Greenberg's AIG share hedge pays off BIG ...

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Hmmmm.....



Greenberg's 2005 AIG Share Hedge Pays Off Big

NEW YORK (Dow Jones)--The collapse of American International Group Inc. (AIG) shares might not be something former longtime Chief Executive Maurice "Hank" Greenberg ever wished for, but it is generating big payoffs on two bets his investment vehicle made three years ago.

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http://online.wsj.com/article/BT-CO-20081120-707116.html
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1. Here's a working link >>

Jay Miller, Lauren Pollock and Kathy Shwiff
Of DOW JONES NEWSWIRES


NEW YORK -(Dow Jones)- The collapse of American International Group Inc. (AIG) shares might not be something former longtime Chief Executive Maurice "Hank" Greenberg ever wished for, but it is generating big payoffs on two bets his investment vehicle made three years ago.

On Monday, C.V. Starr & Co. turned over 4.42 million shares valued at $8.4 million to fulfill a variable prepaid forward contract with Credit Suisse Group (CS) that generated $240 million for Greenberg when he entered it. The delivered shares represent the contractual maximum based on a formula tied to the stock price.

Executives have used variable prepaid forward contracts with investment banks to limit the risk of holding big blocks of their company's stock. Most of these arrangements let the investor defer capital-gains taxes while retaining voting rights, said Carr Bettis, founder of research firm Gradient Analytics.

When Starr entered the deal, AIG shares were trading at about $67, meaning the stock turned over Monday was worth $296.3 million in 2005. Bettis said banks receive the shares at a discount as incentive for taking the risk and typically balance that risk with their own hedging strategies.

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http://www.smartmoney.com/news/ON/?story=ON-20081119-000939-2024&hpadref=1