I came across an interesting investing option that was new to me, but that apparently, has been widely known since the famed Peter Lynch highlighted it in a book over 20 years ago. Your local small town savings and loan can be an investment opportunity of a lifetime (20 - >100% return overnight) if you are able to become a member and it goes public.

A few weeks ago, I saw an article on a man who engaged in fraud to make some of the easiest money available when he could have done it legally for a smaller return. Instead of playing by the rules and using only his own name and money, he started using family and friends to make him eligible for this caper. If you don't have wsj.com access, I'll recap. Here's the link if you're a subscriber:
http://online.wsj.com/article/SB118634212687088573.html?mod=todays_us_page_one

Mutual Thrift Conversions

In short, when a local thrift goes public, only existing members are invited to participate in the IPO. For reasons explained in the article, these IPOs are almost always significantly underpriced compared to book value (in order to entice the members to subscribe), resulting in a significant pop on the opening day. Subsequent buyouts inflate the share price even more, but that requires holding for an indefinite period of time. Because markets are efficient and no secret like this stays a secret for long, more stringent actions have been put in place to deter abuse. While in the past, folks could go state to state and sign up for hundreds of these small-town banks hoping to cash in on IPOs as they occurred, now, most of them require that you live in the same state as the thrift and are a member for at least a year at the time of the IPO. That being said, if you invest the time and several ~$100 deposits in your state now, in a year's time, you could start cashing in on IPOs if you're lucky enough to have joined the ones that go public each year. If you get a notice that say, 1 of the 10 you selected is going public, you can plow $10,000 into that IPO and hope you get the shares (which is likely if you are a member and have a decent deposit already). Once you capture a couple thousand after that IPO, you can roll it into the next offering.

Some additional info:

• Often, the amount of shares you can subscribe to are based on your deposit amount, so if you only invest $100 initially, you may only be able to buy say, $1000 in shares. A quick $300 for a few hours travel and waiting a couple years may not be worth it to you. However, if you're able to sign up by mail/internet or don't mind investing at the going CD rates because you have some liquid cash now, larger deposits will allow for increased share subscription.
• "With 17 conversion IPOs already in 2007 and 18 more pending, the pace of conversion activity has recently picked up. There are still about 730 mutuals remaining, but with that number shrinking each year, it's more important than ever to open accounts with these institutions as soon as possible." This info was provided by a research site that requires paid access. I inquired as to what it will cost for their list; haven't heard back yet. Here's their link if interested: http://www.snl.com/products/bank/tcc.asp
• Don't get greedy. The focus of the wsj.com article made millions several times over doing this. But he enlisted friends and family members, lied about the money flows, etc... You can reasonably make above market returns on each opportunity by using your own money and information, as there were no examples I could find where these IPOs flopped. They seemed the return between 20-105% for the several I researched. Opening up accounts in other states in your mom's name, etc. is just going to land you in hot water.

In the spirit of the EDF mantra, I'm continuing to highlight little-known or alternative investment strategies for regular investors.

After searching around for a bit for the perfect database, this was the one I found to be most useful. You can find every eligible thrift in your state and start inquiring from there as to how to open an account. I've sent out several inquiries as to whether I could open an account remotely or whether I needed to come in in person. Who knows, perhaps a day trip of hitting 10 of these in my state will net me a few 30% overnight returns in 2008 and on...

http://www.ots.gov/instsql/default.cfm?catNumber=70&firstview=0