Over the past 24 hours, i have received half a dozen calls/messagesasking me what about AIG? Before I start that, let me point to a few of my posts on AIG:
- Break up AIG!
- Break Up AIG!
- A New CEO at AIG
- More on AIG
- All my comments during the last four years at RealMoney.
Let me say that it took this long for the price to fall below where it was when I left the firm in 1992. For many firms with significant slack assets, they could have resisted this fall in the stock price, but AIG could not.
Why not? It is a complex firm. Complex firms have a hard time splitting/understanding the results of their various business units. Management’s view of free cash flow is cloudy.
With AIG, the best thing that they can likely do is spin/sell off their US Life and P&C arms separately or together. Those units have a relatively easy to determine value. WIth the cash, AIG can focus on improiving the remaining units. If they can’t do that, AIG is heading for the scrap heap.
Call me a bear here. I have no idea how good the current management team will be, but so many are mezmerized by the past of AIG.