E*Trade: What the Analysts and News Haven't Told You

This compilation of “informed opinions”* covers two important areas of research and insight. These two opinions have been extracted from the blog postings of individuals who strive for accuracy, thoroughly study transcripts and SEC filings, and then provide informed background and opinions. I obtained permission from the authors for posting their information here on Seeking Alpha.

*Seeking Alpha provides a forum for individuals who have an “informed opinion” to publish their ideas. Published materials from Seeking Alpha provide broader circulation of valuable research and opinions. Informative and insightful research and opinions should be publicly published for the good of the investment community.

The following are be covered:

• 5-19-08 SEC Filing to register sale of 94.9 million shares
• 5-16-08 Summary of HELOC and Mortgage Activity discussed in May 16 Annual Shareholder Meeting

The first posting is extensive, and is informative and pertinent to investor concerns relative to E*Trade’s (ETFC) SEC Filing to register the sale of 94.9 million shares this last week. This posting came under the heading, “Citadel: Are they selling bonds but buying more stocks?” (By Blog Author: numbersssss) The content is as follows:

Yesterday, when I first saw the filing , I said

1. It's a legal formality. After the lock-up period, it's routine for such large holders to file this so-called shelf registration filing. They may not sell any at all AND when it comes to their stock holdings, I'd be shocked if they will sell any at these prices.

2. Indeed, if one digs deeper and compares the latest filing with their past but also pretty recent filings, we would realize that Citadel actually bought, repeat BOUGHT shares as of the latest filing (I did have a math error in my yesterday's message --- depending on if two of the funds listed in the document are controlled by KG, their buying was 0.5m shares or 2.9m...will update when I'm clear if Investment Partners and Investment Partners II belong to Cit or Blackrock. Nonetheless, the fact is they bought.)

Today, May 20, 2008, I was watching the relative performance between the stock and bonds closely. This is still tender but offers the first confirmation to my gut/guess as to their actual actions after the filing: Citadel might actually sell a bit of their bonds but use this FUD generated weakness in ETFC buying more stocks to bring their ownership closer to the 25% limit they have secured from regulators.

Why do I say that?

1. Just some simple facts: ETFC the stock still at give away level, bonds however traded up from yielding in mid teen % a couple of months ago to closer to 10% just before this filing, still high but quite an upgrade by bond standard. As smart and as keep on value as KG is, he sure knows this.

2. Remember, before this filing, Cit did a separation deal in the notes put options between KG's fund Windgate and KG's controlled entity (probably worth repeating here my early observation: after the deal signed KG put bonds in his hedge fund while keeping the stocks all for his absolutely controlled entity --- a very bullish arrangement for the stock)

3. We all saw the stock intra day today, decent to say the least, but the bonds fell quite a bit more today. Not sure if it's their selling. Perhaps we can imply this bit: while more equity holders wise up to realize that KG actually bought more lately and may still buy more taking advantage of this FUD, bond holders seem to really worry about the prospect.

4. After reading the lines in the SEC filing document, I noticed these two quotes, which can perhaps give us some hints:

To our knowledge, there are currently no plans, arrangements or understandings between any selling security holders and any underwriter, broker-dealer or agent regarding the sale of the securities. Selling security holders may ultimately not sell all, and conceivably may not sell any, of the securities offered by them under this prospectus.

This paragraph talks generally about both kinds of securities, stocks and bonds.

Then this (from page 10): (!)

In pursuing its economic interests, Citadel may make decisions which may be different from those you may make as a holder of the Notes. As a creditor and shareholder, Citadel could choose to pursue or support transactions that could enhance its equity investment, even though such transactions might involve risks to you as a holder of the Notes.

The second posting summarizes the discussion of E*Trade’s HELOC and Mortgage Debt from the transcript of last Friday’s Annual Shareholder Meeting. This information is an update from the April 17^th Quarterly report on the performance of E*Trades Mortgage Portfolio. This posting came under the heading, “One bit of commentary …” (By Blog Author: prescient11).

The content is as follows:

Although no blockbuster news came out of the shareholder meeting, what did come out is the fact that they again are affirming the $1B-$1.5B loss estimates on the HELOC portfolio. Further, they again affirmed that their current loss reserves of over $500M are enough to cover at least 4Qs of chargeoffs in the HELOC portfolio. They have already charged off $300M approximately. Thus, if $1B is correct regarding HELOC losses they only have $200M left to reserve for and if the $1.5B is more accurate, then they have only $700M left to reserve for. They are not expecting any serious amount of chargeoffs in any other portfolios, and apart from the first lien portfolio, their institutional holdings are doing fine. Thus, this is simply a question of when, not if Etrade will return to normal.

In other words, it's a waiting game. Once all these bad loans are washed through the system, what are we left with, but a brokerage that is second to none and makes great profits, and an institutional side of the business that will earn great returns as well.

Moreover, look at Etrade's capital position. They were at $700M by the end of 1Q. Mr. Layton stated that they still had $500M in asset sales planned in the near future, most in this Q. Their goal is to get to $1B of excess cash. Thus, they will have $200M JUST FROM ASSET sales left to do whatever they need to do. They just sold the Indian assets for $150M. They are only $150M from their goal of excess cash in the $1B range. The year end goal is for a risk-based capital ratio of 13%, which is better than any bank I can think of. Because they no longer originate loans or buy them wholesale, increased customer cash deposits through the year, and the loans running off, they will smash that goal of 13% risk-based cap ratio. Put in perspective, JPM has a 12.4% ratio.

Not only that, but they will be reducing debt as much as possible. $700M in debt reduction at the parent is planned this year. $450M will be retired for 25M shares, i.e. at $18/share. They have already reduced the debt by $100M. Thus, only $150M in debt reduction is left for the year and the $550M was accomplished through minimal dilution, especially considering the severely reduced and manipulated share price.

Disclosure: Cindy Reed holds a long position in ETFC

Comments

[krisspcritter]

Excellent job Cindy Reed ! Great consolidation and summarization of the pertinent points and the big fat surprise that will soon be unleashed on a sleepy and dour Wall Street. Witnessing a 100 million shorts scrambling for the exits like Wu-Tang Clan at a Celine Dion concert will be priceless!

Long and Strong.....

[lucky lenny]

Nice analysis - I also thought the negative press about the registering of securities was a joke - just like Cindy says - it's a formality - doesn't mean anyhting good or bad.

[Daneric40]

Excellent work Cindy. Not sure though if the forces at hand working to bring down etrade can be entirely overcome.

The problem is customers/potential cutomers perception of the corporation. The stock price largely determines this perception. It is of course heavily manipulated.

And I do not trust Citadel. They care not one iota about the average shareholder or the business. They will of course go where they think they can make the most money out of the deal. If they think Etrade is terminally damaged and cutting them loose is the best option, they will do just that and there will be few if any "tea leaves" to read for that to happen. But please keep reading them!

That is the tremendous risk we longs take with this stock. Time is ticking and Team Layton knows it. They have done yeoman work to save ETrade and are betting on next quarter's financial #s to be "above expectations". Once that happens and more confidence is restored, then the price will climb and shorts will start to cover.

It all hinges on next quarter's numbers. Everyone understands that. Unfortunately Wall Street pricks like to set corporations like Etrade up for the fall and set unrealistic expectations and then watch the corporation fall short (like the first quarter). They are of course in cahoots with the heavy shorters and driving the train at the moment.

The core business is what will make or break Etrade. I love their platform and that is what I am gambling on. That and that baby commercial!

I see however a long, drawn out summer with this stock. I do see it heading to $3.59ish unless something just pops out that cannot be ignored (like unbelievable May numbers - which I do not think will happen). It will then crawl back toward $4+ in anticipation of the quarterly report. Then the report will come out and we will see which side will win in this game. And yes it is a game to these sharks.

It can break either way. If it heads bad, look for Citadel and the forces of evil to overcome and to pull the plug. If it heads good, look to make a LOT of $$$.

I say we have around a 50/50 chance right now of losing everything with this stock (and I'm not talking buyout parachute either - talking the big "B" word). Mainly that is because the economy is going to get toasted this summer (inflation) and stock market is going to crash to new lows that you haven't seen since a long time. That alone will bring Etrade down with it (and a lot of other companies to boot).

Beware of the summer of doom. The shorts and sharks are long on many a company right now and Wall Street is behind it all. Just understand this: If Wall Street can't make money on a bull market, you are seeing a viscouness never before seen with them making money on the bear market. And they have bet heavily on the bear market and The FED is in bed with them.

[theblindtibetan]

Good information. Thank you

[rossetti2000]

Thanks, Cindy for bringing balance to Etrade's turnaround saga. The effort to right Etrade's ship in a sea of $135.00 a barrel oil, a housing recession, and a looming threat of brisk inflation will not be an easy job for Donaly Layton. However,presently, Mr. Layton has risen to the occasion by increasing reserves, divesting of non-core assets for cash, dampening, and deftly dealing with corporate debt.

In an attempt to understand where Mr. Layton is sailing Etrade's ship, one can wade through 8Ks, 10Ks, and other SEC filings and still not come to a substantial understanding of just where Etrade will be in the future, but lots of diligence and common sense does point to a bright future for Etrade, its customers and investors.

Perhaps Prescient11 has said it best:

"In other words, it's a waiting game. Once all these bad loans are washed through the system, what are we left with, [is] a brokerage that is second to none and makes great profits, and an institutional side of the business that will earn great returns as well."

We all have to hold on to the thought that every financial institution will have the same general economic ride through the current economic miasma and the pending US economy. However, Donald Layton has the "jump" on like financial institutions, and being smaller in size and more technically oriented, in this economy, is a good thing.

Etrade is closer to seeing the light at the end of this disasterous US economic tunnel, and the road to prosperity, than most institutions. As each financial reporting quarter passes for Etrade, those who are investing their dollars in Etrade, today, should see a great return on investment within one to two years, and a handsome return on investment by year's end.

Once again, thank you, Cindy, for your interest in bringing balance to the heavily negative analyses that everyone is privvy to in the press, on cable and on the Internet. You have done Etrade, its customers, and its investors a wonderful service, and I hope to be reading your analyses more often.

[Educated Investor]

This is good insight. And the press has problems, every time there is a mortgage company going downward the press like to link E*Trade with the demise and yet we can see that just this may E*Trades mortgage portfolio performance was doing fine.

[Educated Investor]

E*Trade is out of the mortgage business and full steam ahead with their brokerage business.

[Educated Investor]

What a great deal the debt swap is announced today. $16 million divided by 3.53 million shares is a per share price of $4.53. Those creditors that made the swap know the value of E*Trade is way above $4.50!

[Daneric40]

I predicted last Friday a "good news" announcement sandwiched between the Shareholder's meeting and the heavy trading on Monday that drove the stock down. Layton is skillfully playing their cards very skillfully.

The key to saving Etrade is managing the media like any other business would do with sharks all around. And it is a game. Layton has other tricks up his sleeve. I believe he can pull this off.

One good sign: They definately are not asleep at the wheel over there.


The other media announcement about changing their rules is just as imprtant: Directors can be, in effect, "fired" by the shareholders. That alone is worth a % or 2 in stock price.

[Zeninvestor]

Yep, right on target. All this hysteria about the 'authorized stock' and the Citadel registration is just that, and recent DARTS, and the continued account acquisition by ETFC makes this a good buy.

The new management team seems to have addressed every outstanding issue, and is making progress on all fronts. Every new executive or director has been an 'upgrade' to the person who left, and a 'plan' appears to emerging to reward the shareholders.

Great article!

[jbmaria]

Cindy you're either in collusion with or being used by the ETFC pumpers.You're aware that both the posters from yahoo you quote spend 24/7 pumping their alleged investment????

But let's put that aside for the moment and consider from where ETFC will get its future growth given the following;

ETFC is selling off assets that presumably contributed to profits.

ETFC has stopped originating mortgages,once their best source of profits until they went sour.

Trading volumes may be marginally better but certainly not enough to goose earnings to any measurable degree.And now with the biz model essentially the same as AMTD,organic growth seems to be shackled.

And just consider if the old commission price wars start up again.The long predicted $5 commission would crunch ETFC earnings,hurt AMTD and frankly barely be felt by SCHW and Fidelity who have massive asset management biz that make the portion of their profits coming from commissions seem small and impervious to cutthroat price slashing.If Chuck and Fidelity want to kick ETFC when they're down,now would be the time.
Can you say competitive disadvantage boys and girls?

[jbmaria]

'This compilation of “informed opinions”* covers two important areas of research and insight. These two opinions have been extracted from the blog postings of individuals who strive for accuracy, thoroughly study transcripts and SEC filings, and then provide informed background and opinions. I obtained permission from the authors for posting their information here on Seeking Alpha."

Tell the truth Cindy?
You were contacted by someone from the yahoo MB who suggested you publish this gibberish since it promotes a position held by all of you.They admit this on the yahoo board,they don't even try to hide it.

"These two opinions have been extracted from the blog postings of individuals who strive for accuracy, thoroughly study transcripts and SEC filings, and then provide informed background and opinions.'

Just how do you know that Cindy.That comment implies you have read all their drivel and fact checked it for accuracy.No chance you checked it for logic.
Shame on you Cindy,admit your fraud.

[jbmaria]

Enter your comment here

And here's a link to your sordid little cabal gloating at putting one over on the investing public at SA.

messages.finance.yahoo...

Here's my favorite bit like no one could ever pick up on your scam,a gang that couldn't shoot straight:

e: Seeking Alpha Article by Cindy Reed (AKA savyinvestor11) 22-May-08 08:41 am
Conservative comments on Seeking Alpha. I read a few of the comments. Be careful not to speak about me, but to speak about the vaule and issues of ETFC. We will all sound like a "message board gang of bullish longs" (which is kinda what we are) if we don't keep our comments as factual and ETFC focused as possible.
Rating :
(1 Rating)
Rate it:

savyinvesto...

[prescient11]

JBMaria, instead of your ridiculous crusade against Etrade, why don't you enlighten us as to an inaccuracies from my quoted insert above. Please, stop embarassing yourself. I did not submit material to Ms. Reed, I simply made several succinct, factual points that are entirely accurate.

So, without further delay, why don't you try to refute on statement of fact from my quoted post.

Of course, because you cannot. Please, stop it with your ridiculously one-sided tirades and false accusations. Thank you.

Of course, if anyone cares to see who is correct on this subject, see a Seeking Alpha article by Mr. Richard Shinnick and my refutations of the same. JBMaria staunchly supported Mr. Shinnick's article. I'll leave you to review the last Q's numbers to figure out who was correct, Shinnick and JBMaria, or myself and other ETFC longs.

Further, Mr. Shinnick did not disclose that he was short financials in general in that article. That was in bad form.

[dig4gem]

ON JBMARIA/Shinnick's negative campaign:

Even worse. Not only that s/he is the one who writes 24/7 negatively on E*Trade in such venues like Yahoo stock message board, but strangely always positively at the same time on E*Trade's competitors, 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]

Pres is,as usual,wrong. Shinnick clearly states he was long ETFC at the time of writing.He was also long BAC at that time if I recall the dialogue correctly.
Here is the article;

seekingalpha.com/artic...

Please read it,I still believe it was a fine piece of analysis that rings true months later. Read all the comments and decide for yourselves who's telling the truth as it was known at that time.FYI,in a later article,Shinnick admitted he dumped his ETFC for a small profit which as best as I could calculate was around $5.

[prescient11]

JBMaria, as you clearly read what I had to say and responded directly to a bit of it, we are all still waiting for a refutation of the facts I have laid out in Ms. Reed's article.

Further, as to Mr. Shinnick, I understand that he disclosed an alleged "long" position in ETFC in the article. What he did not disclose, in that article, is that he was ultrashort overall financials through an ETF, which was disclosed in a different article by him around the same date.

seekingalpha.com/artic...

That, quite frankly is in bad form. Almost as bad as his ridiculous lack of due diligence and any research. Again, readers are free to read that piece on Etrade by Mr. Shinnick and read the Q report, it is quite clear who did their diligence and research and who did not. Trying to explain it away by describing it as: "the truth as it was known at that time" is ridiculous. That dog won't hunt.

The truth can be known, you simply have to do the research first. Without putting a % figure on it, Mr. Shinnick's article was another soft hit piece stating that Etrade could be dangerously close to a capital ratio concern - when their risk-based capital ratio is better than every major bank that I know of.

I await your response to the actual facts I listed and discussed. As per usual, the silence is deafening.

[jbmaria]

dig4gem,
you don't deny pres and others colluded with Cindy to get press here to support their ETFC long position,do you?

All your ad hominem attacks have been answered on the ETFC board,go check.

[prescient11]

JBMaria,

Again, I can't believe you continue your libelous statements that there was any sort of collusion between anyone. I never asked for any of my posts to be placed in an article, I merely provided the facts to Ms. Reed and it was her choice to publish them. Apparently, she is comfortable with my writing and research.

If we are to be convicted of colluding to tell the truth, then find me guilty.

Again, we are still waiting for you to point out one little, simple inaccuracy regarding the facts that I stated above. Of course, we will wait forever, as every one of your posts are full of sound and fury, signifying nothing.

[rl]

jbmaria,

"But let's put that aside for the moment and consider from where ETFC will get its future growth given the following;

ETFC is selling off assets that presumably contributed to profits.

ETFC has stopped originating mortgages,once their best source of profits until they went sour.

Trading volumes may be marginally better but certainly not enough to goose earnings to any measurable degree.And now with the biz model essentially the same as AMTD,organic growth seems to be shackled. "

according to your argument, are we assuming people at etfc are robots without innovations? that they will no longer improve their business and just continue with the existing operation and never change? based on my experiance and i'm sure you can agree that it was etfc who was the leader of online trading (e*trade) and chuck's phone trading system was actually better then their online system back in the 80's. etfc will alway lead in innovation and create new business revenu as they did. i'm sure schwab and others will try the same, but i've not seen them lead yet.
selling assets are the same as selling the very stock you're holding (if any) you sell it to reinvest the cash else where, if you sell it at a lost to cover a potential margin call then it's bad but if you're selling it w/ profit to hold cash... isn't that what many investors are doing right now to minimize lost and wait for the storm to blow over?

etfc will still continue to profit from existing mortgages for a while and the existing profolio will only get better as time goes by.

there's nothing wrong with the existing business model and it's not the same as AMTD.... not to mention etfc didn't have an issue w/ system when vol was way up a few month ago.

"And just consider if the old commission price wars start up again.The long predicted $5 commission would crunch ETFC earnings,hurt AMTD and frankly barely be felt by SCHW and Fidelity who have massive asset management biz that make the portion of their profits coming from commissions seem small and impervious to cutthroat price slashing.If Chuck and Fidelity want to kick ETFC when they're down,now would be the time.
Can you say competitive disadvantage boys and girls? "

bring it on, etfc has minimal operational cost compares to old schwab and fidelity, the branches and the number of employees.... that's old school... what centry are we on again? competitive disadvantage grandpa and grandma? i'm sure old chuck is wise but it's lost its agility.

forget all the details, it is not difficult to see that even if amtd is as good as etfc, etfc's current stock price should be near amtd once the balancesheet get's cleaned up... and that's within a couple of years.

[dig4gem]

JBMARIA,

You are twisting again but no surprise for all of us that know what kind of poster you are.

This is the fact: savy/Reed came to visit our discussion board and noticed some very high quality posts and suggested to Numbersssss that his posts are of high quality and would be perhaps beneficial to the SeekingAlpha community to post there too. But Numbersssss, as first rate as he or she is, is also humble, merely stating that he or she does not want to publish his or her work else where other than in his chosen board under his preferred name "Numbersssss"... S/He also stated that s/he backs all his or her #s, facts, analysis, and conclusions, and are free to quote.

In Nubersssss' own words,

"YES, pls feel free to quote any of my posts --- NOW I'm feeling bad for not wanting to be a little less lazy -:) (A secondary reason for my decision is that I now prefer to write with this no-name handle, Numbersssss, for if I did get back to open fields I would prefer my real name and THAT might become a focus of attention divertion with people googling around and diluting discussion board(s) with my old news. Not that they were bad news, they were good...I was first a long-only institutional/mutual fund manager with a well-known firm for a number of years, in the process winning best of breed performance in my category, then my own long/short hedge fund, and I must be struck with even bigger luck, wisdom, hard working, or whatever else or maybe a combination of all, I did even better, extremely well, over 300% in my first year so soon after a little more time in that effort I decided to get lazy taking the early retirement by offending and returning all outside capital to my investors...Anyhow, THANKS for the great efforts and I enjoy all your articles!"

messages.finance.yahoo...
So,

Why don't you have none of any counter facts to what Numbersssss and prescient11 offered?

Where are your answers to my questions? Don't hide.

"Even worse. Not only that s/he is the one who writes 24/7 negatively on E*Trade in such venues like Yahoo stock message board, but strangely always positively at the same time on E*Trade's competitors, 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?"

[stealthflow15]

Great Commentary,

JBMARIA is well known to hate E*Trade as it lost him money in his long position from $28 to when he sold at $2.08. I am sorry for his bitterness now.

[Avenger]

This is like watching bulldogs play tennis.

[Wiseinvestor69]

A most interesting read. One must truly have an understanding of the mortgage business and the underwriting entities to analyze E*Trades' portfolio. Once this can be achieved, investing in the underlying company is much more palatable.

E*Trade has a class leading brand, internationally recognized platform and very loyal customer base. Most companies have none of these three. To have all of them is truly unique, especially trading near/at bankrupcy levels.

The exits will soon be filled with the millions of E*Trade shorts scrambling to cover their investment which at its core bet on collapsing the company.

[jbmaria]

Let's dispose of this twinkie first,he's the easiest:

"stealthflow15
May 22 04:51 PM
Great Commentary,

"JBMARIA is well known to hate E*Trade as it lost him money in his long position from $28 to when he sold at $2.08. I am sorry for his bitterness now.'

As you well know I sold my last big piece of ETFC on June 6,2007 at over $25 and posted the trade on that date and I've been mostly negative ever since on the equity.This follows 4 years of being a vocal strong supporter of ETFC on the MB .I've been both long and out of this stock,never short,but always interested in ETFC and the OLB sector.I'm known on the SCHW and AMTD board too.
Look it all up,it's all in the posts and crawl back in your hole.

[jbmaria]

rl wrote:

"bring it on, etfc has minimal operational cost compares to old schwab and fidelity, the branches and the number of employees.... that's old school... what centry are we on again? competitive disadvantage grandpa and grandma? i'm sure old chuck is wise but it's lost its agility.

forget all the details, it is not difficult to see that even if amtd is as good as etfc, etfc's current stock price should be near amtd once the balancesheet get's cleaned up... and that's within a couple of years. "

Gibberish,you are using old arguments especially when it come to SCHW.Since the days of Pottruck,Chuck has halved the head count while growing his asset base.And you forget ETFC must now pay its master Citadel over $200 million a year in interest on that loan while it continues to dilute the shares with debt for equity deals.That's a huge competitive disadvantage in my book.SCHW is debt free and AMTD has almost paid back what it borrowed to buy Waterhouse.
You lose!

[stealthflow15]

I guess your e-go is bigger than I thought. I had no idea you were an e-celebrity on the virtual message boards. You got a lot of street cred on the brokerage boards. my fault man.

ps. im not a twinkie.

[jbmaria]

Let's dispose of the biggest moron.

Prescient11
May 22 03:58 PM
JBMaria, as you clearly read what I had to say and responded directly to a bit of it, we are all still waiting for a refutation of the facts I have laid out in Ms. Reed's article.

Further, as to Mr. Shinnick, I understand that he disclosed an alleged "long" position in ETFC in the article. What he did not disclose, in that article, is that he was ultrashort overall financials through an ETF, which was disclosed in a different article by him around the same date.

seekingalpha.com/artic...
*******

I scanned your link and I don't see the reference to shinnick being short financials but that article was a week after the ETFC article in which you ignored Shinnick's clearly stated long position in ETFC.
You misstated facts as usual.
Case closed.

[jbmaria]

stealthflow15
May 22 05:53 PM
I guess your e-go is bigger than I thought. I had no idea you were an e-celebrity on the virtual message boards. You got a lot of street cred on the brokerage boards. my fault man.

ps. im not a twinkie.

I was being nice with the twinkie comment.Next time you make up lies about me try to make them more vague so I can't refute them as easily. Pres is very good at that,he'll give you lessons.

[prescient11]

JBMaria,

From the link, go to the bottom of his piece: "Disclosure: Long SKF"

Look up the ticker if you can't figure it out. And you still haven't refuted one fact I discussed, even though you have had ample time to do so. Case closed.

[rl]

jbmaria,

you can call me a twinkie and i won't have a problem, those cream fill yellow #6 preserves me well.

here's some numbers from yahoo schw competitors:
#emp on schw = 13,300 vs 3,867 on etfc, the rest of the number is too hard to disect, perhaps you can educate me on each of them so i don't sound too stupid on later posts.

can you calculate the cost per emp over the life time of the loan on etfc w/ cit? the buisness model of schw does not allow it to cut man power as flexible as etfc can and that will prob. out last the life of the loan etfc will have to pay interest on.

lets see if we can agreed on that etfc is currently at a disadventage due to its CURRENT debt situation, the horrible mortagage portfolio can still produce positive income the longer we wait it out, and etfc does have a better platform with good customer loyalty that are actively trading.

if you can agree with me on the above terms then we should enjoy a good growth on etfc for the near future?

buy them while they're cheap. isn't that what investment is about? or do you have convincing evidence that etfc will go belly up.

[jbmaria]

'From the link, go to the bottom of his piece: "Disclosure: Long SKF"


Yes and that's a week after the original article,I'd like to think I helped change his mind.So,your argument is useless and weak,you do not have any facts to state Shinnick was short financials when he wrote the ETFC piece,do you?

But let everyone read the original article and commentary and decide for themselves who's right or BSing.




Case completely closed.

[jbmaria]

Is this our helpless author crying out for help????

messages.finance.yahoo...

[Whisper On The Wind]

It might be bulldogs, but this really feels like a tennis match. I found myself saying, okay I'll sell! and then, okay, I'll get more! Back and forth, not sure who to believe. So I'm only going to hold what I have since it's not enough to hurt me, not enough to make me rich. If it goes up, I'll buy a little more. If it goes down... I'll probably still hold it.

[rl]

maria maria,

i decided to run the number on the emps.... lets just say $13 per hour avg. including benefits and everything else... that would be aprox. $27000 per year per emp.... 9000 x 27000 = 243,000,000.... WOW... that's just avg. of $27000 per year per emp.... not even $30,000.... may be if schw hire's people @ less then $13 per hour it would be better off then etfc...

[rl]

whisper,

buy when it drops and sell when it pops.... hold enough to make you rich... chances like this is too rare to miss.... and jbmaria is running out of ammos.....

[Long time Etrade Customer]

Great Article Ms Reed certainly some clarity on some complex and confusing issues regarding ETFC. I have a long position in the stock and options so I take any help I can get in evaluating the investment I have made and it future prospects. I have read both the authors on Yahoo ETFC message board many times and they are obviously quite dilligent and insightful, thank you. As for ensuing debate with JB Maria (if you could call that a debate) She/He should just go away they offer nothing to anyone, I would like to hear a true bear on ETFC as I am sure they could bring up valid negative points to debate instead of the bitter name calling JB Maria engages in. With 100 million shares shorted were are the true bears in this stock (maybe getting ready to run fast!)

[jbmaria]

rl

Your employee numbers are cute but if you want to really know how things are going at an OLB,I've learned from years of study that rev. per employee is a telling statistic and last Q ETFC's plummeted 43%,from the 10Q:

Revenue per
headcount $ 81,778 N.M. N.M. $ 143,876 (43)%

[Avenger]

Here's the thing about JB and the rest. JB is like the little devil that sits on your sholder whispering just enough truth to make you believe what it says. Where JB tends to fail is that she just posts broad information like articles that are on the financial markets, but never really about ETFC directly. That's why she's convincing, like Ms. Cleo she can look at the cards and spin it in a way you question investing in ETFC. But, Pre and Numbers and a few others on our board tend to discuss tangible ETFC specific information. I don't always agree with them, but they use information from specific E*Trade filings to make their case. That's pretty compelling stuff if you can sit through reading it all. JB, is all the time quoting articles that paint a bleak picture, sometimes even founded, on the markets, but when confronted with specific requests for how this will effect ETFC or for a rebuttal to a debate such as the one above, she flees not to be heard from until the next down day for the company where she'll dig up another broad article, post it's content, and end with the only sentence unique to her that typically reads something like "now I wonder what that could mean" or "what does this make you think of". If there ever has been a paid basher on stock message boards (and that seems ridiculous), JB encompasses the finest qualities in what such employers must look for. Vague, uses bits of truth, never admits fault, escapes when they must put up some facts. All they need to do is plant doubt. And as far as "being right". Well in this market if you put pieces of paper on a dart board and threw darts at them August of last year, any one you hit you could say today you were right about it going down.

Still waiting for you to counter the figures, the fundamentals, i.e. the facts in this article. Or is it time to run away to fight another day?

[Avenger]

Pieces of paper with financial companies names written on them I meant to say.

[OKMONEY]

If the emotion E*Trade evokes could be capitalized on ETFC's balance sheet as an intangible the PPS would rival Goog.

[prescient11]

JBMaria,

Not to beat a dead horse, but, you know... Here's a Shinnick piece where he says that he is long the SKF and short XLF in January 2008. The article disclosure is confusing but he clears it up in the comments below. Sorry, but you didn't convince him of anything. He should have disclosed his short positions on overall financials in his ETFC article, plain and simple.

seekingalpha.com/artic...

I'll wait for your apology. Still waiting for any rebuttal on the facts I stated in the body of the article. Oh yeah, there is none.

[Wolfie in SF]

I am long on ETFC and (ironically) I actually work for one of their competitors in the OLB industry in SF (go figure). I really appreciate all the facts and analysis that Pres, Numbersss, Quasi and a few others have been sharing on the MB. It is okay to disagree with them but I would appreciate supporting data if you want to challenge someone's opinions. I strongly believe that if you're looking for gradual and steady appreciation on your stocks, you might want to put your money in the SF company, but if you're a strong believer in ETFC and you're looking for a big potential reward in the next year or two for the risks you've taken, then you should think about putting your money in ETFC NOW when it's cheap...no hard feelings because everyone's investment objectives, horizon and risk tolerance should be quite different. Just don't forget all the risks/returns basic principles. The name calling on the MB is just really bad taste and the one-line negative comments without any supporting data are just a waste of my time. Best of luck to all the ETFC longs.

[rl]

jbmaria,

duh... etfc post lost last quarter, of course the rev per emp dropped... we were talking about the long term cost of operations for schw is higher then the limite interest etfc has to fork out. just go long and be happy..... of course, that wouldn't be as fun as to tease all these people online all day long.

[jbmaria]

going to post this on Cindy's boards as many asked me for more detailed reasons for my caution:


Jimmy Goodwin
May 23 02:36 PM
Up to now I've been against the vocal bulls of this E*Trade movement, but I must admit Cindy has finally come with some solid facts and logic here. "
*******
Ok,Jimmy,why don't you enumerate the "solid facts" that impress you so much. What I see is mostly wishful thinking and alleged progress toward targets.

Numbersssss is "wishing" for this to occur:

"So WHEN is the magic moment? Generally, it's when:

A) the company reports a profit after losses, or

B) the company's cash flows have improved so much that it finally can use its internal cash to pay down debt and/or buy back stocks, or

C) the company's analysts support business actions and trends with positive commentary.

If both A), B), and C) -- it's the most powerful combination in the marketplace."

*******
Well hell,if ETFC hits this trifecta,I get bullish too.
But where's the evidence any of this will occur?


Profits and massively improved cash flows in Q2???

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.
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 sha