Nice link to report from GRIN (grass roots investor networks???) from Ragging Bull thread, note prior Ragging Bull post (#32738) has further details on H&Q 2/28 report
ragingbull.com
Research on EGRP from GRIN!!!
Etrade (EGRP) is one of the most fascinating stocks that I have seen in some time. As the premier growth story in the killer application for the internet (online brokerage), one would expect the stock to trade at stratospheric levels. That has not been the case however, at least not in the last year. Since volumes dropped off last summer and the company announced it was purchasing the largest online bank (Telebank), the company has seen its shares driven
down markedly.
What makes this even more unusual, is the fact that the company has been reporting phenomenal growth each quarter, with the numbers looking better and better by the quarter. The most recent quarterly report (which has led to another 30% decline) was better than even the most optimistic forecasts. While I am not a big proponent of Oliver Stone type theories, one can't help but notice that the big brokerages refuse to recommend it to their clients and that the short interest has been growing rapidly each month, even as the fundamental picture improves on a daily basis. I believe that this will result in an unprecedented
opportunity for the members of the Grass Roots Investor Network.
Below, I have discussed several points which are worth of note when looking at the EGRP opportunity. Before we get to that, I would like to say a few words about the short interest.
As of Feb. 15, the number of Etrade shares sold short had increased to about 32 Million. That?s almost 1/4 of the entire float and about 4X the average daily volume. As the volume on the exchanges ramps up at a surprising pace and Etrade continues to exhibit its marketing muscle, it appears that we have a couple of runaway trains about to collide. Either the short interest knows something the rest of us do not, there is a large scale conspiracy to prevent the shares of
EGRP from moving up (making it more difficult to make acquisitions) or there are going to be a lot of short sellers taking a serious beating.
The kind of move we have the potential for (with this level of short interest) is explosive to say the least (anyone remember the early moves made by Amazon pre,
pre split??). This type of short interest is a good thing for longs, because it represents pent up buying demand, as each of these shares must be purchased at some point. If the stock were to move up quickly, the scramble to cover these short positions would catapult the stock higher, exaggerating the moves it would have made on its own. If you have ever owned shares of a company involved in a ?short squeeze? you know what I am talking about, and it?s a great place to be.
Along those lines, longs might want to move their shares to their cash account and/or take physical delivery of the shares when the ?squeeze? begins. This causes a shortage of the stock and accentuates the squeeze. |
