jswede

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  • Citadel To Handle E*Trade's Lucrative Order Flow
    I agree with the first part, whiz, but I don't think Citadel is necessarily counting on ETFC. Through this deal, they are positioned incredibly if ETFC fails in a few years (20% equity stake - most of which was a gift thru the deal, $1.5bil loan which is senior to all other debt after the 2011 bonds mature, not to mention the ABS portfolio they stole).

    The order routing is something they want to bring into the fold alongside their (huge) CDS and derivatives trading businesses to become that i-bank of the future. IIRC, Citadel does (or has plans to) market their back-office expertise, capabilities and trading platforms, which all fits into that plan you mention.
    Dec 09 13:18 pm |Rating: 0 0 |Link to Comment |View article
  • Investment Lessons From Citadel's E*Trade Deal
    regarding Ken's comment on timing with the press... in THIS case, when no one really knows what they're holding and are looking around to others for answers, when everywhere the ABS/MBS holders turn there is no bid, no color - the only color is every last media outlet saying the same thing - in THIS case, he's right. and I'm sure that's what he meant.

    The ABS portfolio Ken bought for $.27 on the dollar is 58% AAA rated. He paid $.50 on the dollar for $1.35bil in AAA Prime Residential First Lien Securities (avg FICO 725), got the rest of the AAA and some AA for $.10-12 cents, and the remaining AA and BBB rated securities for ZERO cents on the dollar... Then issued a $1.5bil 12.5% 10yr note, and got about 18% equity stake, again, for FREE.

    I'd say he timed it just about right. He's looking at a 100% return on the ABS portfolio in worst case, imo, by just waiting this out.
    Dec 01 10:33 am |Rating: 0 0 |Link to Comment |View article

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