Why I'm Buying AIG

Motley Fool analyst Anand Chokkavelu is buying AIG in his real-money portfolio, and believes that the public spotlight (and scrutiny) post-government bailout will actually help them as an insurance company. Here's what Anand likes most about AIG:

  • The underlying business: As opposed to big Wall Street banks, AIG can stick to the insurance business, taking in premiums, paying out benefits, and investing conservatively to make money on their float.
  • Their valuation: AIG is at such a low price-to-book ratio if it can stick to its knitting and avoid Wall Street shenanigans.
  • Government catalyst: As the government reduces its stake, down now to below 20% from 80%, less and less selling pressure is put on the stock.

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Anand Chokkavelu owns shares of JPMorgan, Citigroup, and Bank of America, as well as warrants on JPMorgan, Citigroup, and AIG, and LEAPs on Bank of America. Andrew Tonner has no positions in the stocks mentioned above. The Motley Fool owns shares of American International Group, Bank of America, and Citigroup Inc and has the following options: long JAN 2014 $25.00 calls on American International Group. Motley Fool newsletter services recommend American International Group and Goldman Sachs Group. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.


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