Hartford up over 100% on outlook

Filed under: Good news, Newsletters, Amer Intl Group (AIG), Stocks to Buy

Positive thinking can be very powerful with respect to companies operating in this environment. Many stocks are priced for the worst possible outcome, thus any sort of positive news will be received with enormous relief.

That relief can translate into huge gains for investors.

In the positive spotlight Friday, insurance company giant Hartford Financial Services Group (NYSE: HIG) has been in the cross hairs of short sellers since the AIG (NYSE: AIG) debacle, falling from a 52-week high of nearly $100 to a low of $4.

Given huge losses in the stock market and with questions about its balance sheet, investors priced HIG for failure.

Not so fast. The company stated Friday that all was not as bad as it appeared as it raised its 2008 forecast and said that it had enough capital to withstand further deterioration in the equity market.

That last tidbit was the best news of all, especially for beaten down common shareholders. Shares of HIG are trading for more than a 100% gain today as a result. That's right, shares doubled in value in one day.

Is this move sustainable? I think the answer is "yes."

Even AIG, with all of its capital problems, ends with shareholders being diluted by 80%. It may even be something far less. If AIG can sell businesses and pay off government loans, shareholders may end up doing much better than expected.

The same is true with HIG, and it is far from the government trough.

This article was written by Jamie Dlugosch, contributor to InvestorPlace. com/

Hartford up over 100% on outlook originally appeared on BloggingStocks on Mon, 08 Dec 2008 10:10:00 EST. Please see our terms for use of feeds.

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