AIG's Prospects Are Improving - Buy the Bonds, not the Stock March 15, 2010Every so often extraordinary opportunities arise and I do my best to make you aware of them. The article (below) "AIG's Prospects Are Improving - Buy the Bonds, Not the Stock" appeared in Barrons this past weekend. Currently, short term AIG bonds with very high yields are available, but they won't last long. Given that the U.S. Government has such a large stake in the company, it's hard to believe that they would let the company go bankrupt. Remember, the bond holder only cares that the company stays in business. The stockholder takes all the risk of the company's performance. For example, these bonds were available today: AIG 5.50% 03/15/13 (American General Finance)Rating: B2/ B12.92% YTM If you have bank cash or money markets or CD's coming due, give me a call. This may be a great alternative. Regards -Keith "To leave the world a bit better, whether by a healthy child, a garden patch or a redeemed social condition; to know even one life has breathed easier because you have lived. This is to have succeeded" -Emerson AIG's Prospects Are Improving. Buy the Bonds, Not the Stock By ANDREW BARY SINCE ITS RESCUE BY THE GOVERNMENT in 2008, American International Group has been viewed as Wall Street's biggest basket case. Many have feared that the bailout of AIG will cost the government billions of dollars and wipe out the company's common-stock holders. But things aren't turning out that way. Instead, AIG's status has improved markedly in recent weeks, since the New York-based insurer reached deals to sell its two large international life-insurance operations for $51 billion. The price is considerably above the units' book value, and more than Wall Street had been anticipating. We estimate the sales will result in gains of more than $20 billion. Various government entities had invested a total of $129 billion in AIG as of Dec. 31, and the company (ticker: AIG) has said it aims to repay everything. For a long time that looked like a dream, but it could become reality. Even public shareholders could make out better than many had expected. A BETTER WAY TO PLAY the company's recovery may be through its debt, that yield more than 9%. These bonds, which have rallied in recent months, benefit from being senior to the Treasury's $47 billion preferred-stock investment in AIG. l
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Every so often extraordinary opportunities arise and I do my best to make you aware of them. The article (below) "AIG's Prospects Are Improving - Buy the Bonds, Not the Stock" appeared in Barrons this past weekend.
Keith Springer President Capital Financial Advisory Services 1383 Garden Hwy, Suite 200 Sacramento, CA 95833 www.KeithSpringer.com Phone -916-925-8900 Fax - 916-925-8914 Providing Professional Financial Advice since 1985
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