Hudson City Deal Finally Approved

In 2012, I added Hudson City Bancorp (HCBK) to our Buy List. That August, the bank announced that it was merging with M&T Bank (MTB).

We got a good price for Hudson and it was a 30% winner for us in 2012. Since it was going to merge, I didn’t include HCBK on our 2013 Buy List.

The merger, however, did not get approved. Not until this week.

The deal repeatedly stalled as the Fed reviewed Buffalo, New York-based M&T’s anti-money-laundering controls. Hudson City has also faced scrutiny from regulators and agreed this month to pay more than $30 million to resolve an investigation by the Justice Department and the Consumer Financial Protection Bureau into allegations of discriminatory lending practices.

The delay, which analysts have called one of the longest in U.S. banking history, has served as a cautionary tale for other lenders seeking to increase in size through acquisitions and has exacerbated a slowdown in deal-making.

We added Hudson at $6.25 per share. Just before the merger announcement, it got to $6.44 per share. Hudson jumped $1.01 on the day of the news. It eventually closed 2012 at $8.13, which is where we exited our position. The stock closed today at $9.76 per share. In the 2.75 years since we sold Hudson, it gained 20%. The S&P 500 is up about 35% over that time.

Posted by on October 1st, 2015 at 11:23 pm


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