$30.94
1.05 (+3.50%)
American International Group, Inc. (AIG)
CAPS Rating:
A holding company which, through its subsidiaries, is engaged in a range of insurance and insurance-related activities in the United States and abroad. Its primary activities include General Insurance and Life Insurance & Retirement Services operations.
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Contrarian investors make their money by doing the opposite of what the market is doing. AIG is facing significant short-term headwinds in terms of market volatility, a ratings downgrade, write downs associated with their investment portfolio of subprime and Alt-A mortgage loans, and leadership changes. The stock is trading within spitting distance of it's 52-week low.
These issues are short-term. Long-term investors can look to AIGs record of innovation in the insurance industry, new markets (China), and its brand strength and size. This is a large moat insurance company that will survive this downturn and come back stronger when the markets turn bullish.
From a valuation perspective, AIG is trading at 0.7 price/book, and it has a 3.9% dividend yield. The stock's 5 year average price/book is 2.0.
There is difference between being early and being wrong. This may be an early call, but I do not believe that in the long-run, this will be a wrong call.
I too believe AIG will bounce back in the long term. It is a pillar in the American fin/bus model to stabilize economic growth by providing stability to growth projects. can you imagine if no one had car insurance? no one would be able to get a loan to buy a car they would have to pay cash for it. if you lost the car in a fire or accident your money would be gone. now apply that to major business. a company needs to borrow 800 mil for a project. I am sure there is some kind if insurance involved. I don't see to many companies lining up to provide that kind of coverage.