E*Trade Primed for a Breakout

E*Trade's (ETFC) management is doing a superb job in correcting the errors of the past and bettering the firm's position for the future. Through of a series of brilliant marketing campaigns (i.e. funny baby commercial) and creative initiatives (global trading), the company has managed to retain its retail client base. The April activity report was surprisingly bullish, as average revenue trades were up 5.8% year over year while the stock was trading at 6 times its current value. While management has disclosed that further writedowns and capital dilution may quite possibly occur, these low expectations will play to ETFC's advantage rather than disadvantage from a trading perspective.

Shorts have overstayed their welcome in this name, currently standing at ~23%. As evidenced by the price action in Fannie Mae (FNM) in the first week of May, namely when it announced a massive writedown followed by a significant pop, blindly shorting financials doesn't work anymore. The large short interest in this name should encourage, rather than discourage, investors as shorts naturally have short investment horizons and become increasingly impatient and distrustful of each other as their strategies don't work. The stock currently has resistance at the $6 level; look for it to get off to the races if it manages to break through as there will be a massive short covering induced rally that could easily send the stock back to its October-November level.

So why am I so convinced that E-Trade, a firm that still holds some toxic paper, is primed for a major breakout? First of all, there has been very significant insider buying from various executives at an average weighted cost that equals or exceeds current trading prices; I like the fact that management outs their money where their mouth is.

As evidenced by the April activity report, E-trade has been able to retain its retail base throughout this crisis and should be able to gradually regain some of the customers who defected to other brokerages. The company's global trading platform is truly revolutionary and unique as it allows customers to trade in a variety of global markets in local currencies. The firm has more financial flexibility due to the fact that is also operates as a quasi bank, although I do hope they have learned their lesson and will refrain from investing in risky assets from now on. Citadel's $2.5B cash infusion (at $4.78 per share), while being a bit dilutive, provides for a strong floor.

By betting against a company with rapidly improving fundamentals, the shorts are in effect digging their own graves. Analysts have been known to be too late to the party, whether it be to the downside or the upside. 21 of 23 analysts who currently cover E*Trade have a negative or neutral rating on the stock; that is actually a positive rather than a negative, as I expect a wave of recommendation upgrades in this name that will send the shorts panicking for the exits.

In conclusion, from a risk-reward perspective ETFC looks quite compelling and I look for the stock to break through its resistance at $6 and probably trade back in the mid teens by the end of the year.

Disclosure: Author has a long position in ETFC

Comments

[Pauly B]

I have been an E Trade customer and have been very satisfied with their service and platform. As more people take control of their investments on line brokerages will flourish. In the long term E Trade is still a likely takeover candidate as the brokerages consolidate as many have duplication of services. I could see a Schwab or TD Ameritrade buying these guys out in the next few years.

I agree, the shorts have overstayed their welcome here.

[JimmyGoodwin]

Seeking Alpha continues it etrade push, don't fool yourself, this company is bankrupt.

[Xyrus]

Improvement? Maybe. Breakout? Unlikely. They could have the best management team, but until their books look better I don't see a whole lot of people rushing to buy, even at these prices. Too risky.

A buyout is possible, but unlikely until they shovel more of the garbage off their books, unless they are bought at lower prices to account for the toxicity.

This one would be a wait and see for me.

~X~

[JimmyGoodwin]

Considering the stock was under $4 a couple of days ago, this is probably the most overpriced stock on the whole market atm. Lets not forget that stock price was $2 a few months ago. It could easy go back to that level and 50% of your cash is gone, for good.

Why would someone invest in a stock which could lose 50% - 100% in a blink of an eye?

[lefty]

Agree with Dean. I also have picked up a long position. Will be $10 by end of 08.

[igotpaged]

I agree 100% with the writer. ETFC is working in the right direction and becoming a much better forward-looking company. Don't be a fool, just follow the money....

[matt7]

Not hard to tell that Jimmy is probably short ETFC and is getting scared...

[Zeninvestor]

Shorts beware! This strong platform, with management's newly authorized stock has the ability to swap debt for equity at a discount and with that reduction in interest expense will be profitable in Q3 if not in Q2. They continue to add accounts and have the best platform in the business (I am a customer). Breakout is long overdue and not much sense in thinking this is not a $6 stock and soon!

[rl]

i don't think etfc is a takeover candidate, i think etfc is strong enough to takeover ameritrade in about 2 years. the combination will give old chuck a run and tip the scale in favor of etfc. this reminds me of the circuit city vs. best buy a few years ago.

[jackooo]

I handle 7 portfolios with E Trade. Most were through Brown Co. when E Trade bought them.
I have pulled one $100,000 plus portfolio because I was not satisfied with customer service. They do not know their jobs and I am continually on the phone trying to set things right. The phone times range from 1/2 hour to a full hour.
Based on their lack of knowledge and lack of expertise I would not venture a buy on their shares.
[e-mail]

[User 194600]

6.00 no . ETFC is trading at 4.40 right now on news and the market. Todays stockholder meeting should be reflecting the changes made so far and should be very positive. This alone will take us to 6.00. If positive earnings show up in Qtr2, the gap to 8.00 will be filled. With positive earnings in Qtr3, ETFC could very easily be in the 14.00-16.00 range. Remember in 2003 it climbed from 5.00 to 20.00.
You are looking at a revamped company here with management that seems to know what it is doing. 2 to 3 years from now, with a few purchases under it's belt, it could easily be trading at the high end valuations I have seen, such as 44.00.

[prescient11]

Great article, thank you. I look for at least $10 by 1Q in '09 and would be ecstatic with $15. If the first lien loan portfolio falls in line, watch out, this will take off like a rocket.

[newcomer]

I used to have a great experience with Etrade supporters. But recently I noticed they have many idiots there. This really gives me a mixed feeling about the company. Hopefully, those are the new-hires, but again you lost your time and most often chances too with those idiots.

[Stockpickerforum]

Jimmy Goodwin,

Are you starting to get nervous? You obviously made two comments about the article which quite easily shows that you are short E-Trade and are starting to get a bit more aggressive in your stock pitch. Most overpriced stock?!?!?! Based on what analysis? On how much you've lost by shorting it?!

[SaveTheRupublic]

One or two bad experiences with customer service? Yeah me too? But hey, at least I'm not getting forwarded to India for my customer service needs. Everyone has to start somewhere. I don't have a problem with people that try. More people should learn the phrase, "I don't know the answer I need to talk with my manager." This does add to wait times. But they do end up getting it right. Eventually.

[pshah]

Etrade just announced a doubling of their total shares to 1.2 billion. Can the author or anyone here explain how this dilution is beneficial in any way for current shareholders?

It seems all these long ETFC arguments have some weight but still is a lot of speculation....

[Zeninvestor]

The shares are 'authorized' but not 'issued' so there is no dilution at the moment. The stated intention, besides the obvious stock options, etc., in the normal course of business is to 'swap' debt for equity at a discount. They intend to retire 700MM in debt in this fashion. That will reduce their interest expense and speed the return to profitability. They are also selling for cash some 500MM in subsidiaries that no longer fit the long term strategy. If you combine those two events you should have minimal dilutive effect on the stock, AND profits with a more stable balance sheet. All and all, the words and deeds from ETFC have been 'shareholder friendly'.

[Go US]

I liked this stock at 2.50 and at 3.80 I just keep buying!!!! I would love to know what the "shorts" have in their pants, I guess no BALLS!!!
Jimmy was figured out so easily. This stock is Stair stepping and looks to be finding resistance at $4.40. I'm not shure if this puppy has leggs even with new management. Risk Vs reward, by the time investors figure this one out it will be all over. The Feds are pumping tons of cash into the system, and the US $ has been in the can so I figure this stock will hit $12.00/ share by years end.

I am Long on ETFC no suprise!!!

[JimmyGoodwin]

"You obviously made two comments about the article which quite easily shows that you are short E-Trade"

I confess, you got me, I went short on a company going bankrupt but it instead it turned into a google overnight, well, according to Seeking Alpha writers anyway. Or perhaps, I just wanted to say something and there was no edit button.

I just posted because I feel quite angry at SA writers who obviously are telling lies in a desperation to reclaim some of the money back they lost when etrade went bust. Also, I feel sorry for potential investors in etrade who stand to lose upto 95% of their money should the predicted bankruptcy happen, this could happen any moment now! Just stick to the facts.. the company is in deep trouble, the stock is now overpriced and extremely risky. As evident in today's trading when it crashed -7% from its day high because of a little bad news. I can't imagine what will happen when the proper bad news arrives. Etrade investors are just over confident because of this excellent rally we've just had, this is not google or apple, this is a company about to be bancrkupt lol.

[Zeus]

Jimmy Goodwin - you don't know what you're talking about.

The odds of Etrade trading back to the 2.30 - 2.50 range are slim and none. That was the bottom.

I think the author is also wrong. The truth lies somewhere in the middle.

Etrade should trade higher by year's end, but the idea that this will be a teenager again that soon is ridiculous.

Almost as ridiculous as Jimmy Goodwin's inane prediction.

[Zeus]

Goodwin - No one is claiming ETFC will be the next Google or Apple, and your comments that this company will soon be bankrupt shows your financial ignorance.

YOu're obviously on a mission here to trash the stock, which would be acceptable if it came from an intelligent person who could back up their points with some credible comments.

Now, get off the computer before your Mom catches using all of her AOL minutes.

[Zeus]

jackooo -

Let's talk truth here, OK? I have placed about 100 calls to Etrade customer service in the past 5 years. I have NEVER - repeat NEVER had to wait as long as 30 minutes or even close to that to have a live human being on the phone.

Out of the 100 or so calls, I have run into about 2 reps that were rude. Any time you deal with a company and only have about 2% rude employees, that is fairly remarkable.

Yes, sometimes their customer service reps don't know an answer, BUT, I also hold an account at OptionsXpress AND TDAmeritrade, and Etrade's customer service and platform are far superior.

Etrade is the best discount brokerage out there.

[Stockpickerforum]

Jimmy Goodwin,

I suggest you listen to Zeus, better not upset mommy. I am happy that you are representing the short argument because you reasoning is deeply flawed. I would also suggest asking mommy to sign you up for a few more English classes as you are not able to express yourself in a respectable manner. "I am angry because SA writers are telling lies"...WOW, shows what a smart individual you are...I'm impressed.

[Stockpickerforum]

Zeus,

Appreciate your voice of reason and reprimanding of our little Jimmy boy. I completely agree with you on the customer service and Etrade being best of breed comments. You assert quite correctly that Etrade has reached the bottom and should be trading higher by year's end. I do, however, disagree with your assessment of Etrade being unable to trade back to the teens. The past quarter was only midly unprofitable and there is a good chance the company has written down the bulk of its toxic paper losses. Since expectations are so low, all you need is for the firm to report two profitable quarters and this thing will be off to the races. This was in fact a $15 stock in October even after the company's holdings were known and financials collapsed so it would not be preposterous to assume the stock could reclaim these levels if a second half rally in financials will in fact take place. In case ETFC isn't able to report a profitable quarter this year I would agree with your assessment; then the stock would probably trade in the $7-9 range by year's end.

[Go US]

Does anyone know what the short estimate is on this stock? I mean are we talking under 2.50? Please excuse my ealyer comment on the "Shorts" lol, but I am really curious as to what reliable theory is out there on ETFC, I just can't see this stalk tanking! I learned early on not to bet against the Fed, and that's what the Shorts are doing, not a very smart move. Truely I thought that ETFC should of held on to the good Loans and tanked to bad. Food for thought why is that Lending institutions can sell our home loans to ther institutions at a 30% to 40% right off and not offer it to the owners, Lendees..... for the same... Oh thats right we suposed to be poor.... I think that is a bunch of BS......

[Stockpickerforum]

Go US,

What do you mean by short estimate? I would suggest you rephrase your question to make sense. What you said about lenders doesn't make any sense, they used to simply package home loans into pools and then segregate those pools into a variety of tranches...making $ on the spreads. I suggest you read a book about real estate finance.

Your question about short estimate doesn't make any sense. Different investors have different estimates depending on their investment horizons and expectations about future events and earnings. Short sellers usually have shorter time horizons than investors who go long because they are taking on more risk; their potential losses are unlimited.

[Go US]

Yes I should have been more specific, and you are correct in stating the obvious, I still think that wholesaling of the Home Loans is not fare, and even if you say that Lenders buy and sell the Loans in bulk or in pools the average joe should be given some right to buy a loan that is discounted. Yes you are correct in the sense that institutional buying of loans in pools is to spread the risk etc. but talk about shorting the stocks, European shareholders took it on the chin by buying into those so called home laon investment funds....
Please educate me more Lucy!!!

[CJS]

i seriously doubt this article or any comments are going to move the market. no offense to any of the writers; but it is some what ridiculous the number of people accusing others of "talking up their book" in an effort to regain losses (whether long or short).

that being said, etrade did say they were going to double the amount of outstanding shares: caveat emptor.

[Zeninvestor]

If you read my comment above you might know why doubling the shares is a 'good' thing. Just a thought.

[John Egan]

I agree wholeheartedly with 'jackaroo' and have left Etrade because of the incompetent staff, the worthless replies to my emails, the endless waits on the phone with replies that were proven to be incorrect, the lack of follow through on their promises, lack of responses to my letters to the acting CEO, and their inability to fix any of the multitude of problems that they instigated. In fact, dealing with ETrade became a part-time job for me.

The fact that one postee notes that after 500 calls, he has never been put on hold for more then 30 minutes begs the question.. 'Why in God's name should anyone ever have to call them 500 times anyway?'.

I've said it before.. Can't imagine why anyone would buy this stock and in particular why they would hand over real money to these losers.

Thx jegan ;-/

[bodysnatcher]

Mr Egan,
I believe the amount of calls stated was 100 in five years, not 500. That comes out to 20 per year. I call them for various info from trading to mortgage to interest rate info and have had no problems.
If you're waiting for the CEO to call, and he does, please let me know. I'd like to know why he's wasting my dime on customer service instead of doing his job.
Pull up your pants. Your agenda is showing.

[wl]

I am not clear on where is the additional 600 million share come from. If you have 10,000 shares of Etrade today, will you have 20,000 shares automatically after they double. So the price of stock will go down to $2 if it is $4 today. Or are they issuing additional 600 millions share backed up by some assets?

[methusalaw]

I have been with Etrade for years and have had many calls to them. They have always taken care of any problem while I was still on the phone and within a few minutes. I believe that you must have had an issue that was beyond the control of E*Trade and most probably something of your own creation. I have also been with four other brokers and none were as stable, had better service or trading platform, and secure. I'm sorry you had a poor experience, but see nothing here that tells us what your issue was and why it was so difficult to resolve. Allegations without substance are hard to verify.


On May 16 06:01 PM John Egan wrote:

> I agree wholeheartedly with 'jackaroo' and have left Etrade because
> of the incompetent staff, the worthless replies to my emails, the
> endless waits on the phone with replies that were proven to be incorrect,
> the lack of follow through on their promises, lack of responses to
> my letters to the acting CEO, and their inability to fix any of the
> multitude of problems that they instigated. In fact, dealing with
> ETrade became a part-time job for me.
>
> The fact that one postee notes that after 500 calls, he has never
> been put on hold for more then 30 minutes begs the question.. 'Why
> in God's name should anyone ever have to call them 500 times anyway?'.
>
>
> I've said it before.. Can't imagine why anyone would buy this stock
> and in particular why they would hand over real money to these losers.
>
>
> Thx jegan ;-/

[methusalaw]

Excuse me CJS, but you stated that E*Trade said they were doubling the "outstanding shares". That is incorrect sir. E*Trade received "authority" to issue 600 MM additional shares. These shares may be issued from time to time to offset current debt, improve operations, or for other reasons or may not be issues at all. These shares do not become "outstanding"... shares until they are issued according to my understanding. At any rate, there is not going to be a wholesale doubling of shares as you would lead folks to believe.


On May 16 04:58 PM CJS wrote:

> i seriously doubt this article or any comments are going to move
> the market. no offense to any of the writers; but it is some what
> ridiculous the number of people accusing others of "talking up their
> book" in an effort to regain losses (whether long or short).
>
> that being said, etrade did say they were going to double the amount
> of outstanding shares: caveat emptor.

[methusalaw]

Mr. Goodwin Sir,
I can very well understand your dilemma as an obvious short player. It must be disconcerting that if you were short in the 2s you have already lost 100% of your original investment and are very probably going to loose at least another 200% of that investment unless you cover very quickly. I wish you luck sir since E*Trade going BK extremely unlikely at this point. The measures they have taken to shore up or eliminate their dept and troubled loans, their access to federal funds, the authorization to issue additional shares if US markets degrade to point of taking out most all financial institutions will ensure their survival. E*Trade is well ahead of the recovery plans reiterated only a month ago in the 1Q review. This stock will at minimum be a 7-9 dollar and more probably 10-15 dollar stock by 1Q of 2009. You sir know and those who are long this stock know it.

I'm long this stock and also a customer of the company and attest to the great service and platform for the profession or non-professional online investor.

[VP ofCommon Sense]

I'm just plain long, but I can see a play to buy at 4.15+ and sell at <4.00 (or the reverse) over and over lately.

[RafaelGrillo]

Heated discussion here!! No need to get nasty. I am long on E*Trade, and not without some hesitation. I am confident that they are doing the right things, and I particularly rely on the strong equity of their brand. But no doubt their financial situation is still fragile, and the economic and financial environment is not helping. Highly unlikely, but this is a company that could be pushed into bankruptcy not because of their wrongdoing, but because of adverse conditions should a second shoe drops on the credit crisis or the economy folds under the weight of high oil prices (this is my main concern right now). Having said that, I don't think E*Trade will go back to $2-$2.50. That was a panic bottom, not a technical one. If you remember, the sky was falling at that time and judgement day was around the corner. I would not be surprised if the share price goes to the high singles by year end. It will take several quarters for it to break the $10 mark though. I would not expect it to happen until next spring or so. I certainly hope to be wrong, and would be delighted to have a nice Christmas present, but I certainly don't expect it. Yet, we are talking of a great risk-reward profile here. Chances of losing half of your investment: very low. Chances of doubling your money: very high. That sounds good to me!

[JimmyGoodwin]

"this is a company that could be pushed into bankruptcy not because of their wrongdoing, but because of adverse conditions"

It doesn't matter how they go bankrupt, you will lose your money. I only hope the optimistic fools investing in Etrade can afford such a large financial loss. Just remember, its not smart to piss against the wind.

[User 194936]

I have 2 accounts with Etrade. Had them with Brown and Co.
before Etrade bought them out.
So far, I am extremely satisfied with the service.
I do not call too often, but when I do, there is no waiting
and my inquiries are answered promptly and courtesly.
Currently, I am 100% in natural resource stocks; but as I
start cutting down on my exposure, I will be swithing over
to ETFC.
I think they have the best trading platform in cyberspace.
IMHO.
Agman.

[Medici]

The July 5 Calls trading at $.20 are a good buy for a short term 50-100% return with minimal risk- Who cares if it is a good long or short, ride the momentum with limited risk-

[wl]

If etrade is doubling their outstanding shares by issuing additional shares instead of doubling what current shareholders have, they are just like a near bankcrupt government printing more money. Their share value is going to go down in a drain. Where is pressure for massive breakout for shorts?

[BAGWHAN]

I get a kick out of reading all this garbage about etfc going bankrupt and doubling their outstanding shares etc... Come on people, use your brain a little, do some homework and understand what you're talking about before you start running at the mouth. ETFC will survive and flourish. If you've got 3-5 year time horizon, stay long and you'll make $$$.

[Long timeEtradeCustomer]

I kick out these people who dont know the difference between authorized shares and outstanding shares. From what I understand a Company can authorize shares all they want,they dont dilute current shareholders until they issue them and they become outstanding. Now had these people listened to the 1st Q CC, Management said whatever they do with the additional shares would be shareholder friendly meaning the shares could be used for debt to equity swaps or other uses that are good to future earnings and the future of the Company. Now if you dont believe them which is certainly your right, I would sell the Stock if you were long, or better yet go short. I for one believe them,they have a few shares of ETFC kicking around that I bet they would like to see go up in value not down. See ya at 15!

[Daneric]

ETFC is not about to go bankrupt. The only thing that will make them go bankrupt is another run on their bank. But they already survived one run and I don't see another happening.

They fully realize that their stock price is the one thing they must protect. Not just because they all have personal stakes in it, but the stock price is what will help drive people either toward or away as customers.

The $2 mark was a panic low-water mark. You won't see that price again and as more time goes on the safer they are. Yes they are in debt, but they are fully aware and have revealed it more forthcoming than Citi or WM. They have a plan to pay it and as long as their online trading business grows at a decent pace, they will survive.

Their asset sales will not hurt their core business:online trading.

Look for a small profit next quarterly earnings report. They will beat expectations and then the price will take off and that is when the shorts will be burned. Management is working all this summer with that goal in mind.

And if they have another good monthly customer report that again beats expectations, you could see a panic occur earlier.

The CEO is an ex-JP Morgan guy and turning ETRADE back into what it was has been a holy-grail quest of his and he won't take failure as a result.

Gaining the approval of shareholders in the authorization of more stock is necessary step that has most likely been planned from back in the dark days. Remember, they must protect the price and perception of their stock so they have waited 6 months and a stabilization in stock price to announce it. ALso note that it was announced Friday after market and it was coupled with the announcement of them selling an Indian asset that will net them $millions.

Its all about managing the stock price and they had to eventually announce additional shares.

1. Insider buys 50K at $3.72
2. Quarterly report comes out and CEO is positive.
3. New trading center opens in Toronto (expansion)
4. April Monthly customer trades beats expectations.
4. Selling assets nets $Millions coupled with market closing annnouncement on a Friday about doubling shares.

That is smart management right there! They have planned and dribbled positive news and timed the potential negative news of the authorization of issuance of stock rather adroitly if you ask me.

Its impact will be negligble. The price will probably retreat back down to $4, but hey guess what, I am betting management has sandwiched more good news that will come out this week to come.

They are hitting all the right notes. Etrade will be a $10 stock by Christmas even as they will still carry a good bit of debt. Won't matter because the direction forward will be bright, and online trading is a growing business.

[Daneric]

One more thing I want to talk about:

Everybody loves a *Rocky* story. Etrade is slowly becoming just that. And expect ETRADE to take advantage of that perception in marketing thmselves to investors in the future.

They are getting buzz on the talking heads shows bceause it is a feel-good story. Don't underestimate this aspect.

I would never short Rocky Balboa as he picks himself off the canvas in the 15th round and throws some haymakers and wins in the end by TKO.

One more thing about CEO Layton. They recruited him from the board of directors and he had never intended to come out of retirement. But he did come out and they obviously gave him a free (and powerful) hand to do whatever is necessary to include canning all the old guard. He got the rest to buy into his leadership and he is like a god in that place at the moment. If he pulsl this thing off, it will be studied by Wall Street for decades to come.

Like I said, everyone loves a Rocky story. I bet CEO Layton does too.

[curious cat]

i'm a trader. i trade with e-trade. hmmm, if all the e-trade traders traded e-trade stock, we could probably send it higher and make ourselves rich. of course, we couldn't agree to do that because it would violate the law, but that sure is a heady way to daydream.

i am not currently long or short, but i am examining my options.

[Ben Williams]

CEO Layton is doing all the rights things with this company and while it has leaps and bounds to go, it is moving in the right direction in a quick u-turn. The mere fact that it survived its near collapse is a testament to something extra about this stock to make me bullish. The dilution of shares issues should not be a problem once the financials start picking up on the balance sheet and the overall value of the stock rises above any dilution that might or might not take place in the near future. They only voted to have that option. Would not want to be short on this one right now, there is the potential for a nice percentage rip on this one in the near future.

[JimmyGoodwin]

Hate to say.. told u so. -10% loss in 2 days, clap, clap, clap.

[oregonduck]

Down a lot today but im buying tomorrow at a good price. Again, Etrade is consolodating their balance sheet so that their stock price will be a good value and the company will be profitable. They are getting rid of debt like crazy and adding cash to their balance sheet. I do think that the shorts are in trouble because the company is not insolvent and will be making money with the pickup in trading activity over the year. If you buy now, you will triple your money by the end of the year.

I have 15,000 shares now with an average price of 4.08. Feeling pretty good.

[oregonduck]

I look at the people who down-talk etrade and most of them do not know what they are talking about. For instance, authority to issue new stock is not a decision to do a stock split, as I have suggested. It simply allows the company to issue new stock. It can be good when trading volume requires issuance of new stock to meet demand. It can be bad when it has a dilutive effect. It means nothing if it is not issued at all.

Also, when I hear about the complaints about etrades service, that has nothing to do about the stock price. A complaint about one persons interaction with a customer service will not effect etrade--just like my conversation with a chase credit card customer service person would effect JP morgan stock. The reality is that analysts will effect the overall moves in the stock, and that will be effected by numbers. Balance sheets are what they look at. Balance sheets are being shorn up today by etrade. The stock deals that were made today, where debt was converted into stock, and where an Indian company was sold for net cash--and tax liabilities were eliminated, all were made to effect the balance sheet. That will come into effect for the next quarters reports and will get analysts attentions. That will bring the stock price up, add market capitalization, and make the company healthy again.

Its amazing how liberating a scare be to a company and how weathy it can make patient stockholders. Patience.....Patience....

[matt7]

Jimmy Goodwin - please stop posting on this message board. Everyone knows you are an idiot and don't know what you are talking about. The reason the stock went down yesterday had nothing to do with what you were proclaiming the other day so don't go patting yourself on the back like you were right. We all know you are on here trying the manipulate the stock because you made a stupid short. So...go cover your short and move on to another stock so you can lose more money and waste other people's time talking about 6 month old data...

[Go US]

Just like a bunch of kids fighting over a toy (ETrade) I think this is really funny, "buy a stock on the merits of the company" Pop said time will tell and know you entrance and your exit points... The real question is when are you guys heading for the Door? :)
As far as customer service ETrade has the right people and really good service, I spent a half hour with one rep working on tax stuff IRAs and the like and shifting cash around she was great and she made it happen.... I was very impressed!!!! GO ETRADE GO.

I am very LONG on this stock

[Pfloyd234]

Im LONG Also!!!!

[Stockpickerforum]

Jimmy Goodwin,

You are a total low life. I wish you get caught with your pants down as Etrade breaks to record highs. Watch out, the breakout will begin after next quarter's earnings report.

[Stockpickerforum]

I'm in it with OregonDuck, I have 14,000 shares at $4.10

[Beauars]

I've been an etrade customer for many many years. I think their site is great. I have had issues with customer service in the past but recently it's been fine. Management seems to be making the right moves now and I'm confident in the company.

[purefct]

Etrade customer service could be better, but each time I look elsewhere I come back to etrade. I left Schwab for Etrade in the 80's, opened and closed Brown, Ameritrade, TD whatever their name was (I haven't gone back since the merger), Scott Trade, Fidelity, and have a Wells Trade acct due to my mortgage but will close it when I refi my mort. I've even left Smith Barney, Shearson Lehman (OK, I'm dating myself a bit with the old names), and even some of my Stone & Youngberg I'm transferring to etrade.

I've made hundreds of calls to ET Cust Svc and have a large number of unsatisfactory experiences - but it's still superior to the service and offerings from the other brokerages. I'm always warry of people who claim they've never had a problem, I conclude they only trade stock in a traditional manner and thus do not tend to have complications.

So complain all you want, etrade is growing because even if they stink at times, they are still better than the pack. As long as customers believe the company will stay around and the company focuses on superior management (and credit markets don't freeze up), etrade will recover quite nicely!

I own about 43,000 sh ETFC and have sold 2,000 contracts (not 20 contracts for 2,000 sh) $5 Put Jan-09 so far. I'm bullish!

[Cindy Reed]

There are a whole bunch of highly educated bloggers out on the yahoo etrade message board. Great research on the SEC filing and implications. You don't have to be a member to read them all. Just to make comments and ranking. The stuff out there needs to be published; it is the research that analysts ought to be doing and publishing!

[Cindy Reed]

Here is the link.

messages.finance.yahoo...

Read comments on "Citadel: are the selling bonds but buying more stock." Comments by Quasi and Numbersss are research informative.

[jbmaria]

Those pumping ETFC would have you believe that mgt. just ran out of authorized shares for routine corporate purposes like ESOPs and debt for equity swaps.Maybe, but did they need to double the existing 600 million shares,seems like they have something in mind that a more modest 1-200 million shares might not cover.
Curious!

At the same time,Citadel registers for "potential" sale over 90 million shares it got for lending ETFC $1.9 Billion at 12.5 % last November. It also registers this debt for "potential' sale at the same time as the share authorization. Curious!

I'm not going to pretend I know what either ETFC or Citadel is up to but unlike the pumpers I won't assume it's purely coincidental and /or innocent toward shareholders.
If nothing else it adds a huge dose of uncertainty to the equation and we know how uncertainty is treated by Wall Street.

ETFC is a financial that has managed to put itself in an extremely severe competitive disadvantage to competitors Fidelity,SCHW and AMTD and its recent exit from mortgage originations virtually assures growth is the farthest thing from their minds right now Survival is their primary focus and gamblers only should be considering this equity.

[jbmaria]

The MF seems to equate ETFC's status with TMA and others diluting their shares:


fool.com/investing/gen......

"Whether Thornburg will be able to keep its doors open is another story. However, the massive share dilution and delayed filings leave few reasons to argue in favor of owning the company's shares. Thornburg, along with fellow leveraged share-diluters E*Trade (Nasdaq: ETFC), Ambac (NYSE: ABK), and (on a much smaller scale) Citigroup (NYSE: C), have dug their own graves.'

[dig4gem]

What is JBMARIA's agenda???

Not only that s/he writes 24/7 negatively on E*Trade in such venues like Yahoo ETFC message board, but strangely positively on E*Trade's competitors on the discussion boards of E*Trade, even positively on the Schwab fund that a lot of their investors are now alleging being misled and suffer substantial losses, yet JBMARIA also claims that s/he HOLDs E*Trade shares!

So JBMARIA,

Do you mislead message/blog boards when you say you "hold" ETFC?

Do you actually short ETFC?

Do you hold SCHW or any of E*Trade competitors' stocks?

Do you work, or in the loose sense of the word "work", for one or more competitor(s) of E*Trade and manufacture all your negative posts for some hidden agenda, like an attempt for E*Trade's competitor to acquire E*Trade on the cheap?

[jbmaria]

Be very careful with ETFC.
As I see it,there's no guarantee that last Q's noted improvement in the loan portfolio won't reverse.Macro trends in housing and incomes don't indicate to me any clear improvement in the mortgage holders lot,delinquencies and defaults continue to trend upward.And the Fed may be out of bullets.
I don't know how bad it might be or become but ETFC has around $40 Billion in loans that could get in some degree of trouble.

The MF seems to equate ETFC's status with TMA and others diluting their shares:


fool.com/investing...

"Whether Thornburg will be able to keep its doors open is another story. However, the massive share dilution and delayed filings leave few reasons to argue in favor of owning the company's shares. Thornburg, along with fellow leveraged share-diluters E*Trade (Nasdaq: ETFC), Ambac (NYSE: ABK), and (on a much smaller scale) Citigroup (NYSE: C), have dug their own graves.'


SA author,R. Middleton has written a comprehensive series on the crisis and other articles I highly recommend,read everything he offers if you want to temper your outlook with some intelligent caution:

seekingalpha.com/artic...


Some other cited issues are asset sales,like the Indian deal just announced. OK,they get the $145m but they lose the rev. and profit going forward and this from a co. that recently was selling themselves as an international player.

Further,they will be paying over $50 million per Q interest to Citadel ,a nasty drag on potential profits.

Exiting the mortgage origination biz. Sounds good given the aura surrounding mortgages but recall this was once probably their biggest moneymaker,now gone for the conceivable future.And let's not forget it's expensive to exit a biz line,severance packages and all that.

Debt for equity swaps. Yes,they take debt off the books,a good thing but they are dilutive to shareholders.
And speaking of dilution,keep in mind the recent authorization of 600 million shares by management.
Those pumping ETFC would have you believe that mgt. just ran out of authorized shares for routine corporate purposes like ESOPs and debt for equity swaps.Maybe, but did they need to double the existing 600 million shares,seems like they have something in mind that a more modest 1-200 million shares might not cover.
Curious!

The MF seems to equate ETFC's status with TMA and others diluting their shares:
fool.com/investing...

"Whether Thornburg will be able to keep its doors open is another story. However, the massive share dilution and delayed filings leave few reasons to argue in favor of owning the company's shares. Thornburg, along with fellow leveraged share-diluters E*Trade (Nasdaq: ETFC), Ambac (NYSE: ABK), and (on a much smaller scale) Citigroup (NYSE: C), have dug their own graves.'

At the same time,Citadel registers for "potential" sale over 90 million shares it got for lending ETFC $1.9 Billion at 12.5 % last November. It also registers this debt for "potential' sale at the same time as the share authorization. Curious!

I'm not going to pretend I know what either ETFC or Citadel is up to but unlike the pumpers I won't assume it's purely coincidental and /or innocent toward shareholders.
If nothing else it adds a huge dose of uncertainty to the equation and we know how uncertainty is treated by Wall Street.
And speaking of Citadel,FWIW,in March a hedgefund manager stated:

"The anonymous fund manager said Citadel, which did not return a call 
seeking comment, paid such a low price for the mortgage book, and got 
such favorable terms on the loan, that it would have been foolish for 
other hedge funds to blindly follow into the stock. After all, he 
said, Citadel was getting in cheap.
"Why would any bull point to Citadel?" he said. "

Frankly,mgt. is another reason I'm wary of ETFC.
Look at the facts.

Layton,according to published reports,was not the BOD first or even second choice for the job.

Layton,to my knowledge, is not known as a turnaround specialist,per se,and he did have some Enron rumors surrounding his former job,perhaps even contributing to his retirement.

To date,the pps has not improved.

Layton is very much at the mercy of KG,who I trust as far as I can throw.

Layton's heavily touted pay package would do best if he succeeds at a turnaround BUT he is getting a $1 million/year cash and will get a nice payout in the event of a buyout and I don't think there's any caveat as to buyout price.This is from memory so you might want to check the filings on that,not that momentous an issue though.

Bottom line,he hasn't been there long enough or achieved enough to rate him so he remains a question mark,IMHO.

I have more concerns but for now I think you can see my caution on ETFC as an investment is quite logical.

[Tharsis]

I currently have 3 accounts with ETFC.....Brokerage, Roth and a Banking.
As others have noted many times above, ETFC has the most technically sophisticated, investor friendly Web platform in the industry...bar none.
Whoever their IT/Web engineers are they should triple their salaries and lock em up, less the competition steals them. In my experience, Customer Service is outstanding...they call me periodically to ascertain my satisfaction level. When I have a question and call in, I get through almost immediately ( granted based on the customers' assets on account ). Overall, great company...hope the breakout discussed here happens and happens big. i'm , as you can guess, LONG