Anirudh Sethi Report

In last 8 weeks stock of AIG had spurted from  $ 8.22 to kiss High of $55.90 on Friday

In last 20 sessions it had zoomed from $ 13.14 to $ 55.90 level.

The problem with that is no one knows exactly why.  After all, would you want to buy a stock that is 80% owned by the US government?

The following are some key developments that have occurred for AIG, although none of them seem to warrant the more than tripling in share price.
 
- AIG reported a profit last quarter.
- A new chief executive, Robert Benmosche, who comes from Metlife.
- Benmosche has said AIG will repay the government for its numerous massive bailouts loans- Short sellers are getting squeezed out of positions.
- Investors buying on speculation that AIG might bring huge returns.
- The 20-for-1 reverse split in June brings down liquidity so it is easier for demand to outweigh supply for the stock.

Although these are good reasons for the stock to go up, but maybe not three-fold.  This could simply be related to people willing to take the risk if their reward is getting back ALL the money the market stole from them back in November of 2008.

Updated at 11:43 /30th August/Poona