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I am the founder of Blue Object Software, LLC with over twenty years of development and ten plus years of Program Management. I have designed and developed a wide range of software applications and tools for diverse companies ranging from small software start-ups to manufacturing, finance and... More
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Blue Object Software, LLC
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Counting Crowds
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  • ETFC Earnings On Tap Thursday

    Will be watching ETFC for revs and other key metrics... but note the Apr/May DARTS are historically low, expect the stock to have a nice run up to $11 again and then sell off a bit to $9 and then a screaming buy as we enter the "july effect" - where ETFC has out performed in July for 8-10 straight years due to turn around in DARTs and oversold conditions.

    This year might be different in that I am calling this the "facebook effect" where the retail investor might be adding new retail brokerage accounts.

    So, while this is an important quarter, it is much more so from a maintaining a position standpoint and making sure they are adding accounts and lowering costs and building out the platform, while we should see later a return of the retail investor via Facebook Effect. We've waited many years for the consolidation of the retail brokerages - lets see if this year will be the year that a company will have the non fed oversight to pull the trigger and go out and take e-trade out. Maybe a g-trade or an iTrade coming soon.. or maybe even a WalMart-Trade... Anyone could take this out and make it work. We'll see. It will not be anyone you have heard about before - trust me. It will be like a Best Buy stepping up to buy Napster kind of play. Total surprise but perfect timing this July if the suitor is smart.

    Disclosure: I am long ETFC.

    Apr 18 6:25 PM | Link | Comment!
  • Time to go long US Financials and Short Euro
    With the banks earnings almost all in, it looks like some have posted good gains on the bottom line but everyone was looking for top line revenue growth... But we did see some not so bad revenues from Morgan Stanley(NYSE:MS) and others and the (NYSEARCA:UYG) is actually looking like it broke out of a down-trend.  Heck, even Cramer is changing his tune about the banks, that we would not sell Citi (NYSE:C) in here or Bank of America (NYSE:BAC).  I think this group can go lower and re-test but I think the bottom we saw in October are in the banks.  Yes we are still worried about Europe but the worry and waiting will get old soon and the huge volatile swings we are seeing are going to fade as we will focus more on US-earnings and high divident paying stocks... That said, I think the banks are way over sold and yet the best way to play the worry is to just short the Euro in the form of (NYSEARCA:EUO).

    If you compare the UYG and the EUO you will see that we were failrly correlated up until August when we went through our debt down-grade crisis and never really recovered... Well, Europe is starting to go through their own debt downgrade process with the advent of Spain and it will be inevitable that they will have to see more downgrades.

    So, I think a good play is to start accumulating UYG at current levels, hopefully we get some lift and create a support above the current 50 day moving averages at around $41,  and also short the Euro via (EUO) at $18 right at its 50/200 day moving average and watch the Euro/Dollar play out and see if we go lower to 1.30 or even 1.20 before its all over, and stop loss out at 1.39 per this article.

    Oct 20 12:57 AM | Link | Comment!
  • E*TRADE - Now What
    There was a lot of good improvements made in net income, darts, loan loss provisions shrinking at a nice pace to only $98m. 

    The miss on revenues was disappointing almost Apple like (who missed on EPS).  The tax break from exiting Europe was good and I'm assuming the estimates factored that in and I'm still trying to understand the $55m set aside for an Auction Rate Security (NYSE:ARS) - I'm not sure what that is for and how that might play out to be a good bet for them next qtr. 

    All in all, I think it was a good qtr, I stand pat on my shares and I will sell some into a rally at $10.50 (resistance) and also do not see it going any lower than the previous low of $7.74.  The negatives include revenues and loan loss overhang, near zero interest rates over the next two years thanks for Bernake, and a lock-step financial market, however the positives still include a profitable company back on track, and consolidation will happen in brokerage, I think they will be taken out - just not sure when and what price.. Price targets may end up being lowered to $14 from $16. 

    The silver lining is that this seasonally is their worst quarter just reported so on the technical side, I'm looking for them to break out of the downtrend and form some support, while on the fundamental side, looking for them to capitalize on the new retirement planning and marketing and lets see if that translates into increasing customer accounts.  The other thing that I hope they do is somehow build more product features so they can separate themselves from competitors who also include non sec reporting firms like Fidelity, however it seems that volatility while bad for investors has been good for the brokers and I think they will start to trade differently from the banks. 

    The icing on the cake for anyone still holding is that a buyout is probably real in the next 6 to 12 months, hopefully before Superbowl, with loan loss provisions at a much more palatable level and pretty well known.  The other issue is that the Volker Rule may actually force banks to look at E*Trade as a way they can stay in the securities business but that is just a hunch at this point, I'm not experienced enough to know if that rule makes ETFC more attractive. 

    Lastly, I see a wide range of suitors out there still, the classic likes of Ameritrade or Schwab but now also expanding to Capital One who was interested before (might try again) and I would throw in Bank of America, Goldman, Google, Apple, Intuit, Walmart, or even Best Buy (lol, they purchased Napster, who knows).... I still think they are worth $10 billion and I almost forgot to mention that a lot of what happens short term will depend on Citadel and what they do and what comes out of the Goldman Sachs report.

    Short Term: HOLD, $10.50 trade, $14 target
    $7.74 - double bottom bounce, wait for new trading range to develop and see what happens with the banks. 
    BIAS: positive with the idea that the banks have bottomed, may retest, but I think the banks will be higher by year end, thus etfc should follow.
    Oct 19 9:59 PM | Link | Comment!
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