Dropping AIG At A Buy

Aig Headquarters
Aig Headquarters

An analyst report out Tuesday from Bank of America on American International Groupreads "We are dropping coverage of AIG."

That's not a surprise. The surprise is that BofA has a "Buy" on AIG with a price target of $30.

Going from A BUY to NO COVERAGE in a day is but one sign that we live in crazy times. At least during the dotcom disaster, I had the Pets.com sock puppet to make me laugh. Now, the best I can do is hunt down classifieds on Craigslist selling Lehman Bros. for $1.

The BofA report on AIG Tuesday said analysts were dropping coverage because "The situation at this stage is binary and dependent more on political will than analyzable facts." Binary? Like twin stars? Computer code? I think it means the future is "all or nothing". AIG could survive. It could die. BofA doesn't know. "While we see the value of the insurance operations being well in excess of the parent liabilities," the report says, "solving the liquidity issues have now entered the political realm...This recommendation should not be relied on going forward."

So don't rely on the Buy recommendation for a stock that's lost 80 percent of its value in a week.

Struggle at AIG - A CNBC Special Report
Struggle at AIG - A CNBC Special Report

I went back to the firm's previous report, dated September 4th, less than two weeks ago, in the halcyon days when AIG was trading at $21. The price target then was $35, which "assumes a range of conservative scenarios of book value declines and capital raises..." Unfortunately, it didn't assume that the market would go nuts.

Back then, BofA was saying AIG's plane leasing business, ILFC, should be sold, "as part of the de-risking and simplification process of the AIG story." Analysts said that while AIG management had a ways to go to restore investor confidence, "We also believe that for the first time there is a will for real change."

Well, change is coming.

So the person selling Lehman Bros. on Craigslist wrote back when I asked if anyone had made an offer:

"Hi Jane,
I had a few Nigerian bankers try to scam me... and some guy was supposed to pick up the company from me last night but never showed up. Anyway it looks like some English dude is serious about buying it but I'd rather sell local.....so if you've got the cash or that unlocked iPhone I'm ready to let the company go asap."

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