(Story updated to reflect stock prices at the close of Friday trading.)
NEW YORK (
) -- Friday afternoon, Citigroup's stock smashed through the $4 price that had served as its glass ceiling for the past six months. Shares in the company climbed by more than 30 cents to reach $4.10 during another bullish day for the markets.
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By the close of the trading day Friday, shares in the company ultimately slid back down to $3.85, an increase of 5 cents from the Thursday closing price.
Shares of the company have spent much of the past four months hovering in the $3-range. The stock fell from more than $7 a share at the start of the year to a closing low of $1.02 on March 5, before recovering somewhat along with the wider market.
The stock had risen above $4 only four times since mid-January -- and each time, by little more than a few cents -- before getting quickly smacked down into its familiar $3 territory.
The reason: weakness in the underlying fundamentals of the company, along with technical trading factors -- specifically the arbitrage trade occurring for much of this year wherein institutional investors and hedge funds had taken long positions on Citi's preferred stock, while shorting the common stock.
Indeed, two weeks ago, TheStreet reporter Laurie Kulikowski predicted that once Citi's exchange of common shares with preferred shareholders was completed,
As Kuliskowski wrote, "investors that are involved in the arbitrage trade will have to unwind their short positions in the common stock once Citi converts the preferred shares."
Which is apparently what has happened. On July 27, the first trading day following the conversion of the preferred shares, the common stock was changing hands at $2.73. Since then, it has risen by $1.37, or more than more than 50%.
-- Written by Ty Wenger from New York
Copyright 2009 TheStreet.com Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed. Laurie Kulikowski contributed to this report.