Movers and shakers: AIG gains 67% to $23.01, CIT up 54% to $1.56
August 5, 1:00 PMAlbany Investing ExaminerHeather White
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8/5/2009: There is absolutely no news to account for these huge gains for both AIG and CIT. AIG has traded as high as $23.01 a share pushing this stock up almost 70%. CIT has doubled over the course of the last 3 weeks trading as high as $1.56 up over 54% today.
What does this say for the banking industry? Are we on our way to a comeback? One analyst believes the large spike in AIG is due to a short squeeze of investors looking to cover their positions before AIG's 20/1 reverse stock split. Another suggests that there are rumors that AIG's earnings announcement on Thursday, August 7, is expected to be better than the streets expectations. Both are valid theories.
Is AIG the driving force behind the gains of over 50% for CIT? I am sure it might have something to do with the positive momentum in CIT, as well as in the rest of the sector.
In addition, there is still buzz circulating that Warren Buffett and his Berkshire Hathaway (BRK.A) are still interested in making a bid for CIT Group. Originally the BRK.A offer was shot down on July, 25th when CIT denied that they were interested in a possible take over.
That being said, considering the hot financial waters that CIT has been in, whose to say that BRK.A will come up with an offer that CIT simply can not refuse. Such a scenario is not at all far fetched ,considering the desperate times for this lender and the deep pockets of BRK.A. This would definitely drive shares of CIT higher.
Even if CIT is not interested in BRK.A's offer, the bottom line is that Warren Buffett made an offer, period. Last time I checked, it pays to follow Warren Buffett, when he is buying you buy too. He is the OPRAH of the Stock Market, his word is Gold.
Only time will tell as to what news comes out after the closing bell. Remember that no news is good news and lets hope if there is a press release, that the news remains positive. The banking industry could use a few Happy Endings.
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