Barron's Positive On AIG (AIG)

In this weekend's Barrons, there was a bullish piece on AIG (NYSE: AIG). Barron's believes the large sell-off in AIG was unwarranted and potentially has 50% upside ahead of it.

The sell off was caused by an accountant's report of "material weakness" in AIG's accounting systems. But, AIG says accounting charges are not the same as actual losses. And Barron's agrees, as it noted, the risk of actual loss is quite contained.

Barron's said this, "AIG certainly appears to be a screaming value at its current trading level of around 45. This puts the stock at around 1.1 times third-quarter book value per share. Merrill Lynch's Jay Cohen figures that even with all the announced write-downs, AIG's book value will be $46.87 a share by year-end 2008. At that level, the stock could sustain negative pretax mark-to-market hits of $48 billion and still trade at a reasonable 1.35 times book value."

But Barron's does note investors will likely be bothered by the hits that AIG is likely to suffer over the next quarter or two. But it says, if "the charges are mere temporary accounting events, as we suspect, long-term investors will have little to worry about -- and perhaps much to celebrate."
Subscribe to EasyStockAlerts.com Now & Get The News Before Everyone Else!