Pj568

E*Trade: A Solid, Deep Value Stock

The cash number has no meaning for any year so any change between years is also meaningless.

One possible approach - The FDIC report for June 30 shows E*Trade Bank with cash of 5.8B. They don't have unlimited access to this as E-Trade transactions with its Bank are restricted so how does their cash have any meaning except for banking operations.

One guess as to cash available would be to take total cash of 6.7B (10-Q) minus Bank cash 5.8 to arrive at 900M (although the parent would probably have some cash at the bank nor do we know what restricted cash is held at other banks). This answer may not even be close but I would think it more accurate than 6.7B

E-Trade could disclose if they wanted to be transparent as to the issue.

E*Trade: A Solid, Deep Value Stock

Customer deposits at 12/31/04 totaled 12B they're now 26B. Banks also borrow from the Fed so cash without debt and equity is meaningless.

Parent Co only cash at 12/31/08 was 183M.

E*Trade: A Solid, Deep Value Stock

Any discussion of cash is absurd since they're a bank. Citi has 535B of cash at June 30th but what does that mean.

E*Trade: A Solid, Deep Value Stock

A quick review - back in 06 (near peak) ETFC earned 1.50 with 400 mil shares outstanding sold for 25 , a pe of 17.

Today with the diluted 2.8B shares (greater by 7x) and keeping the same 17 pe earnings would be around 30cents if selling at 5 or 60cents if selling at 10. Therefore we're talking net income of 840M or 1.68B.

The most money TD Ameritrade (AMTD) ever made was 803M. So realistically how can ETFC get to even 5.

How E*Trade Is Trying to Survive in the TARP Era

With all the capital restructuring going on it makes me wonder if there is a future big hit on the horizon.

Does anyone know the tax area well enough to comment on whether they might be required to establish large tax valuation account to reduce the 1B in deferred tax assets now carried on the balance sheet?

Analysts Will Soon Upgrade E-Trade

Improved ratios come at a high cost.

So with the new share issued and with full conversion on the new convertible debt the number of shares increase from 600M to 2B.

Citadel now has around a 20% interest and after the new issue and conversion will have a 40-45% interest.

Big Debt and Big Returns Could Be Spurring This Rally

It will be difficult for any financial services company to return to prior levels just due to the change in basic fundamentals underway. Several have had to: issue additional stock, are decreasing their own leverage ratio's, decreasing leverage of their customers and eliminated dividends. That's a big load to overcome with their history of settling for ROA's of less than a percent.

E-Trade Financial Carries High Risk-Reward

Maybe some risk afterall. In looking at the June 30 statements, my calculation on a 50% writeoff of remaining Home Equity loans (around 3.8B on an after tax basis) would create a net equity deficit of 1.2B which would definitely create a need for additional equity.

Did the E*Trade Baby Pay Off?

Too many unknowns to be long at this point in time. Further loan losses and dilutive capital events are yet to unfold. I expect both will be substantial during the next 12 months. Companies are saying very little which at a minimum indicates they are unsure of what the future holds for them.

E*Trade: Hindsight with Binoculars

So now we know... Mr Analyst did it in the library with the pen.

Obviously ETFC made big mistakes, a few billion worth, and have been severely punished. Whether they're over or under valued remains to be seen. To their credit they didn't waste time in making major changes and have gained credibility by hiring Layton. Its difficult being too optimistic for them though since the size of their banking operations is far greater than the trading platform and loan portfolios continue to deteriorate. Maybe not as bad as others but there is still considerable exposure.

E*Trade Financial: Laying the Foundation for Success

Read the Feb 18th article by Shinnick.

Its basically negative. Then read all the comments which includes a very lively and knowledgeable discussion from both the proponents and opponents. Is all or some of the portfolio in trouble? Only time will tell but all issues seem to be addressed in the discussion. From my perspective, the issue is uncertain. Therefore I'm sticking to the sidelines.

Good luck to all.

E*Trade Financial: Laying the Foundation for Success

Forbes (not Fortune, sorry about that) article - 4th paragraph

www.forbes.com/2008/03...

E*Trade Financial: Laying the Foundation for Success

Just looked at the February 18th, Seeking Alpha, article by Richard Shinnick where he had answered all the loan quality questions. Not only the helocs but a large percentage of the whole 40B mortgage portfolio are in distressed market States and are stated income loans.

E*Trade Financial: Laying the Foundation for Success

One thing that should be asked is what makes ETFC's Helocs a better investment value than Thornburg's (TMA) Alt A Portfolio. TMA was regarded as a high credit quality operation, but we know what happened there. I have no answer but maybe someone does.

E*Trade Financial: Laying the Foundation for Success

Looks like book is going to catch up with market. In todays Fortune article Layton says to expect another 1.5B of write-downs.