Thursday, November 15, 2007

Paperstand (AMTD weighs ETFC bid; EBAY; Q)

The WSJ reports that in recent days E*Trade (ETFC) has received calls from various parties suggesting a cash infusion into E*Trade similar to the $2bn investment that Bank of America (BAC) recently made in Countrywide (CFC), which gave BofA a stake in the lender. At the same time, E*Trad CEO Mitch Caplan has been weighing the pros and cons of selling E*Trade to a rival. Ppl familiar with the matter say that Ameritrade (AMTD) is keeping a close eye on E*Trade, and that its board in recent weeks has talked about a possible bid.

The WSJ’s “Heard on the Street” column discusses banks and coming subprime hits. Expectations are growing that UBS (UBS) may face 4Q write-downs of as much as $7.1bn. Investors and analysts believe that Citigroup (C) may face more pain after announcing last week that it expected to take write-downs of $8-11bn in the 4Q. Today, Barclays (BCS) is expected to announce its own write-downs. While the bank has been dogged by rumors of a $10bn hit, analysts say they expect a write-down of $2.9-$3.1bn. A write-down of that amount would lessen investor fears. Additionally, no major departures are expected at the bank's Barclays Capital unit. Some banks that have recently reported write-downs, such as Merrill Lynch (MER), have put significantly lower values on holdings of some of these securities than others have. To be sure, not all CDOs are the same. But analysts say the comparisons suggest that banks such as UBS and Citi, if they mark down as much as Merrill, may have to recognize more losses.

Barron’s Online discusses eBay (EBAY), saying that with eBay's 20x multiple of forward earnings, there may be little to lose in betting that the growth businesses at the co, namely the PayPal and Skype, will surprise ppl's expectations. "EBay is getting a different kind of investor than they've traditionally had, investors who are looking at the stock now for growth at a reasonable price," observes Michael Shinnick, of 1st Source Monogram Long-Short Fund. That could mean that the stock, which is trading at around $33, could easily move to $45, or even the low $50s a share over the next 12 mo’s.

“Inside Scoop” section reports that three insiders have purchased 48K shares in Qwest Comm. (Q). "It's not a perfect buy signal, but it qualifies as significant by my criteria b/c they've increased their holdings by a large percent, and their past purchases have done well," says Jonathan Moreland, of Ladenburg Thalmann Asset Mgmt. "I think there is legitimate concern about the industry that they are playing in and the ability to get earnings going in the right direction again," he says. "I'm not willing to follow [these insiders] right here and now, I'd love to see more progress with [Qwest's] business plan and finances."

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