[基础分析] After shorting subprime, Eisman says short AIG

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Equity holders could lose $23 billion, FrontPoint's Eisman estimates
By Alistair Barr, MarketWatch

SAN FRANCISCO (MarketWatch) -- After making millions of dollars betting against subprime mortgages, Steve Eisman of hedge-fund firm FrontPoint Partners is advising investors to short shares of American International Group Inc., according to a recent presentation.

AIG (NYSE:AIG) owes roughly $111 billion, even after proceeds from sales of "crown jewels" like Alico and AIA, Eisman wrote in the presentation, a copy of which was obtained by MarketWatch Thursday.

That doesn't include any debt AIG may have to assume from its ILFC aircraft-leasing unit and its AGF consumer-finance business, which have more than $13 billion of debt coming due, he said.

AIG's remaining businesses, which include property- and casualty-insurer Chartis and its domestic life and retirement unit, may be worth about $88 billion, Eisman estimated, while noting there's a lot of uncertainty about this valuation.

That leaves a loss of $23 billion, or $36 a share, for common stock holders of AIG, Eisman calculated.

"AIG has no common shareholder equity remaining on its balance sheet," the hedge-fund manager wrote in the presentation. "It would likely be insolvent if not for government support, in our opinion."

In a better-case scenario, AIG's remaining businesses could be worth $116 billion, Eisman estimated. That would leave equity holders with a gain of roughly $7 billion, or $7 a share, he said, while pointing out that this isn't likely.

Eisman joined FrontPoint in 2004 to head a new financial-services hedge fund at the firm. Morgan Stanley (NYSE:MS) acquired FrontPoint in October 2006, as the housing market was peaking.

By the end of 2007, Eisman's hedge fund had doubled in size to $1.5 billion after bets against subprime mortgages paid off handsomely. He's featured in a new book called "The Big Short" by business writer Michael Lewis, which chronicles the exploits of several hedge-fund managers who made billions of dollars anticipating the housing meltdown and financial crisis.

AIG shares were trading at $38.97 on Thursday afternoon, down 2% from Wednesday's close
AIG 37.60, -2.09, -5.27%

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