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One Of The Most Hated Stocks In America Is A GREAT Deal

 March 09, 2012 02:42 PM
 


Insurance giant American Insurance Group (NYSE: AIG), or AIG for short, has had a tumultuous few years, to say the least. Right now, a handful of investors literally hate the stock and refuse to buy it.

That's their loss...

As counterintuitive as it sounds, emotionally-charged negativity toward certain stocks can be an extremely bullish indicator. It follows the old "buy them when they're hated" mantra. And it's made smart investors money time and time again.

Anyone interested in learning the details behind AIG's spectacular fall from grace to take an estimated $182 billion government bailout should definitely read Roddy Boyd's Fatal Risk: A Cautionary Tale of AIG's Corporate Suicide. Boyd's book is a fascinating read that details the divisions that got caught up in credit-default swaps, mortgage insurance and nearly everything that became toxic during the credit debacle. I was able to speak with Roddy recently about his research efforts and have come away convinced that there is considerable value in AIG's stock.

I won't go into many details about AIG's past. As with all successful investing, it's not recapping the past, but rather discerning the future that is important for making money.

All you need to know is that, on Jan. 14, 2011, AIG was officially recapitalized and allowed to start repairing its business. Since the crisis, AIG has been in the process of paying back the government, which has meant selling off divisions such as global insurance arms AIG and Alico. But it has also been fast at work focusing on its remaining core operations, which still qualify it as one of the largest insurers in the world.

A massive global network

The two key units are Chartis and SunAmerica. Chartis offers nearly every type of insurance across the globe, including property and casualty, and specialty insurance to individuals and commercial entities. SunAmerica sells annuities and life insurance, primarily in the United States. AIG also operates a leading aircraft-leasing business, which it's considering selling or spinning off to shareholders.

For all of 2011, AIG was still a massive insurer.


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