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Did anyone uderstand the rationale for issuing of AIG warrents?


vinod1
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Has any one understood the rationale for AIG warrents issues to stock holders? These are issued only to private stockholders (at 0.53 warrents per 1 stock) so the US Govt with 92.5% stake is not getting any warrents. So it effectively means that the ownership of private stockholders is being increased at the expense of US Govt. To me it seems a scenario something like this seems to have happened: The US govt seems to be making quite a bit of money on AIG and much better than say in Freddie/Fannie or on the Banks and this is a backdoor way to reduce some of the US Govt profits and pass on some of the better than expected showing "profits" back to shareholders. I cannot think of any other reason for the issuance of the warrents.

 

Vinod

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As I look at the supply imbalance developing for AIG stock plus the fact that they have sold most of  their best businesses, I get the feeling that it would be unwise to touch them even with a ten foot pole.

 

Thanks for the caution. I just digging into this in a little more detail as it is very intriguing due to size of Berkowitz's bet and no obvious undervaluation.

 

Vinod

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