Introduction

I am bullish on AIG for following reasons: It is selling at an all time low price. CEO Edward Liddy is taking it back to basics. It is selling off assets to repay the US governments, and last, it is winding down AIGFP which got it into trouble in the first place.

Selling at low price

Fifty-two weeks ago, AIG (American International Group, Inc.) was selling at a high of $49.50. Its last closing price was at $1.08. Depending on how you look at it, AIG is either worthless, if you are bearish on it, or it's a steal if you are bullish on it. At the present time-although my position could change anytime-I am bullish on AIG. That being so, I believe that you should be in the market buying up shares of AIG presently. Imagine that you can buy AIG today for about $1.00 a share. And let us also imagine that you are able to purchase 5000 shares of AIG at $5000 total. And let us imagine still that AIG does succeed at returning to profitability in 5 to 10 years and is selling at $50 a share. You are looking at boosting your portfolio to a quarter of a million dollars! That's right-$250,000. Notwithstanding that, you still need to be extremely cautious because at this juncture, AIG is still a highly risky investment. That is to say that that it could go belly up at any time and your investment could go up in flames.That being the case, you should invest in it with only what is called "chicken money", that is, money that you can afford to lose, for frankly, you could lose all of it. Again, however, if you are bullish on AIG like I am at this writing, there is no better time to invest like now to realize-long term-if things turn out right, a substantial and incredible return on your investment.

Back to basics and profitability

AIG new CEO Edward Liddy appears to be moving the company back in the right direction. He is taking it back to basics-INSURANCE-what made AIG, what gave AIG both its money and its reputation in the first place. GEICO, for instance, the auto insurance company, would at one time only give auto insurance to people who met a certain criteria. Because of that, it was profitable. Later, GEICO, lost its way and began insuring just about anyone who came through its door. And guess what? Its profitability suffered. So GEICO decided to mend its ways and go back to basics of insuring just some select individuals who met their criteria, and-lo' and behold-they returned to profitability! Now this was not only true of GEICO alone. Many a company made the same mistakes especially during the ‘70's when there were a lot of mergers and acquisitions going on. Companies would merger with just about any other company even though it was not in the same line of business as the companies they acquired. To make a long story short, many of those deals turned out to be unwise and unprofitable. They put a damper on the companies' bottom line. Instead of making the acquiring company more profitable, they actually caused the reverse: They made them poorer. As a result, years later company after company began spinning these dead weights off their books. In doing, the acquiring companies, in most instances, returned to profitability. My point is this: Edward Liddy seems to be following a similar course with AIG. That is why I am bullish on AIG.

Reducing debt

Not only that: Edward Liddy is selling off AIG assets in order to raise money to pay back the US government. A case in point is its recent sell of its retail bank and credit card operation company in Thailand, which netted it about $45 million. Two other cases in point are its sale of AIG Life of Canada that netted it around $263 million and also its sale of Hartford Steam Boiler, which put $739 million into its coffers. Edward Liddy is not stopping there. Already 10 other deals are on the table. Sure, it may take years before AIG recovers. Still, from my perspective, Edward Liddy is leading AIG in the right direction. He is slowing reducing AIG's debt. This is just one other reason I am bullish on AIG.

Closing AIGFP

Finally, AIG is closing down AIGFP, that is, AIG Financial Products. As you might know, it is the department of AIG that is responsible for bringing AIG down. Before AIGFP, the tail, so to speak, began to lead AIG, the donkey, down the road to disaster, AIG was a profitable and highly reputable, global insurance company, That is where it earned both its money and its reputation. Years later, it discovered that it could make even more-in fact, a lot, lot more money-through AIGFP by selling CDOs (collaterized debt obligations). And yes, for a long time it did. At the same time, CDOs did them in; and were it not for the US government stepping in, AIG's ship would have undoubtedly sunk. Here is where the crux of AIG's financial problems originated. And Edward Liddy is in the process of doing something about it: He is in the process of closing AIGFP down. This, I believe, is yet another step in the right direction. Because of this, I find myself bullish on AIG.

Conclusion

These, then, are the reasons that I am bullish on AIG: It is selling at a record low price. AIG is returning to its core business of selling insurance. By selling off some of its assets, AIG is slowly reducing its debt. And finally, AIG is in the process of closing down AIGFP, the department that got it in trouble in the first place.