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April 09, 2009

My Stock Swap Caribbean Vacation

Stjames2_2
No, this is not a drawing. This is St. James's Club in Antigua.

by Barbara S. Peterson

On Wall Street they call it bottom-fishing, loading up on absurdly cheap stocks when you sense the price can't go any lower. We're seeing it all over: home buyers snapping up foreclosed McMansions, shoppers getting designer duds at Wal-Mart prices. Travel is no exception.

Does that make us vulture vacationers, as the New York Times dubbed this phenomenon last Sunday? Should we feel a tad guilty that we're profiting from someone else's pain? I mean, we're really just filling rooms and airlines seats that would otherwise go empty. Besides, unlike market players who hope to cash in their cheap shares for a substantial profit later on, we're not holding the investment. We're enjoying it now.

The Times article got me thinking about my own voyage into vulture-dom. In mid-February, I took what amounted to a free vacation to the Caribbean under a novel stock swap deal: I got to dump several hundred shares of battered Citigroup stock in exchange for a week's stay in a beachside room at St. James's Club in Antigua, all meals included.

The trip was thanks to a novel marketing ploy by Elite Island Resorts, which last fall published a list of 100 distressed financial industry stocks that it would accept in lieu of cash payment at the half-dozen or so properties it manages. And it got better: They credited your shares at the price they commanded the previous July, before the market truly melted down. During that period, Citi stock had fallen from $17 to around $10 a share, and prospects for the financial services giant looked grim. It seemed too good to be true; naturally, I bit. 

Turns out it was really what it seemed: a fantastic deal. Citi shares sank to penny stock levels just as I was lazing back with my family on a sunny beach, savoring our good fortune at having "sold" at just the right time. Yes, I did feel a tiny twinge of guilt that Elite had gotten the short end of the stick--who knows how long they'd have to hold onto the stocks they accepted till they even got back to those July prices? I figured they'd learned their lesson and would never launch such an offer again. 

So imagine my surprise recently when I saw the deal was back. Yes, you can, once again, dump your dud stocks for credit up until May 31, and take the trip through December 20, 2009. (Note: There is a $5,000 limit on the amount of stock you can trade for your vacation. Make sure to read the terms and conditions.) Interestingly, on the list of several hundred stocks they'll accept, one name is missing: Citigroup. I called the reservations line to ask what had happened, and the agent laughed when I told her my story. "Yes, we took that one off," she said, "probably just around the time you were down there."

Note: We did have to pay for our airline tickets. But, as Wendy Perrin and I have been writing about, even at the height of the season there were still seats--and deals--aplenty.

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