U.S. Devising Plan to Exit AIG

Shares of AIG (NYSE: AIG) are flat today despite a report from Bloomberg that the U.S. government is considering a 2-year plan to disposes of its stake in the bailed-out insurer by converting its preferred shares into common shares and then selling them in the open market.

This plan would be similar to the method the U.S. is using to exit its Citigroup (NYSE: C) stake. The U.S. converted its preferred shares into common and is now looking to sell its 7.7 billion shares over the next year in an 'orderly and measured' fashion.

The U.S. has a nearly 81% stake in AIG.

While the share overhang from a potential sale could weigh on the stock, the news should be view as a positive because shareholders will be left with a "clean" company that is 100% shareholder owned once the government gets out.

AIG paying back it loans was unthinkable last year, now the U.S. could entirely exit its stake - WOW!

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