Whitney Tilson, the founder and Managing Director of T2 Partners, has been on an unbelievable winning streak lately, being on the right side of Green Mountain Coffee, Barnes & Noble, First Solar, and Netflix.
Tilson called into CNBC’s Fast Money this afternoon from the Value Investing Congress to unveil his next big idea.
“We love tainted businesses,” said Tilson. “And it’s hard to find one that’s more tainted than AIG after requiring a $180 billion bailout by the taxpayers.”
He stressed how AIG is no longer the company that almost broke the world a few years ago. “It’s transformed from being one of the most complexes businesses in the world to one that’s quite simple.
“It’s easy to understand. It’s easy to value. And it’s trading at a 41% discount to tangible book value.”
Tilson believes the American taxpayer will eventually be entirely paid back and that the government would have no ownership in the company within one to two years.
“We think this stock’s got 50 to 120 per cent upside in the next year or two,” he said.
Tilson called it a win-win situation: “Either the stock goes up to intrinsic value and that’s a win. Or the stock stays here just a little bit above where the government is willing to sell, in which case the company is buying back mountains of stock. While the stock isn’t gonna move much in the short-term, it’s gonna give us that much more upside in the long-term.”
Tilson argued that a tipping point could soon come when investors stop worrying about the government’s involvement, at which time the stock would begin to “move very quickly.”
AIG is currently the 4th largest long position in Tilson’s portfolio.
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