Professional depositors and institutional investors, among the most powerful forces in newly converted thrifts during the last year, have become far more picky.

The investors have been dissatisfied with the performance of thrift stocks in recent months and are concerned that the Federal Reserve will raise interest rates, possibly hurting thrift earnings.

Instead of putting their money in every newly converted thrift, they're now being very selective and, in the case of professional depositors, only investing about half what they used to, observers said. Thus, demand for the stock has slackened, contributing to the cheap prices at which many newly public thrifts now sell.

"The investment environment is quite different," said Samuel Vitale, a Greenwich, Conn.-based professional depositor and hedge fund manager. "If I like it, I make the commitment. It's just that I make it less frequently. I've definitely become much more conservative in the positions I've taken this year."

The situation is a dramatic change from two years ago. Then, professional depositors and institutional investors would go into almost any thrift stock. That was because thrifts generally saw a sharp surge, or "pop," in their stock price right after the conversion, when their shares opened on the market.

"Over the last two years, it's been a pretty sure bet that anything that came in the conversion market would go up, and therefore investors were interested in every offering," said Ben Plotkin, executive vice president of Ryan Beck & Co.

But professional depositors accustomed to such "pops" have been disappointed more recently. The Office of Thrift Supervision has been requiring higher appraisals to prevent price jumps, leaving "less room for error when you make these investments," Mr. Vitale said.

"We've just had no performance," said Martin S. Friedman, vice president of Friedman, Billings, Ramsey and Co., Arlington, Va. "You're not going to go out and buy new stocks based on the performance in the past few months."

"Many of the transactions that are coming today are priced at levels that are not as attractive to the institutional community," said Gerard Cassidy, bank analyst at Hancock Institutional Equity Services, Portland, Maine.

Instead, investors are making decisions based on a company's earnings prospects and management potential. If investors like a particular thrift, they'll invest a meaningful amount. But if they're not confident, they won't put in a penny.

"There has to be a story," Mr. Vitale said. "Everything has to work to buy it on the open market. There are a lot of things that go into what you choose on the open market these days because you have a tremendous choice."

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