AIG (NYSE: AIG ) has come a long way from its near-death state during the financial crisis. But AIG's stock has come a long way too. Over the past two years alone, the stock is up more than 70%. Is it time for it to slow down?
AIG is one of the largest holdings at hedge fund Kase Capital, and Kase managing partner Whitney Tilson thinks there's still plenty of upside.
In the video below, Tilson explains why AIG continues to be "one of [his] biggest positions." A transcript follows the video.
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Tilson: The stock had a really great run from $30 up to about $50, and it's sort of stagnated the last couple quarters, as the last couple earnings releases haven't been the big beats that they had for the prior year, let's say, that really drove the stock up a lot.
It's still one of my favorite and one of my top three positions. I think it's a fabulous franchise. Peer insurance companies are trading at 1.2, 1.3x book, and AIG is trading at a 30% discount to book, so just on the valuation adjustment to its peer groups, the stock could be up 50-100%.
I also think book value is going to continue to grow, and cost-cutting is starting to kick in. I think they've fixed the underwriting piece of it, and now it's a question of getting costs under control. Everything I'm seeing is they are, but it just takes some time.
AIG, over the next year or two, I expect to do very well. That's why it's one of my biggest positions.