ETFC Update - Raised $511M in cash
http://www.marketwatch.com/news/story/e-trade-selling-e-trade-canada-442/story.aspx?guid=%7B84774F70-F27A-4CD7-B3C9-592488010632%7D&dist=hplatest
They sold Canadian branch for $511M. They continue to show strength in their core business (stock trading) and have firmed up their cash position.
That has pushed up the shares in after hours and I think the stock will move back up as folks make the connection and realize that ETFC is not a problem child.
We have 1000 shares with a cash basis of $3.72 (paid $4.07 and wrote covered calls for $0.35). We sold the August $4 for $0.10. Our cost basis is now $3.62.
If >$4 in August, we net 11% in 4 1/2 months.
If <$4 in August, we'll write more covered calls.
We bought 1000 shares today at $2.47 and sold the Oct $3 calls for $0.50. With a cost basis of $1.97.
If >$3 in October, we net 51% in 3 months
If <$2 in October, we are at a loss
Given the news today, I think $4 by October is likely
They sold Canadian branch for $511M. They continue to show strength in their core business (stock trading) and have firmed up their cash position.
That has pushed up the shares in after hours and I think the stock will move back up as folks make the connection and realize that ETFC is not a problem child.
We have 1000 shares with a cash basis of $3.72 (paid $4.07 and wrote covered calls for $0.35). We sold the August $4 for $0.10. Our cost basis is now $3.62.
If >$4 in August, we net 11% in 4 1/2 months.
If <$4 in August, we'll write more covered calls.
We bought 1000 shares today at $2.47 and sold the Oct $3 calls for $0.50. With a cost basis of $1.97.
If >$3 in October, we net 51% in 3 months
If <$2 in October, we are at a loss
Given the news today, I think $4 by October is likely
posted by Andrew at
3:16 PM
2 Comments:
Could this signify that etrade is standing poor in cash positions? And this is just another desperate move to assure confidence.
Why wouldnt the fear driven market respond to this negatively?
ETFC does have a problem with HELOCs and they have been aggressively working to reduce it.
I look at this as their effort to return to basics: US stockmarket brokerage. They sold off their Korean arm a few months back and sellingthe Canadian arm makes sense.
To underscore their renewed focus on the brokerage business, it was announced that ETFC has been stealing business from Schwab and Ameritrade.
But they do have a problem. The difference is that they are moving to address it. They have been buying down their debt. They have accumulated $1B in cash and announced that their capitalization
was fine.
Yes, I know, a lot of banks have been saying that only to have problems. The difference is that ETFC is looking like one of the ones that could come out on top.
But the ability to get cash without dilution or extra debt is special.
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