Shares of mutual holding companies, habitually the laggards of the small capitalization universe, may at long last be winning favor with investors.

The companies, which sell a minority stake to the public while keeping a majority of shares in private hands to retain control of the underlying thrift institution, have recently outperformed fully converted thrifts in the market.

Their stock prices have soared an impressive 20% since last October, compared to the 12.6% gain for shares of standard stock thrifts, according to data from SNL Securities.

Until recently, investors generally shied from mutual holding companies because they were viewed as both less liquid and less lucrative than fully converted thrifts-which often carry a takeover premium.

But a taste has apparently developed for buying stock in mutual holding companies. The change actually underscores Wall Street's recent enthusiasm for the thrift industry as a whole.

Investors who witnessed the massively oversubscribed initial public offerings of Greenpoint Financial and Roslyn Bancorp, may be getting into the so-called MHCs with the expectation that they will eventually fully convert to stock ownership, observers said.

If that happens, investors already in place would be able to grab gains from the likely pop in the stock price. Currently, there are 36 mutual holding companies in the nation, according to SNL Securities.

Angelina Billon, an analyst at Capital Resources Group Inc., Washington, D.C., added that investors are "keenly aware" of the potential for profit as changes and consolidation continue to blow through the thrift industry. "Thrift investors have become increasingly aggressive," she said.

Adding to the glow, thrifts have produced a string of positive earnings reports, many of them outpacing analysts' expectations.

Asset quality has been good, making for "clean earnings," and loan growth has been stronger than expected, according to analyst Caren Mayer of Montgomery Securities, San Francisco. "Investors are pretty excited about the thrifts," she said.

Ben Plotkin, president of Ryan, Beck & Co., West Orange, N.J., endorsed the mutual holding company structure and said investors are finally beginning to recognize the value in mutual holding companies.

"While mutuals don't have takeover appeal," he said, "more investors are finding them a much better fundamental value."

He added that accounting practices can understate the companies' price- to-earnings ratios, making the holding companies look more expensive than they actually are.

"If price-to-earnings are compared with thrifts on a fully converted basis, mutual holding companies are trading at a substantial discount to the thrifts," Mr. Plotkin said. "People now understand that mutual holding companies are value investments."

Others say investors may be attracted to the dividend yield of mutual holding companies. Mutual yields are slightly higher than the yields on fully converted thrifts, although the gap is narrowing.

Some observers suggested that the higher dividend is meant to compensate shareholders for the lack of a takeover premium, and for the lack of shareholder control over the company's direction.

To be sure, there is some skepticism about the recent gains enjoyed by mutual holding companies.

"There's a liquidity issue, and it's difficult for big institutions to come in and drive up the demand," said analyst Samuel J. Beebe of William Hough & Co., St. Petersburg, Fla.

Analyst John B. Moore of Morgan Keegan & Co., Memphis, assigned the new enthusiasm for mutual holding companies to the decline in thrift conversions in the last year. Since the biggest increases in thrift stocks occur in the first six months after an initial public offering, investors have put their money in institutions likely to convert, he said.

Ms. Billon said that, while opportunities persist in the sector, selectivity is now the key.

"There is some value in the sector, but the gap between valuations of thrifts and mutual holding companies has narrowed," the analyst cautioned. "It is a less compelling group now."

And she warned of the risk of disappointment for those investing in the hope that the mutual will eventually go fully public. They may never actually do so, she noted.

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