E*TRADE Almost Reverses Own Fortune (ETFC)

The analyst who upgraded E*TRADE Financial Corporation (NASDAQ: ETFC) at Citigroup is probably not feeling as confident as compared to about an hour ago.  Citi raised its rating to BUY from Hold and raised its target to $2.30 from $1.50.  This had shares marked up higher as per our “Volume Spike” alert service.  But then at 9:20 AM EST, a headline hit saying that E*TRADE had terminated its stockholder rights plan and filed for an ATM (at-the-market) program to issue common stock.  This is on the heels of the announced CEO departure last week.

E*TRADE entered into an equity distribution agreement with Sandler O’Neill + Partners, L.P. to offer and sell up to $150,000,000 of common stock through the ATM program from time to time. The online brokerage firm intends to use the proceeds to boost liquidity for the parent company and for working capital and general corporate purposes.

The sale is expected to take place in the open market when and where Sandler O’Neill decides is best.  Interestingly enough, the firm is able to buy shares as principal for its own account.

The stock had been up north of $1.80 before the news hit the tape.  Now shares are up ‘only’ 4.8% at $1.74 on right at 50 million shares.

JON C. OGG
SEPTEMBER 14, 2009