(Adds closing share price)
NEW YORK, March 14 (Reuters) - Shares of E*Trade Financial Corp dropped 8.2 percent on Thursday on news that hedge fund Citadel LLC is dumping its stake in the bank and discount brokerage company.
Citadel was E*Trade's largest investor, holding 27.4 million shares, equal to 9.6 percent of the outstanding shares. Citadel said late on Wednesday that it was selling its stake in a secondary offering to Citigroup Inc. E*Trade will not receive any proceeds.
Shares of E*Trade, which closed Wednesday at $11.82, fell 97 cents on Thursday to close at $10.85.
In a report Thursday morning to clients titled "Bye Bye Baby-Citadel," a reference to E*Trade's "wise baby" advertisements, Compass Point Research & Trading analyst Michael Tarkan said investors were likely to "take some profits" during the day as E*Trade shares have risen 32 percent this year. He has a "neutral" rating on the stock. (Reporting by Jed Horowitz; editing by John Wallace and Matthew Lewis)