AIG downplayed concerns about its exposure to the troubled U.S. housing market, noting that its investment in mortgage-backed securities and its lending business are meeting or exceeding performance targets.
Chief Executive Martin Sullivan reported that AIG is very comfortable with the size and quality of its investment portfolios and its operations. Sullivan further urged investors to consider the company a very safe haven in stormy times, and that AIG stands to take advantage of near panic in markets.
"In every period of uncertainty, there is also opportunity," he said. "Given the high quality of our investments and our superior financial strength, AIG is poised to take advantage of these opportunities as they arise."
AIG has no need to sell any of its securities to meet its cash needs, and is able to hold them to maturity, and realize full performance. AIG has about $28.7 billion invested in securities backed by loans made to subprime borrowers, which is about 3.4% of the more than $838 billion in cash and investable assets on hand at AIG.
AIG is currently down 9.8% YTD. AIG recently upped its dividend to .20 per share per quarter. The company plans on increasing the dividend around 20% per year under normal circumstances. AIG has a current dividend yield of just over 1%. The company has a P/E ratio of 9.65 based on 2007 projected earnings of $6.70 per share. AIG recently closed up .37 at $64.67.
While there will likely continue to be a great deal of volatility in the market over the next few months, AIG has a great deal of upward potential in the stock. The current PE ratio is less than half of the average PE ratio over the past 10 years. The stock could double over the next few years.
AIG at this time appears to be a solid investment for the long term investor. Of course I am an amateur investor. I am long AIG at the time of this entry. All investors should do their own due diligence before committing capital to any investment.
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