Icahn Stake Stokes American International Group Inc's (AIG) Fire

Carl Icahn has increased his stake in American International Group Inc (AIG)

by Alex Eppstein

Published on May 17, 2016 at 12:10 PM

Activist investor Carl Icahn -- who recently unloaded his stake in Apple Inc. (NASDAQ:AAPL) -- has increased his holdings in American International Group Inc (NYSE:AIG) to 44.4 million shares, according to a regulatory filing. The move is strategic for Icahn, who can now exert more pressure on the insurance company to split into three entities. The newly revealed stake is also lifting the stock, turning up the heat on a recent round of bearish options traders.

At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), options players have bought to open 1.79 puts for every call during the last two weeks. The corresponding put/call volume ratio ranks in the bearishly skewed 88th annual percentile. Underscoring this put bias, AIG's Schaeffer's put/call open interest ratio (SOIR) of 0.84 registers in the high 79th percentile of its 12-month range.

Options traders aren't alone in their skepticism. In fact, over half of the analysts tracking AIG rate the insurance stock a tepid "hold." What's more, even as Icahn boosted his stake in the company, several other hedge funds have reduced or dissolved their holdings -- including Paulson & Co, Jana Partners, and Omega Advisors.

However, as alluded to, the Icahn news is seemingly overshadowing any negative headlines, boosting American International Group Inc (NYSE:AIG) 0.7% to trade at $55.69. On a slightly longer-term basis, the stock has come a long way since bottoming out in late February at $50.20, tacking on about 11%.

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