Lehman Bros 7.25% Pref'd Series P (fka LEHPQ)

[DJN]

AIG and Lehman Brothers are born again

http://www.thedeal.com/dealscape/2009/09/aig_and_lehman_brothers_are_bo.php


Lehman Brothers Holdings Cos (OTC:LEHMQ) and American International Group Inc.'s (NYSE:AIG) stocks are back from the dead. Well, they're no longer flatlining, at least.

This time last year, Lehman was tumbling toward bankruptcy and AIG was inching up to a bailout, but now Lehman Brothers' trading activity is at 50 times normal levels, ringing in at a whopping 32 cents, and AIG is up 400%, around $37 a share.

Why?

First, some traders believe the Lehman is going to return some money to shareholders, according to according to The New York Post.

Indeed, bolstering that view is a recent sale of $423 million worth of claims on Lehman's assets that were sold by hedge fund Citadel Investment Group to Credit Suisse last week. And, according to Lehman Holding's Web site, the company has accumulated $6 billion in cash from its derivative contracts. While some investors appear to have hope, many Wall Street observers think the notion that Lehman will have any dough left after paying off an estimated $100 billion in claims is little more than a pipe dream.

In AIG's case, the re-birth of the stock is due to CEO Robert Benmosche, according to The Wall Street Journal. Here's an outline of why, according to the article:

* The government rewarded Benmosche stock options as part of his compensation package, signaling that the institution is backed by the government, too big to fail and is not being liquidated.
* Benmosche stopped the fire sales to repay government loans.
* Benmosche took a vacation to his Croatian villa, signaling his independence from Washington.
* He also opened a dialogue with former CEO Maurice Greenberg Talking
* He slammed New York Attorney General Andrew Cuomo for his infamous performance during last spring's AIG bonus blowup.

Many analysts say there is really no reason to own either stock. Several analysts are calling AIG's stock underperforming and overpriced. Several other "zombie" stocks are also seeing rebounds in the past few weeks, such as Washington Mutual Inc. (OTC:WAMUQ), Fannie Mae (NYSE:FNM), Freddie Mac (NYSE:FRE) and Citigroup Inc. (NYSE:C). Are investors getting nostalgic? What do you think? - Maria Woehr