It's no toaster oven, but later this month Citigroup ( C) will give a gift to all its stockholders: shares of Travelers Property Casualty ( TAP.A). The shares could prove hard to hold at first as the dilution shakes out their initial recipients. But for investors who can afford to be patient, it might be worthwhile to put these particular handouts in storage.
Travelers stock, trading around $14, is down 24% from its $18.50 offering price and is off 33% from its $21.05 high-water mark. Indeed, with the overall stock market sinking -- notwithstanding Tuesday's strong rally -- it's awfully tempting for Citigroup investors to take their Travelers shares and cash out. Yet with Travelers' stock trading at a discount to most other big commercial insurers, there's a decent chance it could be trading a good deal higher several months from now. That's especially true because the commercial insurance business is just beginning to see the fruits from some big rate hikes it's been charging customers in the aftermath of the Sept. 11 terror attacks.