I went long EGRP @ 26 1/2 the friday before the FOMC. A technical bottom had been hit and market sentiment had returned to its previous bullish stance. However, I was not surprised at the 'dirty tactics' displayed by Lehman.
This move is not without precedence. Raymond James Financial also downgraded from buy to hold on 08/10/1999. If you perform a thorough due diligence, you'll see that RJF also downgraded from buy to hold on 10/06/1998. It took awhile, but I eventually found an RJF rec sent to clients on 1/14/99 recommending EGRP as a buy. This was never made a public announcement. As an exercise superimpose, these dates on an EGRP graph. It doesn't take a rocket scientist to see what is happening. They are downgrading at the stock's nadir, loading up, then they recommend to their clients at a later date. The Lehman downgrade, complete with its ambiguous wording, is no different.
EGRP remains as the premier on-line brokerage. They have an outstanding business model with great management. This sector has been ravaged recently, but stands to benefit immensely from the revived bullish outlook from the market. Customer base has only scratched the surface of its potential. As the market continues to accelerate, money and customers will pour in similar to the early days of mutual funds.
Those who have entered long at this technical bottom will greatly benefit. I suspect that over the next few weeks, not only will EGRP's performance be exceptional, but the analyst upgrades will also come as the brokerage houses will have already bought their shares. I suspect that a three month target touching old highs is well within reason. Good luck all!!! |
