American International Group (AIG) presents a “huge value” opportunity for investors, trading below book value while having positive growth prospects, making it the largest U.S. holding in the Evermore Global Value Fund, says David Marcus, Co-Founder, CEO, CIO and Portfolio Manager of Evermore Global Advisors, LLC.
“A year ago, the Fed owned 92% of AIG. Today it only owns 15.9%. And yet the company is still trading at about 50% of book value, and this is a good book value. Because of the crisis and the bailout, they had to scrub their balance sheet. They really had to get rid of a lot of junk, take charges and write-offs, and so you have a high-quality book value,” Marcus said.
Marcus says the insurance giant is growing again and prospering, and they have no paid back most of the Federal bailout money they received. He says the government is expected to make a profit from the loan, and that AIG has been buying back stock aggressively whenever the government has sold down its stake.
“You have a huge discount. You have a very aggressive, strong management. As a value investor, [AIG] is exactly what we look for. It’s cheap, tons of catalysts, and I think investors are missing one of the great trading and investing opportunities in a huge value name. This is a $52 billion market cap — it’s a big company,” Marcus said.
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