Saturday, November 8, 2008

AIG - thy name is opaque

I have been thinking about playing in the common securities  of AIG.  My view is that an awful lot of CDOs (and their CDS) are trading at levels way below where they will eventually settle.  [Illiquid markets and inability to borrow etc.]

In that case AIG common may be a good bet - because the collateral posted for future losses will be in part returned.

Then along comes this story (hat-tip to Felix) that AIG is lobbying hard to get the interest payments on the government loan reduced.  This suggests further liquidity problems.

I think I will leave that one in the "too hard basket" at least for a while.

John

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The content contained in this blog represents the opinions of Mr. Hempton. Mr. Hempton may hold either long or short positions in securities of various companies discussed in the blog based upon Mr. Hempton's recommendations. The commentary in this blog in no way constitutes a solicitation of business or investment advice. In fact, it should not be relied upon in making investment decisions, ever. It is intended solely for the entertainment of the reader, and the author.  In particular this blog is not directed for investment purposes at US Persons.