(Includes closing stock prices.)
NEW YORK (
(C - Get Report)
stock jumped nearly 12% on huge trading volume Tuesday, two trading days after the company issued new common shares in exchange for preferred stock held by investors.
Citi's stock, which reached as high as $3.01 in trading Tuesday morning, closed up 28 cents, or 10.4% to $2.97. More than one billion shares traded hands in regular trading Tuesday, compared to a three-month daily average volume of 278 million.
The exchange offer, announced in February, has made the government Citi's largest stakeholder, holding roughly 34% of the company's shares. Citi's total shares outstanding were expected to jump to as much as 23 billion from the completion exchange vs. 5.5 billion at June 30.
, which has hovered around $3 a share for most of this year, has been hampered by the arbitrage trade for much of this year where institutional investors and hedge funds have taken long positions on Citi's preferred stock, while shorting the common stock. Some observers said that the stock would rise once the conversion was complete as the shorts were forced to unwind their positions.
closed down on Monday, despite the completion of the exchange offer.
A Citi spokeswoman said that shares from the exchange will be delivered into clients accounts on Thursday. She declined to comment regarding the jump in stock price.
Reported by Laurie Kulikowski from New York.