The economy is recovering and the stock market is picking up. It is
time for TD Ameritrade (AMTD) and Charles Schwab (SCHW) to grab
more market share. One acquisition target recently talked about is
E*Trade (ETFC).
E*Trade has been under pressure due to its mortgage business. The
stock is trading a little over $1.5 on Friday. Wall Street
investors piled in to short the stock since 2008, and according to
Nasdaq short interest report, ETFC has over 36% short interest as
of 8/28/09, the highest among the SP500. However, several positive
things are happening with this company for the moment. Its debt
conversion program was approved by shareholders, housing prices are
coming back slowly (a likely boost to its mortgage department), and
trading actiivity is picking up speed lately, which usually is a
good sign that its core business is in good shape.
Investors have been pushing AIG (AIG) and Citigroup (C) shares to
rally because of the housing stabilization. E*Trade has over 15%
market share based on the number of accounts. With E*Trade trading
at such a low price, it is a steal for competitors to grab if they
can. The rumors got one step closer to reality recently after CEO
Layton said on 8/19 that E*Trade has always been approached with
"vague ideas" from suitors regarding a potential deal, but the
company has nothing to report.
Having said that, it may not be up to E*Trade to resist if
shareholders' values are justified by a proper offer. For the long
term, E*Trade should be a winner.
Disclosure: Author is long SCHW
http://seekingalpha.com/article/158968-will-td-ameritrade-or…