American International Group Inc.'s (NYSE:AIG) stock rose 14%, up to $39.22 Tuesday, and Wednesday shares are down 6%. Analysts have maintained that
no stock is as overvalued as AIG's. So what's going on?
The Wall Street Journal says:
Standard & Poor's Cathy Seifert said the move could be optimism ahead of the company's earnings report Friday. She said she expects volatility at least until then, adding investors could be looking at trends we've seen in peers' earnings, including narrowing credit spreads, which will help the company, offset by the fact it's had to draw down more of a Fed loan. The New York Stock Exchange contacted AIG to check on the stock movement and AIG released a statement that its policy is not to comment on unusual market activity.
This makes sense, but Clusterstock
reports a different story, which could explain what the rally on AIG stock was about:
There is chatter running between trading
desks that the government is preparing to announce a plan to reduce its stake in AIG on very favorable terms. The whispers we've heard about this have been rather vague. But it does seem like the market is reading this as a positive for the company.This
rumor has been around since September. The question is: Would the government really reduce its stake in AIG? And why would it do it at this point? Something is going on over there at AIG. The insurer recently reversed its decision to sell its
Japanese units and has shelved the sales of many other businesses. It seems CEO Robert Benmosche has taken an about-face with AIG's old strategy, but where the company is marching toward still remains unclear. -
Maria Woehr
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