Hudson City Savings Bank, a $7.9 billion-asset company in Paramus, N.J., will become one of the largest thrifts ever to convert to a public company this week.

But thrift stocks are ailing, and the planned $529 million offering is receiving a chilly reception.

A June 28 Securities and Exchange Commission filing shows Hudson City sold just 78% of the 52.9 million shares it needed to meet regulatory requirements.

To reach the minimum, Hudson City raised the cap on the number of shares investors could buy, tripling it for an individual investor to $1.5 million and doubling it for a group of investors to $5 million.

Industry sources said investors are turned off by Hudson City's decision to convert to a mutual holding company instead of a fully public company.

"Hudson City would have been a great standard conversion," said Jason Werner, a research analyst at Tucker Cleary in Chicago. "The deal would have been oversubscribed and had all kinds of institutional interest."

Under the mutual holding company structure, investors control less than 50% of the company and have little leverage over management. Mutual holding companies also cannot be forced to sell.

Seymour Holtzman, a managing director of Jewelcor Management, a Wilkes- Barre, Pa.-based investment fund, said he has committed to buy roughly 100,000 Hudson City shares. But he admitted he is having second thoughts.

"The mutual holding company structure is repugnant," Mr. Holtzman said. "At the end of the day management has no accountability."

Jeffrey L. Gendell, another active thrift buyer who manages New York- based Tontine Management LLC, has decided to stay away from Hudson City and buy thrift stocks trading at a lower price-to-book multiple.

"I think it makes more sense to buy other New Jersey thrifts that are cheaper," Mr. Gendell said.

Officials of Hudson City, which operates 75 branches in 13 New Jersey counties, said they could not discuss the offering until trading begins.

Shares of mutual holding companies have plummeted by about 30% the past 52 weeks, according to an index compiled by SNL Securities in Charlottesville, Va.

Four of the six mutual holding companies that went public this year are trading below their offering price.

Unlike Internet stocks that post minuscule earnings and soar in early trading, industry sources said Hudson City is not likely to advance much above its $10 per-share offering price-even though it has a profitable history and attractive market share.

For the six months that ended June 30, the thrift reported net income of $49.2 million and had a return on assets of 1.25%.

"This is a long-term investment," Mr. Werner added.

Industry sources also criticized Hudson City's timing. In early 1998 other mutual holding company conversions such as Brookline (Mass.) Bancorp and Gaston Federal Bancorp of Gastonia, N.C., posted first-day trading gains exceeding 65%.

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