Fairholme Fund Sells More Than One-Third of Stake in AIG

Apr 29, 2015

Four years ago, Bruce Berkowitz (Trades, Portfolio)’s Fairholme Fund (Trades, Portfolio) held nearly 95 million shares of American International Group (AIG, Financial). If Fairholme still had that many shares in its portfolio, it would make AIG Fairholme’s largest holding today – by far.

But Fairholme has been steadily selling its stake in AIG. It still holds more than 29 million shares of AIG, which is enough to make the New York-based multinational insurance corporation the fourth-largest stake in Fairholme’s portfolio, but it sold more than one-third of its stake – 18,502,400 shares (for an average price of $53.62) to be precise – in the first quarter of this year.

AIG has a market cap of $77.95 billion and an enterprise value of $96.54 billion. It has a P/E of 11.0, a Price/Book of 0.7 and a Price/Sales of 1.3. AIG is active in three core businesses: AIG Property Casualty, AIG Life and Retirement and United Guaranty Corporation (UGC).

At the close of trading Wednesday, shares of AIG were selling for $56.65, 14 cents shy of its 52-week high.

Analysts expect AIG’s profits to be down when first-quarter earnings are reported on Thursday, April 30 (current estimates are $1.18 per share, four cents below the forecast of $1.22 at the beginning of 2015). If that turns out to be accurate, it would continue a trend from 2014, following a fourth-quarter loss of 9.35% that came on the heels of two consecutive quarters of declining growth.

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