MrB Posted September 12, 2012 Share Posted September 12, 2012 Ben did more in two years in terms of preserving and creating value in this company than most CEOs do in a lifetime. See attached. Also PM's original SOTP table (slightly adapted) to show how far we have come. aigBoard.xls Link to comment Share on other sites More sharing options...
berkshiremystery Posted September 12, 2012 Share Posted September 12, 2012 Some article by Peter Eavis,... didn't even think of him, since his FFH mud-slinging days years ago. Why A.I.G. May Not Be Able to Avoid Volcker Rule BY PETER EAVIS Sep. 12, 2012 http://dealbook.nytimes.com/2012/09/12/why-a-i-g-may-not-be-able-to-avoid-the-volcker-rule/?partner=yahoofinance Link to comment Share on other sites More sharing options...
MYDemaray Posted September 12, 2012 Share Posted September 12, 2012 So Benmosche tipped his hand regarding a dividend. Let the speculation begin as to size...anyone have an opinion on whether a 2013/2014 would exceed $0.675 (our ratchet threshold)? Link to comment Share on other sites More sharing options...
racemize Posted September 12, 2012 Share Posted September 12, 2012 So Benmosche tipped his hand regarding a dividend. Let the speculation begin as to size...anyone have an opinion on whether a 2013/2014 would exceed $0.675 (our ratchet threshold)? They have historically paid out a very small percentage of earnings, so unless they are changing that policy (possible), I'd expect much smaller. Link to comment Share on other sites More sharing options...
berkshiremystery Posted September 12, 2012 Share Posted September 12, 2012 So Benmosche tipped his hand regarding a dividend. Let the speculation begin as to size...anyone have an opinion on whether a 2013/2014 would exceed $0.675 (our ratchet threshold)? They have historically paid out a very small percentage of earnings, so unless they are changing that policy (possible), I'd expect much smaller. Well,... I was just looking into ValueLine,... they paid in the early half of the last decade probably 1/10 of their net income as dividends. 2002 7% payout ratio 2003 6% 2004 6% 2005. 16% 2006. 11% 2007. 20% 2008. NMF I personally believe that under Benmosche there might be some different or higher policy than under the old Hank Greenberg regime. After he stepped down... AIG's payout ratio grew. So I would guess something between 10-20%... similar like AXP pays out. Link to comment Share on other sites More sharing options...
berkshiremystery Posted September 13, 2012 Share Posted September 13, 2012 A Safe 7.7% Yield From AIG Sep. 12th, 2012 http://seekingalpha.com/article/862511-a-safe-7-7-yield-from-aig?source=yahoo Link to comment Share on other sites More sharing options...
Ross812 Posted September 13, 2012 Share Posted September 13, 2012 A Safe 7.7% Yield From AIG Sep. 12th, 2012 http://seekingalpha.com/article/862511-a-safe-7-7-yield-from-aig?source=yahoo The AIG preferred is trading above it's par value of $25 and is callable at the end of the year. If the preferred is called at the end of the year you will only make $0.10... I like to keep track of preferreds though. Here is my watchlist: AIG/WS 14.15 -0.07% 0.00 4.66 14.16 14.19 BAC/WS/A 3.56 -0.34% 0.00 1.959 3.56 3.57 BACpH 25.9201 +0.08% 0.00 19.51 25.92 25.93 BACpI 26.10 +0.15% 0.00 17.17 26.08 26.10 BACpJ 25.26 0.00% 0.00 18.25 25.25 25.26 BACpL 1,073.99 +0.14% 0.00 665.0599 1,072.00 1,073.69 BCSp 24.99 +0.08% 0.00 17.64 24.97 24.99 BCSpA 25.02 -0.04% 0.00 18.79 25.02 25.03 BCSpC 25.59 +0.08% 0.00 19.86 25.55 25.58 BCSpD 26.00 +0.12% 0.00 20.73 25.99 26.00 INF 19.80 +0.25% 0.00 13.59 19.69 19.80 MERpD 25.28 +0.08% 0.00 18.00 25.28 25.29 PNCpL 26.59 -0.23% 0.00 25.63 26.63 26.65 SDRXP 111.1875 0.00% 0.00 83.77 0.00 0.00 SSWpC 27.791 +0.18% 0.00 25.25 27.75 27.79 WFC/WS 10.10 -1.56% 0.00 6.65 10.10 10.19 WFCpJ 30.07 -0.40% 0.00 25.78 30.07 30.08 WFCpL 1,233.95 +0.40% 0.00 990.25 1,225.00 1,239.76 Right now the only preferred I am buying is CHKDG.pk. It's a Chesapeake preferred with a $100 dollar par value yielding $5 a year and is convertible into ~2.5 shares of CHK at the owners option. Its dividend is qualified for the 15% tax rate and is currently trading for $81. EDIT: INF is on there too. That is Brookfield Asset Management's global infrastructure ETF. Link to comment Share on other sites More sharing options...
tng Posted September 13, 2012 Share Posted September 13, 2012 There are some floating rate preferreds that are still trading below par, such as BML-PG, BML-PJ, and BML-PL (these are Bank of America preferreds, they were formerly from Merrill) which are interesting too. The yields are lower due to the low interest rate environment, but I think they will trade at par at some point in the next few years, so you will get that extra 20% bump or so. Link to comment Share on other sites More sharing options...
berkshiremystery Posted September 14, 2012 Share Posted September 14, 2012 AIG Bailout Saga: All's Well That Ends Well Sep. 13th, 2012 - SeekingAlpha.com http://seekingalpha.com/article/865881-aig-bailout-saga-all-s-well-that-ends-well?source=yahoo ----- AIG: Take Advantage Of AIG's Buyback For 50% Discount To Book Value Sep. 11th, 2012 - SeekingAlpha.com http://seekingalpha.com/article/859121-aig-take-advantage-of-aig-s-buyback-for-50-discount-to-book-value http://static.cdn-seekingalpha.com/uploads/2012/9/1335191_13473267806562_rId12.png Source: http://static.cdn-seekingalpha.com/uploads/2012/9/1335191_13473267806562_rId12.png AIG Estimated Book Value per Share (3rd qtr. 2012) $66.12 Link to comment Share on other sites More sharing options...
Hielko Posted September 14, 2012 Share Posted September 14, 2012 Finally bought some AIG this week (some of my thoughts) and calculated roughly the same discount. Too bad that there are probably not going to be share repurchases at that scale anymore. Link to comment Share on other sites More sharing options...
berkshiremystery Posted September 14, 2012 Share Posted September 14, 2012 Finally bought some AIG this week (some of my thoughts) and calculated roughly the same discount. Too bad that there are probably not going to be share repurchases at that scale anymore. Heiko,... great write-up, I enjoyed it,... I'm own a mixture of AIG common+warrants to leverage up my returns,... (...and had written some puts, some months ago). if I mighty repost some small passage that is interesting to read: <snip>... If AIG is able to grow book value at a 10% rate the next decade, and is trading at book value at that point in time the warrants could provide some awesome returns. After nine years BV would be ~$153. With the warrants trading at $14.6 and having a $45 strike this would be close to a 740% return or an 25% annualized return. The common stock would return ‘just’ 440% or 18% annualized. But since AIG is probably going to pay a dividend soon the return is going to be a bit lower since the strike price is only adjusted for dividends in excess of $0.675 yearly (would probably lower the annualized return with almost a percentage point). ...</snip> of course I encourage everybody to read Heiko's complete article: http://alphavulture.com/2012/09/14/american-international-group/ ----- I just saw your biography,... great to have so many professional poker players here ;) http://alphavulture.com/2012/09/14/american-international-group/ Link to comment Share on other sites More sharing options...
Hielko Posted September 14, 2012 Share Posted September 14, 2012 Glad you enjoyed it :). You're also a poker player? Link to comment Share on other sites More sharing options...
ERICOPOLY Posted September 14, 2012 Share Posted September 14, 2012 Finally bought some AIG this week (some of my thoughts) and calculated roughly the same discount. Too bad that there are probably not going to be share repurchases at that scale anymore. Heiko,... great write-up, I enjoyed it,... I'm own a mixture of AIG common+warrants to leverage up my returns,... (...and had written some puts, some months ago). if I mighty repost some small passage that is interesting to read: <snip>... If AIG is able to grow book value at a 10% rate the next decade, and is trading at book value at that point in time the warrants could provide some awesome returns. After nine years BV would be ~$153. With the warrants trading at $14.6 and having a $45 strike this would be close to a 740% return or an 25% annualized return. The common stock would return ‘just’ 440% or 18% annualized. But since AIG is probably going to pay a dividend soon the return is going to be a bit lower since the strike price is only adjusted for dividends in excess of $0.675 yearly (would probably lower the annualized return with almost a percentage point). ...</snip> of course I encourage everybody to read Heiko's complete article: http://alphavulture.com/2012/09/14/american-international-group/ ----- I just saw your biography,... great to have so many professional poker players here ;) http://alphavulture.com/2012/09/14/american-international-group/ It would actually be ~640%. With the warrants trading at $14.6 and having a $45 strike this would be close to a 740% return Link to comment Share on other sites More sharing options...
Hielko Posted September 14, 2012 Share Posted September 14, 2012 It would actually be ~640%. With the warrants trading at $14.6 and having a $45 strike this would be close to a 740% return Yeah, your totally right (fixed some other math too). Link to comment Share on other sites More sharing options...
berkshiremystery Posted September 15, 2012 Share Posted September 15, 2012 AIG Funds Land in Treasury's Bank Account Sep. 14, 2012 - WSJ http://blogs.wsj.com/economics/2012/09/14/aig-funds-land-in-treasurys-bank-account/?mod=yahoo_hs Link to comment Share on other sites More sharing options...
berkshiremystery Posted September 16, 2012 Share Posted September 16, 2012 AIG's Record Breaking Stock Sale Sep. 14th, 2012 - WSJ http://blogs.wsj.com/deals/2012/09/14/aigs-record-breaking-stock-sale/ Link to comment Share on other sites More sharing options...
berkshiremystery Posted September 17, 2012 Share Posted September 17, 2012 American International Group (AIG): The Next 5 Catalysts Sep. 17th, 2012 http://www.istockanalyst.com/finance/story/6043632/american-international-group-aig-the-next-5-catalysts# "AIG should increasingly represent a larger weighting in relevant indices, and new shareholders may become incremental buyers," Deutsche Bank analyst Joshua Shanker wrote in a note to clients. ----- The second catalyst is that AIG would likely resume share repurchases when it passes the Fed's systemically important financial institution (SIFI) stress test. Year-to-date, AIG has repurchased $13 billion worth of its own shares and effect has been significantly accretive to book value per share (BVPS). "We project BVPS at $66 at September 30th, 2012, up from $55 at year-end 2011, while generating $3.50 per share of net income over the intervening 9 months," the analyst said. ----- Link to comment Share on other sites More sharing options...
Mephistopheles Posted September 18, 2012 Share Posted September 18, 2012 Does the anti-dilution provision apply for share repurchases, or only for dividends in excess of the threshold? I can't find the AIG warrant prospectus on EDGAR, but in the BAC prospectus it says: In the case of a pro rata repurchase of common stock. A “pro rata repurchase” is defined as any purchase of shares of our common stock by us or any of our affiliates pursuant to any tender offer or exchange offer subject to Section 13(e) or 14(e) of the Exchange Act, or Regulation 14E thereunder, or any other offer available to substantially all holders of our common stock. If we effect a pro rata repurchase of our common stock, then the exercise price will be reduced to the price determined by multiplying the exercise price in effect immediately prior to the effective date (as defined below) of such pro rata repurchase by a fraction of which (A) the numerator will be (i) the product of (x) the number of shares of our common stock outstanding immediately before such pro rata repurchase and (y) the market price of a share of our common stock on the trading day immediately preceding the first public announcement by us or any of our affiliates of the intent to effect such pro rata repurchase, minus (ii) the aggregate purchase price of the pro rata repurchase, and (B) the denominator will be the product of (i) the number of shares of our common stock outstanding immediately prior to such pro rata repurchase minus the number of shares of our common stock so repurchased and (ii) the market price per share of our common stock on the trading day immediately preceding the first public announcement by us or any of our affiliates of the intent to effect such pro rata repurchase. The number of warrant shares will be increased to the number obtained by multiplying the number of warrant shares immediately prior to such adjustment by the quotient of (x) the exercise price in effect immediately prior to the pro rata repurchase giving rise to the adjustment divided by (y) the new exercise price as determined in accordance with the immediately preceding sentence. For the avoidance of doubt, no increase to the exercise price or decrease in the number of warrant shares deliverable upon exercise of a warrant will be made pursuant to this adjustment provision. The “effective date” of a pro rata repurchase means (a) the date of acceptance of shares for purchase or exchange by us under any tender offer or exchange offer that is a pro rata purchase or (b) the date of purchase of any pro rata purchase that is not a tender offer or an exchange offer. So 3 questions: 1) Is it the same deal for the AIG warrants? 2) Do all these share repurchases that AIG has been doing count as "pro rata repurchases"? 3) How do I find the AIG warrant prospectus on EDGAR? Link to comment Share on other sites More sharing options...
MrB Posted September 18, 2012 Share Posted September 18, 2012 Does the anti-dilution provision apply for share repurchases, or only for dividends in excess of the threshold? I can't find the AIG warrant prospectus on EDGAR, but in the BAC prospectus it says: http://www.sec.gov/Archives/edgar/data/5272/000095012311003847/y89089e424b2.htm Link to comment Share on other sites More sharing options...
mrvlad0 Posted September 18, 2012 Share Posted September 18, 2012 http://www.investmentnews.com/article/20120918/BLOG06/120919939 Berkowitz sees AIG as potentially having a book value in excess of $70 a share in 2013. Given the current buy-back process, Berkowitz says, “AIG could be done with the government by the end of first quarter of next year, which is three years ahead of schedule.” Berkowitz believes investors won't return to the stock until the Treasury's remaining ownership is at least close to zero, at which point he believes the stock price should appreciate and converge with book value. This doesn't include any expectation of the stock returning to a mid-single-digit multiple of book value, a level at which the company has traded at in the past. Just imagine when this stock trades at a multiple of BV. Link to comment Share on other sites More sharing options...
racemize Posted September 18, 2012 Share Posted September 18, 2012 Just imagine when this stock trades at a multiple of BV. It is a different business than it was when it traded at 4x values. I'm not sure we ever get back to those mlutiples. I'd expect the upper end of normal insurance (maybe 2?) once AIG is happy and the meltdown is way behind us. Link to comment Share on other sites More sharing options...
Mephistopheles Posted September 18, 2012 Share Posted September 18, 2012 Does the anti-dilution provision apply for share repurchases, or only for dividends in excess of the threshold? I can't find the AIG warrant prospectus on EDGAR, but in the BAC prospectus it says: http://www.sec.gov/Archives/edgar/data/5272/000095012311003847/y89089e424b2.htm Thanks MrB. So if I read correctly, the repurchase anti-dilution provision only applies to tender offers, and those only when the they repurchase 30% of the shares oustanding. Am I right about that? Link to comment Share on other sites More sharing options...
Uccmal Posted September 18, 2012 Share Posted September 18, 2012 Think about those numbers for a minute. The warrants exercise at 45. Conservatively AIG reaches 100 In say three years. The warrants cost around $14.00 today (I got mine much cheaper). Buy 1000 warrants. 100 - 14 - 45/14 = 3x, excluding the time value still left. Probably closer to 4 x with time value. When the dividend is re-instated the warrants become cheaper. A relatively painless 4-5 x return. If book value grows concurrently then the multiple becomes even greater. Link to comment Share on other sites More sharing options...
Yours Truly Posted September 18, 2012 Share Posted September 18, 2012 I'm just skimming this topic and had a general question. Prior to the meltdown, how much did AIGFP and other recently sold "non-core" assets contribute to revenues/earnings? I need to do more digging because the opportunity looks interesting here Link to comment Share on other sites More sharing options...
racemize Posted September 18, 2012 Share Posted September 18, 2012 I'm just skimming this topic and had a general question. Prior to the meltdown, how much did AIGFP and other recently sold "non-core" assets contribute to revenues/earnings? I need to do more digging because the opportunity looks interesting here I think it is easier to approach earnings power with the current core assets rather than subtracting from prior earnings, given how much has changed. Link to comment Share on other sites More sharing options...
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