AIG Has Been An Aggressive Buyer of AIG Stock

To continue on yesterday’s entry regarding American International Group. With all of the concern about AIG’s exposure to the subprime mortgage mess, most reports overlook that AIG has been aggressively buying back stock. During the second quarter of 2007, AIG repurchased 22,021,462 shares of its common stock. An additional 24,501,510 shares were purchased through August 6, 2007, for a total of 48,993,471 shares purchased year to date. On the first trading day of the 3^rd Quarter, July 2, the stock closed at just over $70 per share. The stock hit a 52 week low on August 1 of $60 on very heavy volume. While to say that the company bought stock back at the 52 week low is total speculation, the more than 24 million shares repurchased between July 2 and August 6, were bought at the low end of the 52 week range. With over 2.6billion shares outstanding, AIG purchased just under 1% of its outstanding shares in no more than a five week period. This purchase suggests that the company saw a bargain in its own stock and wisely repurchased when the stock was down.

In the WSJ “Heard on the Street” Column of August 13, (click for full article $) it was speculated that some analysts feel that AIG is more exposed to the subprime mess than the company admits. As mentioned in yesterday’s entry, AIG feels that its exposure to subprime will have a minimal impact on the bottom line.

AIG is one of the largest insurance companies in the world. While not founding the company, Maurice “Hank” Greenberg, built the company with such diversification that the impact of losses in subprime may indeed be minimal.

AIG is likely positioned to weather the current storm in the equity market well. As mentioned yesterday, the company has a very low historical P/E at this time. The stock may well double over the next few years. Again, I am an amateur investor who is long AIG at the time of this writing. I have no knowledge of the company other than information that is available publicly to all. Each investor should do their own due diligence before committing funds to any equity.