| | | I do not believe their stated tangible BV for AIG. To me, it's like a Black Box similar to the too big to fail banks stated BV. The problem w/ AIG, those assets are not transparent, may be made up of illiquid notes, preferreds, securities and/or other derivative products
Also, because it is so large, no activist investor can come into the company and/or restructure and down size the company to liquidate some of those 'alleged' assets.
Perhaps the only reason you might want to own this and/or some of their debt (preferably secured notes) is to tap into the income stream of some of those assets (on the cheap).
I just do not see this as a risk free investment and would rather own a small bank where I knew the market value of the assets they have on their books. Even Wells Fargo overstates their stated BV assets and those assets do not reflect the liquidation value (or even the current market value).
FWIW, I have looked at several of their properties brought to foreclosure both now and during the crash of 2009, and WFC had minimum bids that were ridiculously high, some of those I even bid on which were rejected for too low of an offer.
I do like the operations of Wells Fargo but for me, it's just about how the market values their assets held on their books, specifically their mortgages. It's getting better but I still think they are overstated by at least 20%.
AIG is a much more difficult one to value as many of their insurance products can not even be valued and are tied together w/ different derivative products that make them not liquid and time dated. Even if you paid 50% of stated BV, I would have no clue if that represent value.
With Banks a 50% BV number might be in the ballpark if one new their distribution of loans by region and had a timeline histogram of the date and loans put into service. Based on that, I could come up w/ a reasonable valuation based on data mining similar to how Zillow provides regional/individual sales/value information.
You just can not do that w/ AIG.
As a value investor, it's easier for me to evaluate smaller companies since the largest component for determining it's value are the assets they own. Both Goodwill and Non-Tangible assets are available and can be backed out pretty easy.
Just my two cents. Sometimes it is easier to move on to something else that provides more certainty as to the value of the 'owned' assets.
EKS |
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