E*Trade Redux

As I posted in my last post, the speculation about E*Trade’s mortgage portfolio was ridiculous and overblown. E*Trade confirmed my assumptions when they submitted their Supplemental Portfolio Disclosure [.pdf] to the SEC. The disclosure reiterates that they have minimal exposure to the subprime market, and a very high-quality mortgage portfolio.

At one point last week, E*Trade’s stock dipped down to $9.92 per share, below their $10 dollar book value. The stock now stands at $14.50, which is off of the $26.08 52-week high. In my opinion, the market was spooked by rumors, and there is no substantive reason the stock price should be depressed. At one point, there was message board postings that people were having a hard time withdrawing funds!

I’m predicting that the stock should recover to a fair valuation soon. Consequently, I think it is a great value play. Of course, I own E*Trade shares, so I guess I am biased.