Bloomberg News

TPG-Axon, D.E. Shaw Cut AIG Holdings as Tradewinds Takes Stake

November 15, 2011

Nov. 15 (Bloomberg) -- TPG-Axon Management LP and D.E. Shaw & Co. cut holdings in American International Group Inc. in the third quarter, as Tradewinds Global Investors LLC took the second-largest non-governmental stake in the bailed-out insurer.

TPG-Axon, the hedge fund founded by Dinakar Singh, reported no holding in New York-based AIG at the end of September, compared with 1.73 million shares as of June 30, according to regulatory filings. D.E. Shaw reduced its stake by more than 30 percent to 2.77 million shares, while Tradewinds, an affiliate of Nuveen Investments Inc., had 20.9 million shares on Sept. 30.

AIG posted a $4.11 billion third-quarter loss Nov. 3 after what Chief Executive Officer Robert Benmosche, 67, described on a conference call as a “perfect storm” of plunging equity markets, widening credit spreads, unfavorable changes in currency exchange rates and natural disasters. Declines in the value of AIG’s stakes in a former Asian subsidiary and mortgage- related assets, as well as impairments on aircraft at its plane- leasing unit, contributed to the loss.

“We had the opportunity in the third quarter to see what happens when our stress test becomes somewhat of a reality,” Benmosche said on the call. “I can assure you that we are in very good shape.”

Bruce Berkowitz’s Fairholme Capital Management LLC, which holds the largest non-governmental stake in the insurer, reduced its holding by 1.68 million shares to 101.5 million shares in the third quarter. The U.S. Treasury Department owns 1.46 billion shares, or 77 percent of the common stock.

Undervalued Companies

The essence of Tradewinds’ investment philosophy is “that global markets are not always efficient,” according to its website. “It is possible to buy companies for less than their intrinsic worth. We believe that by investing in high-quality, undervalued companies, we can create value for our clients.”

AIG slipped 1.3 percent to $23.54 yesterday in New York. The insurer has plunged 51 percent this year, compared with the decline of less than 1 percent for the Standard & Poor’s 500 Index.

Mark Herr, a spokesman for AIG, declined to comment. Representatives for Nuveen didn’t immediately respond to a request for comment. TPG-Axon didn’t respond to a message left in a general mailbox. A spokesman for D.E. Shaw said the fund manager doesn’t comment on portfolio holdings.

--Editors: Dan Reichl, Peter Eichenbaum

To contact the reporter on this story: Noah Buhayar in New York at nbuhayar@bloomberg.net

To contact the editor responsible for this story: Dan Kraut at dkraut2@bloomberg.net


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