Last week was another solid week of insider buying. Hopefully, the continued pace of insider buying is foretelling the future of the US/Global economy; many could use the holiday/2014 cheer. iStock's fingers are crossed for all of our readers looking for real work – good luck.
Luck doesn't seem to be necessary for this week's purchase. E*TRADE Financial Corporation (NASDAQ:ETFC) director Rodger Lawson has an enviable track record.
In case you don't know, E*TRADE is the one with the talking baby commercials. They are a financial services company that provides online brokerage, related products, and services primarily to individual retail investors under the E*TRADE Financial brand in the United States.
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The director has purchased shares of the financial services company three previous times during the past two-years, and each time, the price went up immediately afterwards. He's also had success buying UnitedHealth Group Inc. (NYSE:UNH) as an insider. As readers of our weekly insider article know, we love us some past performance.
A quick review of Lawson's purchase might help illustrate his successful investing past.
February 27, 2012 – Bought 1,313 Shares of ETFC at $9.51 (up 12.72% one year later)August 13, 2012 - Bought 7,528 Shares of ETFC at $8.45 (up 73% one year later)May 13, 2013 - Bought 4,479 Shares of ETFC at $11.16 (up 62.72% since)January 13, 2013 - Bought 2,000 Shares of UNH at $54.42 (up 35.89% since)August 19, 2013 - Bought 1,000 Shares of UNH at $71.64 (up 3.2% since)[Related -E TRADE Financial Corporation (ETFC): E*TRADE Put Options In Play As Shares Slide]
A ton of money managers that would love to have that sort of performance. Last week, the E*TRADE director bought 2,754 shares at $18.15 for a total investment of $49,994.70. The trade is so fresh that it hasn't made most newswire accounts, yet.
In iStock's view, the most important metric for discount brokerage firm is Daily av! erage revenue trades; otherwise known as DARTs. According to ETFC's most recent 10-Q, "DART volume increased 13% to 145,150 and 5% to 147,777 for the three and nine months ended September 30, 2013, respectively, compared to the same periods in 2012."
As you can see, the metric accelerated in the last three-months. As a result, "Trading and investing commissions increased 14% to $102.8 million and 6% to $309.8 million for the three and nine months ended September 30, 2013, respectively, compared to the same periods in 2012."
Not surprisingly, the company announced the following since it' last EPS report, "Daily Average Revenue Trades ("DARTs") for October were 159,703, a nine percent increase from September and a 29 percent increase from the year-ago period. The Company added 30,276 gross new brokerage accounts in October, ending the month with approximately 3.0 million brokerage accounts — an increase of 3,193 from September."
Our guess, educated, is that E*TRADE will release similar, maybe better numbers for November in the next few days. It's also likely the trend has continued through the early part of December, at least that's our connected dot theory.
Overall: Director, Rodger Lawson's history of getting it right with E*TRADE Financial Corporation (NASDAQ:ETFC), combined with accelerating DARTs makes ETFC a reasonable discount trade candidate.
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