I started off small in the 1990s with bank stock conversions by typically purchasing one or two hundred stocks in an IPO. My success with the bank conversions finally let me buy thousands of shares in more contemporary IPOs. The account outline below shows some of the mutual bank stocks I bought in an IPO in the 1990s. The cost of the 2,589 shares was $25,890 (2,589 x $10 per share = $25,890). The market value was $52,103 leading to a $26,213 profit and a 101% return.
Market Price of $52,103 Minus Cost of $25,890 = Profit of $26,213
Buying Conversion Stock in a Community Offering
Depositors at mutual banks have priority subscription rights in the event the bank decides to convert to stock possession. It's really possible to buy IPO stock even though you don't have a deposit account at the changing bank. Occasionally depositors with priority rights don't buy all of the available stock making it available to the public in what is called a Community Offering. Examples of Community Offerings would include the Port Monetary, Hudson City Bancorp and Connecticut Bancshares conversions.
In order to buy stock in the Neighborhood Offering you need to call the bank and buy a stock order form and prospectus. The stock order form must be completed and returned to the bank before the Subscription Offering Deadline. A check to cover the number of shares bought must be included with the stock order form. It usually takes several weeks after the Subscription Offering Deadline for the stock to be allocated and for stock certificates to be mailed to shoppers.
Examples of MHC 2nd Stage Offerings
Enclosed on the next one or two pages are stock price charts of Mutual Holding Corporations that conducted Second Stage Offerings. This sampling of price charts reflects the price movement of the minority stock before the completing of a MHC Second Stage Offering. Spot the price appreciation realized by minority stockholders before the 2nd stage conversion.
MHC Technique Current Profit Results
I make trade suggestions for MHC stocks which can on occasion be bought in a broker account thru my advisory service. The table below lists the current open trade profit results for the MHC Strategy. The portfolio has $59,323.30 in open trade profits with an average return of 34.8% before commissions.
Many MHC stocks are thought to be value stocks as they generally have a decent Price to Book values and vital cash on their balance sheets in relation to stock price. For instance, I listed the cash per share as a percentage of the current stock price for a sampling of MHC stocks below.
Chuck Hughes News article on stock trading strategy
