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AIG IPO: Opportunity Missed or Crisis Averted?

This article was written by in Investing. 6 comments.


A few days ago, I received an email from E-TRADE that my brokerage account there qualified me to participate in AIG’s latest public offering. The government is beginning to sell its stake in the company, and this would be a unique opportunity to purchase stock not usually available to most people. IPOs have a history of paying off big for investors who get in early.

I looked into the details of the offering, and I decided to place an order for 50 shares, the minimum, at a price a few dollars lower than the expected offering price. Not surprisingly, there were enough interested buyers at higher prices, so I didn’t make the cut when the stock price opened at $29 a share. At the time I’m writing this, the price per share has already dropped 3.3%. The government has still has a significant portion of equity, 1.5 billion shares, to release to the public over the next few years, and they’re betting on a profit.

This may have been a missed opportunity on my part. If I had bid $29 for my 50 shares, I still wouldn’t have been guaranteed to qualify; bigger sharks feed first. However, I priced myself out of the running by not being confident about the valuation the market placed on AIG. If AIG continues to struggle, however, I may have done the right thing.

What would you have done?

Updated September 2, 2011 and originally published May 25, 2011. If you enjoyed this article, subscribe to the RSS feed or receive daily emails. Follow @ConsumerismComm on Twitter and visit our Facebook page for more updates.

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About the author

Luke Landes, also known as Flexo, is the founder of Consumerism Commentary. He has been blogging and writing for the internet since 1995 and has been building online communities since 1991. Find out more about him and follow Luke Landes on Twitter. View all articles by .

{ 6 comments… read them below or add one }

avatar Krantcents

Be grateful that you missed out! Under normal conditions, you would need a much bigger position in an IPO to make money.

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avatar rewards ♦31 (Newbie)

According to “The Four Pillars of Investing” (Bernstein), IPO investors historically receive horrible returns. If you’re looking for something that beats the SP500, invest in a small value index.

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avatar optionsdude

I am thinking you averted a crisis. AIG has yet to prove that it can perform as an insurance company and has a poor history of pricing its policies over the last 2 years. I would call it an incredibly speculative stock and suspect that you can get in at a much cheaper price.

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avatar Will @ HackingTheBank.com

I think you dodged a bullet on this one, but who knows in the end. After having my portfolio taken down by AIG, particularly with that reverse split, I won’t be touching them at all.

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avatar rewards ♦31 (Newbie)

How did the reverse split take down your portfolio?

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avatar skylog ♦368 (Nickel)

this could be a case of the best move being none. i would not fret over missing out. only time will tell, but i am betting whatever you did or will do with that same money will do better for you.

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