Run Away!

A week after buying into eTrade on news that they were liquidating an underperforming unit to address their solvency issues, I've dumped my shares on news that the company reported a significant loss, and issued a press release stating that "the current economic environment may impede our expectations to return to profitability from continuing operations this year."

I got out early, and preserved some of the gains I had made before the feeding frenzy began:


A 46.2% gain is probably nothing to be too upset about - but it is a 9% drop from yesterday's closing price, and I expect it will slide deeper as the day wears on.

This is the second time I've played eTrade this year. I bought in at $2.99 in January, then sold out at $4.21 in March when the company seemed resolved to let its subprime portfolio drag it down the tubes.

I tend to doubt I'll go back for a third helping ... but then, you never know.

Weekly Summary

This week, I'm back in the black by an appreciable margin, largely due to my recent investment in eTrade and the continued progress of Krispy Kreme:



While the beleaguered big-board stocks have been making sufficient gains, my "true" penny stocks are continuing to flounder, with Miva dancing at the edge of my tolerance for bad performance - but in the end, my losses and gains have largely balanced one another out, and I've yet to stumble across a multi-bagger this year.

E-Trade (Again)

Company:	E*Trade Financial Corporation
Web Site:	http://www.etrade.com
Purchase Price:	$2.46
Current Price:	Click Here

E*Trade is one of the pioneers of online securities trading, who took a significant loss (five billion) in the subprime lending crisis, which sent its stock price plummeting from over $25/share to almost $2/share over the course of several months.

I played this stock earlier this year, and made a pretty good profit on it before it started to sink again and I cashed in my chips. Today, the company announced the sale of its Canadian subsidiary for almost half a billion dollars, which should go a long way to improving their debt ratio, and I expect that the shares will start moving up again, so I'm buying back in.

As before, I'll keep a close eye on things, but I expect to make another win.

Weekly Summary

There have been a few changes in my portfolio this past week - for the better, mostly, and I'm generally pleased with its performance thus far:


Granted, much of the gain is due to GOGB, which is still trading in small quantities - but it's been going on for so long that I'm beginning to doubt whether it's one or two individuals goofing around with the stock price. All the same, it's not attracting many buyers, and volume remains unremarkable.

I also feel pretty smug about dumping E-Trade at $4.12 a share earlier this week - it's slipped further (closed at $3.74 today) and the cheery news has dried up. While none of the major analysts have downgraded it lately, that's bound to happen. I only wish I had smartened up a month ago, when it peeked over the $5 mark.

Out with ETFC

Today, I sold out of my position in E-trade. I bought into the company earlier this year, and my sense at the time was that it was headed for a turn-around ... and the stock rallied to over $5.00. But then, the new CEO made the statement that he had no intention of divesting the company of the subprime loans that are dragging the company down, and the price has been slipping ever since.

The stock regained some footing last week, with the swings in the market, but I no longer have much confidence that it will make a full recovery, so I've gotten out before it continues back along its downward trend.


In all, I've no complaints about the money I've made here - it's a very tidy profit, but I don't want to get caught holding the bag and hoping that the CEO gets over his insistence on hanging onto the "assets" that are dragging the company down.

E-Trade Slipping

E*Trade released its 2007 financial statements this week, and the portrait is more dismal than anyone seemed to expect: a 1.7 billion dollar loss for last year. The new CEO's remarks in a interview with forbes.com, that he would rather face the risk of the firm's home equity portfolio than sell it off (unless someone was going to offer "100 cents on the dollar to buy it") only exacerbated doubts about the continued viability of the firm.

And so, the company is going to continue to flounder, at least in the short run, and I fully expect my investment in it to slide slowly 9or perhaps quickly) into the red, possibly becoming just another tax write-off.

E*Trade Marks Progress on Turnaround Plan

In a press release dated February 11, E*Trade announced that ...

[The company] has signed an Asset Purchase Agreement to sell substantially all of the assets of RAA Wealth Management, LLC (RAA) to PHH Investments, Ltd (PHH). This transaction ... [is] anticipated to be completed within the next 90 days; as a result, the Company expects to generate approximately $80 million in proceeds.

... The Company is actively working to improve capital and liquidity. Management has identified non-core assets with high market demand that will create value for the franchise through the orderly sale of such assets. The Company has also streamlined certain corporate functions to reduce expenses and will allocate these savings, as planned, to growth initiatives for its core retail business.

The albatross around this company's neck, and that of many others, has been subprime lending - and unloading its mortgage receivables on another company, even at a loss, shores up the company's own portfolio and eliminates a drain on its resources. This is an excellent sign that they are actively implementing their turnaround plan, and the stock price has reflected their success.

Weekly Summary

There's something fishy going on with one of the stocks in my portfolio - GOGB looks like it's way up, but it's been low-volume trades, so I believe someone is gaming the market. I expect it will go back to normal soon. On the other hand, the increase for E*Trade (EFTC) is genuine.


Discounting the $1250 for GOGB, I'm still up about 10% for the year. Not bad for just over a month.

E*Trade Financial Announces Super Bowl Advertisments

E*Trade Financial Corporation today announced the Company will debut two thirty-second advertisements during Super Bowl XLII, a strategic investment that will gain the Company broad exposure to a captivated audience of financial services consumers. ... "With the boost in visibility from our Super Bowl advertisements ... we will demonstrate that we remain completely committed to our core retail business and to our customers," said Nicholas Utton, Chief Marketing Officer.

Frankly, I'm appalled.

It used to be that blowing a significant amount of money on a Super Bowl ad was a sign of an up-and-coming company, and may young Internet firms launched themselves by betting on a single roll of the dice. E*Trade, however, is no young company - and instead of seeming bold, this move just seems desperate.

Said another way, the ship is sinking, and they've just spent a lot of time and money writing a new jingle. They really ought to be focusing their efforts on improving their capital structure (especially, escaping the burden of subprime loans that are weighing them down).

The fact that they're resorting to distraction tactics in a desperate attempt to remind us that they're still in business is a very bad sign. The fact that the don't realize that their investors will see right through this is even worse.

ETrade (ETFC)

Company:	E*Trade Financial Corporation
Web Site:	http://www.etrade.com
Purchase Price:	$2.99
Current Price:	Click Here

E*Trade is one of the pioneers of online securities trading, who took a significant loss (five billion) in the subprime lending crisis, which sent its stock price plummeting from over $25/share to almost $2/share over the course of several months.

I've been watching the company since its price plummeted in November and have been hesitant to invest, but its recent signs of recovery (most notably, the restructuring of its capital reserves by reducing its holdings in mortgage-backed securities) have been encouraging.

And so, I've bought a couple hundred shares, and expect to make a satisfactory return within the next six to twelve months.