E*Trade Attractive Again?
Source: http://feedproxy.google.com/~r/InvestmentU/~3/LIeC9iahmWY/etrade-attractive-again.htmlPosted on Monday, June 22nd, 2009 | In Contrarian Perspectives, Market Commentary
by The Investment U Research Team
Almost four months ago we discussed E*Trade Financial (Nasdaq: ETFC) and it’s forgotten brokerage profit center. In the month afterwards to April 17, E*Trade climbed an impressive 248%.
That price has fallen by almost 50% since – and it’s just one of the reasons why we’re looking at E*Trade again. The larger basis behind our attention to ETFC is the short interest.
In March the short interest was 13% with 70 million shares being shorted. Currently it stands at 16% with over 90 million shares shorted.
Ultimately, E*Trade’s issues come back to the amount of non-performing mortgage debt it has on its balance sheets, how much it can refinance and how those losses will affect the rest of its income.
In the meantime, they’ve been raising capital and issuing new stock.
Until Wall Street feels comfortable with these items, they’ll be cautious. That means smaller investors have the ability to take advantage of this emotional seesaw and profit from E*Trade’s gyrations.
Who knows if we’ll see another 250% gain. But if the stock price moves back to its April highs, it would represent a 100% gain from today’s price of $1.25. Not bad by any stretch for a short-term gain.
Symbols mentioned in this article: ETFC.
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