Get Started With as little as $50
As discussed formerly, depositors at mutual banks 'own ' the bank and receive priority rights to purchase stock in the IPO if the bank switches to public possession. At most mutual banks it'll only take $50 to open a savings account. A $50 saving account gives you concern rights to get stock at the IPO price if the bank converts to public ownership.
The simplest way to obtain concern rights to buy mutual bank stock at the IPO price in a conversion is to open a high-interest account at a mutual bank in your neighborhood. I've got a home in New Jersey and have opened up hundreds of high-interest accounts in New Jersey, Big Apple, Pennsylvania, Connecticut, Massachusetts, New Hampshire, Vermont, Virginia, Maryland and Delaware. I love to open accounts when I travel or go on vacation. My children are so used to me running into banks and opening accounts when we go skiing or go on vacation that they believe opening bank accounts is an ordinary part of everyone's vacation!
There's never any advance notice on when a mutual bank might convert. I try and open accounts at as many banks as feasible in order to have priority rights to buy stock at the IPO price in the event a bank makes a decision to convert to stock possession. I've had bank tellers tell me when I was opening an account that their bank has no plan to convert to stock ownership only to receive a conversion package in the post from that very same bank 4 weeks later.
Whenever you apply for an account at a mutual bank, bank regulations demand that you be notified by mail if the bank makes a decision to convert to stock possession and you should also receive a prospectus and stock order form. Stock is acquired straight from the bank in a conversion and shoppers receive a stock certificate in the mail. There isn't any brokerage commission involved with the purchase of the stock.
For those people who do not have any mutual banks in your area, it's feasible to open accounts by mail at some banks. I have opened 142 saving accounts in 26 different states thru the mail.
It's correct that opening many bank accounts can use up some of your available capital but I consider this my 'safe ' money that is instantly available in case I need it. Meanwhile I am earning interest on my high-interest accounts.
An Engaging Phenomenon
Since 1853 Cambridgeport Bank accumulated $78,578,000 in takings which is a. K. A net worth or equity. Because Cambridgeport Bank was a mutual bank this $78,578,000 in revenues was never distributed and takings just accumulated year by year.
In the IPO the bank sold 7,443,000 shares of stock at $10 per share and as a consequence the bank received $74,430,000 in notes from the stock sale (7,443,000 shares x $10.00 per share = $74,430,000). The money proceeds of the stock conversion added $74,430,000 to the net worth of the bank. As mentioned previously, since 1853 the amassed net worth of the bank has grown to $78,578,000 so the $74,430,000 received in the stock sale almost doubled the original net worth of the bank on the day the stock IPO was finished.
The stock conversion nearly doubled the net worth of the bank as the total net worth increased to $153,008,000 ($74,430,000 + $78,578,000 = $153,008,000). This 153 million dollars of net worth or equity now belongs to the stockholders who are the owners of the stock. If you divide the net worth of the bank by the total number of shares outstanding, in this situation 7.443 million, you get a number called 'Book Worth ' per share. Book value's the cash value per share if the bank was liquidated. If you divide the $153,008,000 of net worth by the 7,443,000 number of shares the result's a book price per share of $20.55 ($153,008,000/7,443,000 = 20.55). So essentially you are purchasing stock at $10.00 share that has a book cost of $20.55 on the IPO date.
Peter Lynch described this bank conversion phenomenon in an interview with Worth . Magazine: "So when the thrifts began to publicly confess, there were no prior owners to pay off, as happens in most public offerings. Rather than a big hunk of the returns ending up in the pockets of the company's founders, all of the cash was returned to the company till."
"For the lucky purchasers of the shares, the result was the same as buying a new auto for cash, then discovering the dealer has left the cash in the glove box as a car-warming present. Let's say the local S&L (mutual bank) had a book price of $20 million, the result of decades of earnings built up within the company. Then it went public and sold $20 million worth of stocks in the offering. That $20 million invested by the shareholders became their thrift-warming present to themselves; to all intents and purposes they were purchasing the business for nothing. And because their $20 million was injected into the S&L, the book value doubled overnite, from $20 million to $40 million. In theory, each share was now worth 2x as much as the investors had paid for it."
Purchasing mutual bank stock in a conversion IPO at of its book worth has to be one of the least significant risk stock investments available today. As well as lowrisk, buying stock at of its money break value also gives you tremendous profitability. We intend to next look at some examples of mutual bank stock conversion IPOs in which I bought stock.
As discussed formerly, depositors at mutual banks 'own ' the bank and receive priority rights to purchase stock in the IPO if the bank switches to public possession. At most mutual banks it'll only take $50 to open a savings account. A $50 saving account gives you concern rights to get stock at the IPO price if the bank converts to public ownership.
The simplest way to obtain concern rights to buy mutual bank stock at the IPO price in a conversion is to open a high-interest account at a mutual bank in your neighborhood. I've got a home in New Jersey and have opened up hundreds of high-interest accounts in New Jersey, Big Apple, Pennsylvania, Connecticut, Massachusetts, New Hampshire, Vermont, Virginia, Maryland and Delaware. I love to open accounts when I travel or go on vacation. My children are so used to me running into banks and opening accounts when we go skiing or go on vacation that they believe opening bank accounts is an ordinary part of everyone's vacation!
There's never any advance notice on when a mutual bank might convert. I try and open accounts at as many banks as feasible in order to have priority rights to buy stock at the IPO price in the event a bank makes a decision to convert to stock possession. I've had bank tellers tell me when I was opening an account that their bank has no plan to convert to stock ownership only to receive a conversion package in the post from that very same bank 4 weeks later.
Whenever you apply for an account at a mutual bank, bank regulations demand that you be notified by mail if the bank makes a decision to convert to stock possession and you should also receive a prospectus and stock order form. Stock is acquired straight from the bank in a conversion and shoppers receive a stock certificate in the mail. There isn't any brokerage commission involved with the purchase of the stock.
For those people who do not have any mutual banks in your area, it's feasible to open accounts by mail at some banks. I have opened 142 saving accounts in 26 different states thru the mail.
It's correct that opening many bank accounts can use up some of your available capital but I consider this my 'safe ' money that is instantly available in case I need it. Meanwhile I am earning interest on my high-interest accounts.
An Engaging Phenomenon
Since 1853 Cambridgeport Bank accumulated $78,578,000 in takings which is a. K. A net worth or equity. Because Cambridgeport Bank was a mutual bank this $78,578,000 in revenues was never distributed and takings just accumulated year by year.
In the IPO the bank sold 7,443,000 shares of stock at $10 per share and as a consequence the bank received $74,430,000 in notes from the stock sale (7,443,000 shares x $10.00 per share = $74,430,000). The money proceeds of the stock conversion added $74,430,000 to the net worth of the bank. As mentioned previously, since 1853 the amassed net worth of the bank has grown to $78,578,000 so the $74,430,000 received in the stock sale almost doubled the original net worth of the bank on the day the stock IPO was finished.
The stock conversion nearly doubled the net worth of the bank as the total net worth increased to $153,008,000 ($74,430,000 + $78,578,000 = $153,008,000). This 153 million dollars of net worth or equity now belongs to the stockholders who are the owners of the stock. If you divide the net worth of the bank by the total number of shares outstanding, in this situation 7.443 million, you get a number called 'Book Worth ' per share. Book value's the cash value per share if the bank was liquidated. If you divide the $153,008,000 of net worth by the 7,443,000 number of shares the result's a book price per share of $20.55 ($153,008,000/7,443,000 = 20.55). So essentially you are purchasing stock at $10.00 share that has a book cost of $20.55 on the IPO date.
Peter Lynch described this bank conversion phenomenon in an interview with Worth . Magazine: "So when the thrifts began to publicly confess, there were no prior owners to pay off, as happens in most public offerings. Rather than a big hunk of the returns ending up in the pockets of the company's founders, all of the cash was returned to the company till."
"For the lucky purchasers of the shares, the result was the same as buying a new auto for cash, then discovering the dealer has left the cash in the glove box as a car-warming present. Let's say the local S&L (mutual bank) had a book price of $20 million, the result of decades of earnings built up within the company. Then it went public and sold $20 million worth of stocks in the offering. That $20 million invested by the shareholders became their thrift-warming present to themselves; to all intents and purposes they were purchasing the business for nothing. And because their $20 million was injected into the S&L, the book value doubled overnite, from $20 million to $40 million. In theory, each share was now worth 2x as much as the investors had paid for it."
Purchasing mutual bank stock in a conversion IPO at of its book worth has to be one of the least significant risk stock investments available today. As well as lowrisk, buying stock at of its money break value also gives you tremendous profitability. We intend to next look at some examples of mutual bank stock conversion IPOs in which I bought stock.
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