Big bucks bullies bash TD Ameritrade

A pair of hedge funds is pushing TD Ameritrade Holding Corp. (NASDAQ: AMTD) to merge with one of its peers. Their rationale? Cost savings and increased sales. The AP reports that Jana Partners and SAC Capital Advisors, who combined own 8.4% of AMTD, are seeking to substantially increase their position -- driving AMTD up 9% after hours.

I envy the hedge funds' ability to put their mouth where their money is. I have all sorts of ideas I would love to see companies follow but I don't have their power to make them happen. If Jana and SAC are right that mergers will improve industry profitability then shareholders will benefit because the current stock market has not attracted enough individual trading volume to support three independent online brokers.

Jana and SAC accuse AMTD parent and 40% owner, The Toronto-Dominion Bank (TSE: TD), of blocking a merger with E Trade Financial Corp. (NASDAQ: ETFC) but TD says it only controls five of AMTD's 12 board seats. Jana and SAC think a merger could yield as much as $500 million in annual cost savings, from moves such as combining assets on one platform, and more than $100 million in yearly revenue benefits.

If Jana and SAC are right, TD, EFTC and The Charles Schwab Corp. (NYSE: SCHW) could be in play.

Peter Cohan is president of Peter S. Cohan & Associates, a management consulting and venture capital firm. He also teaches management at Babson College and edits The Cohan Letter. He has no financial interest in the securities mentioned in this post.