However, there has been growing interest (since 2010) among the investor community about buying the equity. Funds such as Fairholme putting 30% of their fund in it, and more recently the hedge fund Blue Ridge Capital putting 5% in the last quarter or so.
The basic arguments for buying are simple:
1) Price to book discount. AIG trades at ~1/2 of book value, I believe because of (previous) government control and recovery since the initial bailout in 2008. This compares with 0.8x of the rest of the industry.
2) A fundamentally good company - revenues have been increasing and the reason for the bailout was a one specific section of AIG - AIG FP (Financial Products), and its crisis was that of liquidity driven by that one unit, not the rest of the (market-leading) businesses of Chartis and SunAmerica.
What I'd like to add is:
-Timing
All executive officers have been buying the stock outright (most recently at 31.70-90 in May 2012) and exercising buy Not selling stock. In fact, there has been no insider seller of AIG in 2012 except for the US Govt, which is a politically-forced seller (want to eliminate). (Source: Morningstar)
-Psychology/Technicals
On September 11th, the US government sold $20 billion dollars worth of stock. Let me be clear, an insider sold over 30% of a $58 billion market cap company in one day on record volume - And it ended the day up!
Forget fibonacci's, moving averages, or other indicators - this is supply and demand. If there are enough buyers to buy $20B of AIG without missing a beat, I think there is demand for the stock.
Careful investing to all,
-Stanley
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