Texas_bugsitter

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