Steve Eisman vs. Bruce Berkowitz: AIG Battle

David Einhorn publicly came out against St Joe (JOE) a couple of months ago. Bruce Berkowitz already had a sizable position in St. Joe. It seems like Einhorn has won the first round. This is not the first time this year a notable hedge fund manager publicly criticized one of Berkowitz’s large holdings and took the opposite side.

GREENLIGHT CAPITAL

In April, FrontPoint Partners’ Steve Eisman prepared a presentation about AIG, valuing the company at $7/share in his best case scenario. “AIG has no common shareholder equity remaining on its balance sheet”, Steve Eisman wrote in the presentation. “It would likely be insolvent if not for government support, in our opinion.”

In a better-case (yet unlikely) scenario, Steve Eisman estimated the value of AIG’s remaining businesses at $116 Billion. That would leave equity holders with a gain of roughly $7 Billion, or $7 a share, he said. The stock went down 5.3% after Eisman’s presentation, closing at $37.59.

AIG closed at $57.62 on Friday, increasing 53% since April 8th. Bruce Berkowitz’s Fairholme had 15 million shares of AIG at the end of March. Steve Eisman’s presentation depressed AIG’s prices and this led Berkowitz to double his holdings to 32 million shares at the end of June. Insider Monkey, your source for free insider tradingdata, doesn’t know whether Bruce Berkowitz sent chocolates to Steve Eisman but he made nearly $600 Million dollars for his investors from his AIG investments. Steve Eisman, on the other hand, isn’t having a great year. Some are predicting that FrontPoint Partners won’t see another Thanksgiving because of their insider trading related troubles.

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