E*Trade: How Good a Deal Did Ken Griffin Get?

I am in the camp that says Citadel's Ken Griffin got a very good deal on E-Trade's asset-backed security portfolio - at 27 cents on the dollar, and considering defaults are over-estimated. But maybe the deal was even better than that.

Depending on how you do the math, Citadel may have paid as little as 60 cents on the dollar for prime mortgage-backed securities. Nice.

Useful related chart (click to enlarge):

[via NYT]

Comments

[Pj568]

There is always too little information released to make any meaningful conclusions. Companies tend to disclose different pieces of information, ie: by most recent Rating Class (but not date of rating), by FICO Score (prime vs subprime), by lien status (first vs second), by type (conventional vs adjustable), by year, whether conforming or not, whether agency or not, by LTV (loan to original appraisal value), by location (State), insured or not, and sometimes with default rates by class. Each is very meaningful to value. Some disclose more than others byt none release it all. It's always been and will be "Buyer Beware" and Citadel certainly was. Overall not much to conclude except it was an act of a desperate seller fighting for near term survival and a savy buyer with the cash to make it happen now.

[All Tech]

I think you have a typo here....you probably meant to say, "Depending on how you do the math, Citadel may have paid as little as **10** cents on the dollar for prime mortgage-backed securities. Nice."

You said $0.60. But if you do the math on the 85 million shares Citadel also received the net transaction amount for the $3B ABS portfolio is closer to $310M or $0.10 on the dollar....