Former head and oustered Maurice "Hank" Greenberg according to an SEC filing is leading a campaign to do a total makeover at his AIG (NYSE:AIG). There is a problem besides the fact that Greenberg is 82 years old. He was ousted in 2005 after Eliot Spitzer’s pre-Governorship probe of the industry that led to his demise as leader there. A key consideration is that Greenberg may in fact be blocked from being able to do very much on his own. Here is the summary of the filing:
The Reporting Persons are considering and evaluating strategic alternatives designed to lead to the maximization of their investment in the Issuer. The Reporting Persons believe that there are opportunities to significantly improve the Issuer’s performance and strategic direction, as well as the value of their investment. In this connection, the Reporting Persons anticipate holding discussions with stockholders and third parties that may address a number of issues, including without limitation, their respective views on the Issuer’s business and prospects, the suggested disposition of certain of its operations, investment opportunities and concerns over the direction and management of the Issuer generally, and other opportunities to improve or realize on the value of their investment in the Issuer. At this time, the Reporting Persons have not made any decisions regarding their future intentions with regards to their plans and proposals with respect to the Issuer.
The Reporting Persons reserve the right to change their plans and intentions, including the right to increase or decrease their investment in the Issuer. In particular, any one or more of the Reporting Persons may (i) purchase additional shares of Common Stock, (ii) sell or transfer shares of Common Stock in public or private transactions (including, without limitation, transfers among Reporting Persons or between any Reporting Person and any entity affiliated with such Reporting Person, which may include entities not in existence as of the date hereof), (iii) enter into privately negotiated derivative transactions and/or public purchases and sales of puts, calls and other derivative securities to hedge the market risk of some or all of their positions in the Common Stock and/or (iv) take any other action that might relate to or result in any of the actions set forth in response to paragraphs (a) – (j) of Item 4 of Schedule 13D…………….
Unfortunately, this will be a tough one for Mr. Greenberg, despite his approximate 13% ownership. He may have been unjustly run out of his own company, but the path was already set some time ago. Many people refer to behemoth companies as battleships that take a long time to turn. It is hard to imagine that this can be affected immediately, but 24/7 Wall St. will run the math on it. It is obvious thatthe new management team is not a strong one, at least not compared to when Greenberg was commander in chief of the financial and insurance conglomerate.
AIG traded up over 3.5% to $61.25 in after-hours trading on Friday. The 52-week trading range is $56.37 to $72.97. This will create one hell of a Special Situation newsletter report if we get to look at AIG as a break-up or activist candidate.
One key issue Mr. Greenberg will have to consider is a good old cowboy euphemism: "Once you let the cat out of the bag, it’s hard to put it back in." Shining light on the hidden financial woes internally may also create some temporary harm to the stock.
Jon C. Ogg
November 2, 2007
Jon Ogg can be reached at firstname.lastname@example.org; he produces the 24/7 Wall St. subscriber-based Special Situation Investing Newsletter.