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What's Up With AIG?

What's up with AIG? Most traders think it is UNANALYZABLE -- a short squeeze is the only rational explanation.

AIG is up another 24 percent today, already well over 80 million shares changing hands.

Never mind that the new CEO, Mr. Benmosche, is out today saying that he will repay the government what the company owes them--$182 billion, and that no one knows where they will get the money from. Never mind that they are trying to find sellers of their two most profitable divisions in a down market, and that they insist they are not in a hurry to sell anything.

Here's the way to look at the story:

1) After a 20-1 reverse stock split, there is now a mere 134 million shares outstanding. And that include 26 million that the government owns, so the actual float of the company is very small.

2) AIG is trading north of 80 million shares today and will certainly hit 100 million. In other words, the stock is trading its entire float--in a single day!

3) With the supply of stock so restricted, this is a recipe for disaster for shorts.

4) There is also an August options expiration, which may also be playing into the game.

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Questions? Comments? tradertalk@cnbc.com


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  • A CNBC reporter since 1990, Bob Pisani covers Wall Street from the floor of the New York Stock Exchange.

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