Three Catalysts for American International Group, Inc. (AIG)

Secondly, the company still hasn’t worked its way back to generating a decent return on equity. They have a 5% return on equity. I think they should get to 10% in the next couple of years, and that will help drive a revaluation as well.

The last thing I’ll add on that, just by the way, is management just got their stock options struck, so they had very strong incentives to sandbag earnings, keep the stock price low…

Brendan: Buy back from the government at a low rate.

Whitney: …to get the government out at a low price, and that worked. They got out, and the government sold out in the $30 a share range, and now the government’s out, they’ve got their options struck, and now management incentives have completely reversed.

I think the quarter we saw that they just reported, where they blew by estimates, I see that happening for the next year or two, as I think they’ve got some spring-loaded earnings to report over the next year or so.

The article Tilson: These Are 3 Big Catalysts for AIG Stock originally appeared on Fool.com.

Brendan Byrnes owns shares of American International Group, Inc. (NYSE:AIG). The Motley Fool recommends American International Group. The Motley Fool owns shares of American International Group and has the following options: Long Jan 2014 $25 Calls on American International Group.

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