.50 (approximately USD3.42) per share. AIG expects to use the net proceeds from the placing of AIA ordinary shares for general corporate purposes, which may include share repurchases or other capital management. Under the terms of an agreement with the managers of the placing, AIG is restricted from selling any of its remaining ordinary shares of AIA until December 10, 2012. Additionally, American International Group's Board of Directors has authorized the repurchase of shares of AIG’s Common Stock, par value USD2.50 per share, in an aggregate amount of up to USD5 billion. This authorization replaces all prior Common Stock repurchase authorizations and is limited to repurchases from the United States Department of the Treasury. " Source Reuters So my question is, what is the significance of that line? Immediately following the sale, AIA Aurora LLC, a wholly-owned subsidiary of American International Group, expects to transfer all of its remaining interest in AIA to its parent. Link to comment Share on other sites More sharing options...
berkshiremystery Posted September 11, 2012 Share Posted September 11, 2012 BerkshireMystery, I meant over the long term.... about your contributions. :-). I too spend time mulling things over in my mind, building positions slowly as I get more comfortable with investments. It keeps me from panic selling. I bought some AIG Leaps - $40 -2014s, and a few hundred warrants in my retirement account. Based on amounts invested my main positions are FFH (for safety and long term gains), BAC and AIG, with smaller amounts in SSW, RBS preferreds, CFX,JPM,WFC, and a few tiny residual positions. I would say the first 3 make up well over 50% right now. Uccmal,... well,... percentage-wise, FFH is also still my biggest anchor position at first place (as some hedge against market turmoil, for safety, and also some income), then BAC + AIG. On 4th place BRK/B. Afterward some smaller holding in LUK and some other smaller positions. With BAC I have some mixture of common/warrants/leaps,... with AIG currently only common+warrants. Actually, I should add to my prior post yesterday, that with my upper comfort level of 25%/25% for BAC+AIG,... that was somehow my mental "top ceiling" in my head, that I grew comfortable to hold through any market volatility (like the volatility in FFH's worst days/or the Wheeler & Munger Partnership worst days in the 1970's). I personally think that this is currently very unlikely with BAC+AIG, because they are valued with some significant margin of safety way below intrinsic value, so any short term pullback shouldn't last long,... but of course any black swan pullback could happen. And currently the next wave of value investors start to build positions,... specially with AIG,... like Julian Robertson and his baby Tiger guy,... and also Omega Advisors. I first tiptoed into BAC over a year ago with some tiny amounts of only 1%, then started with BAC LEAPS around last Christmas season and thereafter also with warrants. My first interest in BAC came after seeing Chris Rees some small private concentrated investor (TenStocks.com) heavy underwater in BAC,... with having put probably about 1/4 of his portfolio into it. Chris Rees - TenStocks.com http://www.tenstocks.com/AboutUs.html http://m100.marketocracy.com/crees_10STX/1performance/index.html http://covestor.com/chris-rees/tenstocks https://mobile.twitter.com/#!/Tenstocksdotcom I knew of course also the OID 1992 feature and the Greenblatt book. I never followed some lesser known person,... except John Zemanovich (formerly Raven) with FFH,... and his Sir John,... scuttlebutt ;-) Thus I thought this might be some comparable pattern/situation,... and specially since I understood BAC well over the last decades. AIG was build in the first half of this year. I also set then in my mind my 15%/15% lower bottom limit, thus my position range for both <lower end 15%/15% ~ 25%/25% upper end>. So currently, I still have some little room left,... and or to roll over or to add in market pullbacks. I will probably roll over the BAC Jan 2013 LEAPS cycle into 2015 and purchase some AIG Jan 2015 LEAPS, if the cycle comes up next month. I currently only wonder who will take this current $13B public float offering ($18B - $5B repurchases = net $13B available,... plus maybe an additional $2.7B to cover over-allotments),... we might see some more surprises in 13F filings. Link to comment Share on other sites More sharing options...
dcollon Posted September 11, 2012 Share Posted September 11, 2012 AIG Stock Sale Repays Bailout as U.S. Government Profits http://www.bloomberg.com/news/print/2012-09-11/aig-stock-prices-at-32-50-share-as-treasury-cuts-stake.html Link to comment Share on other sites More sharing options...
berkshiremystery Posted September 11, 2012 Share Posted September 11, 2012 AIG Stock Sale Repays Bailout as U.S. Government Profits http://www.bloomberg.com/news/print/2012-09-11/aig-stock-prices-at-32-50-share-as-treasury-cuts-stake.html The U.S. sold about 553.8 million shares at $32.50 apiece, the Treasury Department said yesterday in a statement. The New York-based insurer bought $5 billion of the stock. Treasury still holds 317.2 million shares, valued at about $10.6 billion based on yesterday’s trading. Link to comment Share on other sites More sharing options...
Uccmal Posted September 11, 2012 Share Posted September 11, 2012 Bm, finetrader, Should qualify that I bought Leaps and warrants mentioned above yesterday, not knowing of course they will be cheaper for awhile today. Added about 10%~ to my already large position. Link to comment Share on other sites More sharing options...
Uccmal Posted September 11, 2012 Share Posted September 11, 2012 Question (for anyone): Do these placements from the government have to cross a stock exchange, or are they direct transactions? Link to comment Share on other sites More sharing options...
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