vinod1 Posted February 7, 2011 Posted February 7, 2011 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
twacowfca Posted February 7, 2011 Posted February 7, 2011 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.
vinod1 Posted February 7, 2011 Author Posted February 7, 2011 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
Recommended Posts
Create an account or sign in to comment
You need to be a member in order to leave a comment
Create an account
Sign up for a new account in our community. It's easy!
Register a new accountSign in
Already have an account? Sign in here.
Sign In Now