quasimatter

Why the E*Trade Shorts Have It Wrong

Open letter to E*Trade CEO/Execs/BoardOfDirec... from a concerned share-holder.
======================...

Respected Sirs/Madams,

The increase in short interest over last two week
provides further solid evidence that the stock
price is being depressed for May 16th authorization
of 600M shares which could potentially be followed
by debt for equity swap at the depressed prices.

If company management agrees to debt for equity
prices at the obviously depressed prices with clear
evidence that it was manipulated down by shorts
(a huge percentage of last two weeks "supply"
of shares was short sales); that would prove
beyond doubt that E*Trade Management is working
as an accomplice in a plan to defraud E*Trade
shareholders and letting other parties buy E*Trade
on cheap.

Given the strengthening balance sheet,
increasing revenues and customer base,
and reducing mortgage losses as evidenced
by last quarter's conference call; there is
NO IMMEDIATE need to reduce debt by equity
swaps.

At this point, I suspect that people shorting
this stock are the same people who are going
to acquire shares in debt to equity swaps
and are not concerned about having to "cover"
their shorts. By rewarding them with stock
at cheap prices, the CEO would essentially
be participating in such plan and violating
fiduciary duty towards share-holders.

I would like to plead the CEO and E*Trade
management/BOD in this open
letter NOT to approve ANYMORE debt for
equity swaps in near future until the stock
price has stabilized at a normal level.

- Quasi

P.S.: This is going to various forums,
Investor relations at E*Trade (previous
emails to them have gone unanswered) and
SEC both as an open letter to CEO and a
possible "pre-warning" about a crime about
to be committed.

E*Trade: Hindsight with Binoculars

Open letter to E*Trade CEO/Execs/BoardOfDirec... from a concerned share-holder.
======================...
Respected Sirs/Madams,

The increase in short interest over last two week
provides further solid evidence that the stock
price is being depressed for May 16th authorization
of 600M shares which could potentially be followed
by debt for equity swap at the depressed prices.

If company management agrees to debt for equity
prices at the obviously depressed prices with clear
evidence that it was manipulated down by shorts
(a huge percentage of last two weeks "supply"
of shares was short sales); that would prove
beyond doubt that E*Trade Management is working
as an accomplice in a plan to defraud E*Trade
shareholders and letting other parties buy E*Trade
on cheap.

Given the strengthening balance sheet,
increasing revenues and customer base,
and reducing mortgage losses as evidenced
by last quarter's conference call; there is
NO IMMEDIATE need to reduce debt by equity
swaps.

At this point, I suspect that people shorting
this stock are the same people who are going
to acquire shares in debt to equity swaps
and are not concerned about having to "cover"
their shorts. By rewarding them with stock
at cheap prices, the CEO would essentially
be participating in such plan and violating
fiduciary duty towards share-holders.

I would like to plead the CEO and E*Trade
management/BOD in this open
letter NOT to approve ANYMORE debt for
equity swaps in near future until the stock
price has stabilized at a normal level.

- Quasi

P.S.: This is going to various forums,
Investor relations at E*Trade (previous
emails to them have gone unanswered) and
SEC both as an open letter to CEO and a
possible "pre-warning" about a crime about
to be committed.

E*Trade's Annual Shareholder Meeting Should Pressure the Shorts

Open letter to E*Trade CEO/Execs/BoardOfDirec... from a concerned share-holder.
======================...

Respected Sirs/Madams,

The increase in short interest over last two week
provides further solid evidence that the stock
price is being depressed for May 16th authorization
of 600M shares which could potentially be followed
by debt for equity swap at the depressed prices.

If company management agrees to debt for equity
prices at the obviously depressed prices with clear
evidence that it was manipulated down by shorts
(a huge percentage of last two weeks "supply"
of shares was short sales); that would prove
beyond doubt that E*Trade Management is working
as an accomplice in a plan to defraud E*Trade
shareholders and letting other parties buy E*Trade
on cheap.

Given the strengthening balance sheet,
increasing revenues and customer base,
and reducing mortgage losses as evidenced
by last quarter's conference call; there is
NO IMMEDIATE need to reduce debt by equity
swaps.

At this point, I suspect that people shorting
this stock are the same people who are going
to acquire shares in debt to equity swaps
and are not concerned about having to "cover"
their shorts. By rewarding them with stock
at cheap prices, the CEO would essentially
be participating in such plan and violating
fiduciary duty towards share-holders.

I would like to plead the CEO and E*Trade
management/BOD in this open
letter NOT to approve ANYMORE debt for
equity swaps in near future until the stock
price has stabilized at a normal level.

- Quasi

P.S.: This is going to various forums,
Investor relations at E*Trade (previous
emails to them have gone unanswered) and
SEC both as an open letter to CEO and a
possible "pre-warning" about a crime about
to be committed.

E*Trade's Annual Shareholder Meeting Should Pressure the Shorts

JBMaria -- them exiting mortgage business is a HUGE good news.

E*Trade's Annual Shareholder Meeting Should Pressure the Shorts

Forgot to mention that if you are an investor in E*Trade come and
join fellow "retail" investors at ETradeInvestors group at yahoogroups.

finance.groups.yahoo.c.../

- Quasi

E*Trade's Annual Shareholder Meeting Should Pressure the Shorts

Honestly, the only risk to E*Trade now is an "inside job": I am
suspecting both Layton and Ken Griffin are executing a script
in which they will keep stock price close to $4 and then convert
all debt to equity at $5 range -- essentially stealing this company
for nothing while we all know that this company should be worth
a lot more. This may be one of the reasons the shorts are not worried about having to cover -- because they are going to get
stock to cover the short in a "debt for equity" swap.

Bunch of crooks if you ask me. I am super long and a loyal customer
and I HOPE I AM PROVEN WRONG. And my reason for posting this
is so the MANAGEMENT AND CITADEL know that we are watching
for any shenanigans.

- Quasi

Bank of America: Limited Downside Risk

LOL -- this is the weirdest article I have read. The author claims
to have sold the stock right after the announcement and then
has this statement below:
"Although I have no current position in BAC, I will jump back in if current levels hold. Weak hands have already been shaken out since the deal was announced."
Is it me or is he referring to himself as "weak hand"?? He WAS
the weak hand who sold after the deal was announced!

Read This Before Buying E*Trade

JBMaria,

Hats off to you -- 20,000 posts and you don't even have a position
in this stock? Looks like you do this full time.

Shinnick -- I have not seen you even once question any comment
or data reported by JBMaria and now I see a clear sense of "lovefest"
starting between you two with your following comment "Unfamiliar-I am not claiming to be an expert on E*Trade and you seem to have in depth knowledge." So now you are trying to put JBMaria on a
pedestal and build her credibility. This puts you squarely
in "manipulator" crowd (they always tend to gang up and never
question each others data/statements).

Why did you not question JBMaria's comment about 40Bil loan
portfolio Vs. 2B market cap? These two number are completely
unrelated. Loan portfolio is related to customer deposits and
if anything "cash reserves" is what one needs to look at not stock
price. But it is a very clever trick used by JBMaria to create a
fear as though 40B loan portfolio could wipe out 2B market cap
with losses. The fact is ETFC has nearly 200B in customer assets
and loan portfolio is just a part of it and these have NOTHING to do with market cap. The fact that you do not question such fear
mongering tactics and instead shower her with praise; shows that
you are out of your depth now and would like any support from any
one who can back you up.

Have you gone long on BAC already? Any chance BAC may be
trying to buy ETFC? You suspect the price of ETFC is being kept
down till the buy-out plays out? Are you part of that "scheme of
manipulation"?

Good luck to both of you -- I have said enough. Intelligent readers
can read through all this and decide for themselves. [Comment edited for abusive language. Commenter put on notice]

Read This Before Buying E*Trade

JBMaria,

I find it funny you call me or daffy "pumper elves". I maybe post at
most one article a day on Yahoo Message board (much less than
you). There are many real pumpers who keep posting one liners
entire day -- maybe you should reserve your titles for them
to retain some credibility.

I am simply a long who is just upset how Bhatia and big professional
players have screwed retail investors on ETrade.

Hats off to you on a perfect sale at the precise peak. If you are
not short on the stock and now have sold, why are you posting
so much on all forums? Out of pure kindness of your heart?
Thanks -- I appreciate your efforts to give us some advice.

Regarding Citadel -- you claim it was a BAD deal -- let us get
the facts, at the time Citadel went to E*Trade with offer, the
stock was at $3.57 with a market cap of $1.5B. Why would
someone pay $800M and loan another 2.1B in a company
which had a market cap of $1.5B for a 20% stake? Given the
fact that ETrade was forced into that deal by run on the
bank caused by Bhatia and naked short-selling which scared
some customers to pull some money out - it was not a bad deal.
(Of course, I wish it was better than that)

And yes, you are right -- other offers were definitely worse.
Idiots like Ameritrade other pursuers were probably going for
the kill or probably offered $5-6 per share which I believe
would have been much worse outcome for ETrade (All because
of Bhatia's comment??). I am glad it did not work. If any of
the buyers had any vision (balls?) they would have offered $8-10
per share which would have still been a great deal and they
would have gained technology and LOYAL customer base.

But no, they were ready for the kill and felt they could drive the
company to bankruptcy with Bhatia's help and naked shorting
and then pick up pieces for cheap!

Good luck JBMaria -- I hope you cover your shorts soon or
stop wasting your time here with fear-mongering with
no vested interest in the stock (as you claim).

Read This Before Buying E*Trade

Mr. Shinnick -- if you want to stay focused on loans and "analysis";
here it is. I wish you had done some analysis before the post.

Let us consider $11.9B HELOC portfolio - as that seems to be the
major cause for concern. About half is with CLTV over 80% -- so
that means about $6B is over CLTV of 80%.

If CLTV is 80% and price decline is 15% -- banks won't lose
anything. If CLTV is 95% and decline is 15%; banks will
lose 10% of their value. Let us assume average CLTV for
loans over 80% is 88% (assuming no loand over 95% CLTV).

Next we need to assess what is the price decline in those
properties AND what percentage of borrowers would choose to
walk away??

So we need three parameters to play around with
numbers:
1) What percentage will default?
2) What is the LTV (loan to value ratio at the time
of origination) on defaulted houses?
3) How much the real estate value has declined in those
market since loan origination.

Industry is stating 6-8% default rates right now -- let us
even assume 10% default rate (i.e., 1 in 10 homeowner
has defaulted and destroyed any chance of getting credit
in future). Note again -- if 1 out of 10 American is insolvent,
we would have much worse problem as a country so I believe
10% default rate is too excessive. The question is not what
how much properties have declined -- most owners will continue
to live there and service loan and hope the prices to go back
again instead of walking away from "dream" of owning a home for
a long time to come.

So once again, 10% of $6B is $600M. Let us again take a worst case
assumption that in those 10% defaulters ENTIRE amount is lost
(There may be some recovery in some cases -- i.e. where prices
have not declined more than 12%).

So under a very conservative analysis, I come up with 600M losses
on $6B HELOC portfolio. So yes, $1-1.5B projected losses are well
beyond reasonable.

Similar analysis can be done for other loan portfolios. The key being,
you have to decide what percentage of borrowers will walk away??
I believe 10% is way too much (except for sub-prime borrowers
who are running at 12-15% default -- but as we know ETrade does
NOT have subprime exposure).

So honestly, the ONLY WAY this company can go bankrupt is if
they are FORCED to sell their mortgage portfolio at a loss (as opposed to orderly servicing taking losses as they occur by
defaults). And they would be forced to sell IF customer withdraw
money from E*Trade Bank. And the only way customers will
withdraw money from E*Trade bank is by people like Bhatia
and yourself go screaming "run for your money" the bank is
going down. (Which was precisely the reason they were forced
to sell to Citadel!).

I hope someday people like Bhatia are prosecuted for deliberate
attempt to kill a company.

Anyway, I hope you are genuine enough to agree with the analysis
here -- and I hope your average reader will read all the way down
for some realistic analysis instead of fear-mongering statements
like "11.9B HELOC is in trouble".

If anything, I think ETrade suffers from too much disclosure on
their loan portfolio. Which other company (Citi/BOA) gives this
level of details and breakdowns about their loan portfolio?

Fortunately, there are people who can analyse the numbers
themselves and are not prone to fear-mongering (including
big institutions like Citi -- who has increased their holding of
ETrade by 600%).

Read This Before Buying E*Trade

Ha -- Mr. Shinnick, now you have support of Ms. JBMaria - a well
known ETFC basher. I would be scared to keep such associations.
Make sure you don't leave any trails if you talk to any hedge fund
managers or any "analysts" or any other media persons about a joint
effort to derail ETFC.

Let me ask you a question: Have you compared ETrade platform vs.
Ameritrade Vs. Schwab Vs. BOA Vs. Fidelity?? Then you can see why
any of these companies would like to pickup ETFC for pittance by
market manipulation. Not to mention that ETFC was coming after their banking business!

The point is -- how loud will all you people have to scream bankruptcy to make ETFC customers AND shareholder believe?
I think it is not working anymore! Tell everyone you know to
cover their shorts and try to find some other victim company.

Read This Before Buying E*Trade

Honestly, in my humble opinion, the name of the game was "Kill
E*Trade" (probably by some competitors of E*Trade or some hedge
funds with naked shorts in conjunction with media and analysts).
It would be interesting to see WHO built their short
positions while people like Cramer were screaming BUY at $15.
Next comes the attacks by Citi, BOA and ML (specially CITI
with screaming "fire" in crowded theater) -- in fact forcing the company to
the brink of bankruptcy by creating fear in
customer base. That was the plan -- to force bankruptcy and
then pick up pieces purely through analyst/media manipulations.
In the process they also forced a lot of retail investors to lose
tremendous amount of money. Note also that Citi itself BOUGHT
ETrade share (ownership up by 600% while their analyst
screamed bankruptcy).

That attempt at killing E*Trade failed. Total disaster on the
side on Citi/BOA. So then the name of the game became how
to cover the short positions (and whose short positions are these??)
without causing a run-up? So Citi comes with another "sell"
announcement early January and BOA follows with sell with $2 target.
Both these announcements were very ill-intentioned and timing of
those again smack of "manipulation" (and were obviously wrong as
proven now).

In summary, in my OPINION -- I suspect this was a master plan
to "screw" retail investors for the benefit of "professionals". And
by your article, in the best case, you either prove that you are
not as bright as you think you are -- or in the worst case,
you are part of the "manipulator" crowd.

At this point, the theory of manipulation is speculation; but I hope
someday SEC investigates links between various parties AND also
follows up on Naked shorts, FTD (Failure to Deliver) and enforce
reg sho list.

Manipulators should know that they are up against who are now
known as "E*Trade Marines". We have seen all the manipulation
(including media and analysts) and we are going to back this
company to ZERO or $25. I will wait for 3 more years and see
E*Trade buy Ameriturd for 1/10 the price it is today.

Many of us have lost too much money already to be afraid
of losing $5 more. Thanks for your attempt to whisper "fire"
in crowded theater! It did not work. Go look at the fundamentals,
listen to conference calls, go through the numbers with fine
tooth comb (as I have done and Precient has so eloquently
put above), listen to the facts, have some faith in our country.

This company would be dealing with it's mortgage issues in an
orderly fashion if not for Prashant Bhatia's irresponsible (and
maybe intentional) "run on the bank" comment.