So AIG is having an analyst call on Monday. Word on the street is, they are going to say everything is just fine, don’t worry about the fact the stock has dropped like a rock to $11 mid day Friday, a drop of about half the value. This is what Bear Sterns and Lehman’s did and look what happened to them.
Unlike Bears, I don’t think AIG is too big to fail; there is a big difference here between Fannie and Freddie or even Bears and AIG. AIG is a collection of companies under one roof, not truly a company unified as one entity. In fact, AIG has two options, raise capital, which I don’t think is a smart idea if you are an investor or sell off assets.
Frankly I’m for the break up of AIG; it is too big and has too much fat and too many people getting paid a lot of money to do nothing of much value. Taking away the perks and the corporate pork by breaking the company up into smaller ones will make the better parts, stronger investments for those willing to invest. Having seen how some of those divisions work, I wouldn’t hire them for my team, they sit around too much, at least the management level. It is a recipe for poor performance. When the markets were good, so was AIG, this is when you see the real metal of a company and they are failing. Really the stock is a reflection of this stagnation management style. Sure the workers in many divisions are good but the management is not and who calls the shots, not the workers. So some think this is a blip, no, going from $60 to$11 is not a blip. I said this before, there are some serious fundamentals wrong with this company and they are not fixing them just putting their head in the sand and pretending they don’t exist. That is not going to help, so break up the company, it’s the best option for investors to get some gains out of this.
Of course odds are that management will fight this course of action tooth and nail but it is the more logical point of view for the investor, to break the company up and reap the profits. The fact is, AIG is so big and spread out that in down markets like this where financials are getting hit hard, AIG’s diversity works against it. As a corporation, it needs to think about the investor, what’s best for investors is clarity, sell off divisions and make it clear what business AIG is in. Until then, every negative hit to financials, AIG is going to feel.
BTW, thanks to AIG for breaking the one day corporate record on this blog. In a 24 hour period, you had more hits than any other corporation to this blog. I didn’t realize your marketing being so bad was such a hot topic. I was just skimming the surface, I was thinking of actually showing you how to fix it, but why give you something for nothing, not like your stock is worth zero, yet.