Texas_bugsitter

The Worst Isn't Over Yet

Joel, you gave some observations from what retailers are doing to get business. I have noticed what some are doing to improve margins. Wal-mart used to offer larger size items (cheaper per oz, or cheaper per other unit) but no longer offer them. One must buy the smaller package at more cost per unit. I see similar action at Fry's Electronics. I used to buy soft plastic CD cases in a bulk package of 50. Now they only offer a much higher priced variety in smaller packages of 10 or less.

As for this rally, I read in Jim Wille's newsletter that this rally ws started by wallstreet brokers calling in shorts on Citi. And my son who works at a trading company somewhat confirmed this in that his company can no longer get Citi shares to short.
Seems to me that this is a set up to help some banks sell shares or make profits in selling shares they had taken positions in. I have read so many articles that say earnings will be terrible for the S&P500 and I think the recovery will be muted, too much debt, no HEW (home equity withdrawal). HEW has fallen from $228 a couple of years ago to only $9B in 2008 and added 5% to GDP. With home values down, 401Ks down, and job losses up I think consumer spending is going to trimmed significantly.

E*Trade: A Bet Worth Making

To: Dissenting Opinion

You need to read the 10K from Etrade as your comments on banking losses don't fit what is reported. See page 42. The losses by Etrade are mostly "provisions" for losses on loans that have not actually been declared losses yet. This provision at the end of 2008 was about $1.6B, of which about $1B was set aside in 2008.
Losses actually taken in 2008 in the banking segment appears to be only about $195M. The 10K also states that the loan loss provision is 114% greater than the loans currently considered delinquent.

Bad loans need to be delinquent for more than 90 days so the next quarter report will give us all a much better picture as it will reflect what has happened since the stock market crash and all the layoffs.

Reading Etrade's 10K I cannot understand how any analyst can conclude anything about Etrade's loan portfolio. They either have to have inside information not available to the average shareholder or they get info from some other source than Etrade.
(I have a very LOW opinion of Citicorp analysts as I have repeatedly seen them put sell ratings on things when the stock is already at a low, and many have gone up significantly after that...Many of their calls don't make sense to me so I just take it that Citi analysts to have a "stock manipulation" goal; or to trash the stock so their inside people can profit by having shorted it or by buying when it goes down...I wish the SEC would actually work for shareholders; but they are just at much trash as the Citi analysts)
I do agree things at Etrade could get worse but it appears to me that Etrade management is ahead of the curve compared to most financial institutions; as I mentioned earlier, their loan loss provision at the end of 2008 is 114% greater than their delinquent loan amount and they are well in compliance with their bank capital compliance ratio....

Countering the AP's 'E*Trade Financial Earnings Preview'

Cindy: I saw this post on yahoo board (Etrade )
And i am concerned that the low stock price is orchestrated to make a private buyout cheap to the acquirer; your thoughts please..

+++
am truly concerned about this possible scenario as I am LONG a significant amount of shares.

CONCERN:

Why would Layton intentionally take higher than necessary write-offs (for losses that won't occur for another year or more) which artificially suppresses the earnings per share and price per share while massive debt to equity swaps are occuring?

By simply delaying the date of these excess write-offs, Layton could increase the EPS and the PPS, which would result in significantly less dilution for shareholders when the debt to equity swaps occur.

I am not accusing Layton of having sinister intentions. However, these issues are never addressed in the conference calls. If his goal is to give E*Trade away at bargain prices, then his current course of action is proving highly successful.

By year end, his goal is to set aside enough cash that E*Trade never has to realize any more losses from its banking segment. But at the same time, he is suppressing the stock price and giving away a significant amount of shares through debt for equity swaps.

If E*Trade is to be taken private by the *Undisclosed Swap Holder*, then the *Undisclosed Swap Holder* would be purchasing a cash cow, money making machine at dirt cheap prices. At the same time, Layton is guaranteeing that the purchaser would have no future losses on the banking side. This is because all losses were taken in advanced of the acquisition with the purpose of artificially suppressing the share price and making the company cheaper to acquire.

Read that last sentence again, it has me very worried.


A SIDE NOTE:

Why increase the loan loss reserves significantly more than is called for? The additional cash just sits in the bank and doesn't earn nearly as much interest as what they are paying on their debt.

Instead, Layton should use the cash to pay down debt. A years worth of interest SAVINGS would go further towards covering loan losses than a years worth of interest earned on the cash set aside.

Metrics, Mortgages and Analysts

As an investor who does his own fundamental analysis and investigation, I don't see Cindy as a pumper, I see her writing much in tune with what I see in Etrade. There is risk, and the mortgage aspect of things is uncertain, but I believe in Sir John Templeton's investment philosophy that to find good investments you look where things are miserable. I see Etrade as one of the best choices in the midst of all the misery.

I appreciate Cindy's posts, and as for all of you who disagree, I am waiting for you to post your article presenting your opposing view.
Be sure to make it as readable as what Cindy writes.

Oh, and just so you can call me a blind believer in Etrade, I am long 46,000 shares at prices from $2.40 to 3.70. I am an investor, not expecting a quick buck. I plan on holding for two or more years if necessary as I believe the reward/risk ratio in Etrade is worth it.

In summary, I stand with Cindy, and I have put my money where my mouth (or is it keyboard) is!

S&P Upgrades E*Trade Despite Struggling Financial Sector Peers

One of John Templeton's sayings is to buy into misery...Find value in an area where everyone sees things as miserable. I see E-trade as the value in the financial mess.

I believe in "investing", not trading and am willing to wait several years if I buy into value.

Long 26,000 shares, 16 K at $2.40