Author Topic: JEF - Jefferies Group  (Read 595645 times)

plato1976

  • Hero Member
  • *****
  • Posts: 637
Re: JEF - Jefferies Group
« Reply #600 on: June 19, 2013, 09:54:52 AM »
What the estimation of the current book value per share and the tangible book value per share in Q2 ?
I was lucky to get out weeks ago - now feel this one may fall into value zone quickly

Any news on LUK lately?  Has come down to almost book value.

jefferies net profit dropped 34%. on another note; this is why i read this forum. been beating myself up for missing this ever since the p/b started running away.

guess i'll start building a position. i'm almost certain handler can give me 10+% a year at book value.

http://blogs.wsj.com/moneybeat/2013/06/18/jefferies-second-quarter-net-drops-34/?mod=yahoo_hs


Grenville

  • Lifetime Member
  • Hero Member
  • *****
  • Posts: 1042
Re: JEF - Jefferies Group
« Reply #601 on: June 19, 2013, 12:32:25 PM »
LUK reduces stake in INTL FCStone by 700K, now hold 918K shares (4.8%)

http://www.sec.gov/Archives/edgar/data/96223/000090951813000164/mm06-1913ifcstone_sc13da7.htm


muscleman

  • Hero Member
  • *****
  • Posts: 3176
Re: JEF - Jefferies Group
« Reply #602 on: June 19, 2013, 12:49:36 PM »
What the estimation of the current book value per share and the tangible book value per share in Q2 ?
I was lucky to get out weeks ago - now feel this one may fall into value zone quickly

Any news on LUK lately?  Has come down to almost book value.

jefferies net profit dropped 34%. on another note; this is why i read this forum. been beating myself up for missing this ever since the p/b started running away.

guess i'll start building a position. i'm almost certain handler can give me 10+% a year at book value.

http://blogs.wsj.com/moneybeat/2013/06/18/jefferies-second-quarter-net-drops-34/?mod=yahoo_hs

Do you want to wait until it reaches tangible book value? Companies like BAC currently already trade at tangible book, though I understand that the ROE of LUK may be higher than BAC.
Sorry to ask these newbie questions because I started to track LUK only recently. Is there any sum of parts valuation number?
I am muslceman. I have more muscle than brain!

scorpioncapital

  • Lifetime Member
  • Hero Member
  • *****
  • Posts: 1743
    • scorpion capital
Re: JEF - Jefferies Group
« Reply #603 on: June 19, 2013, 04:45:30 PM »
There is no doubt LUK is in the "recharging the elephant gun phase". It's ROE is pitiful at the moment. It is trading slightly below tangible book. It has sold and liquidated many of its public investments and owns a few large private businesses. Therefore, the thing to watch is what they are going to do with their resources in the next little while both at investing HQ and at Jefferies HQ. With 10 billion in equity, to achieve a 20% ROE which is what would lead to a 20% growth in book value, they must produce $2 billion per year of gains and/or income. They are nowhere close to that...I would say that the current "complex" can produce - in a stretch , no better than 1 billion per year, so the other billion must come from new investments.

jay21

  • Hero Member
  • *****
  • Posts: 1217
Re: JEF - Jefferies Group
« Reply #604 on: June 20, 2013, 05:26:10 AM »
Has anyone seen a compelling SOTP valuation analysis on LUK?  If so, could you please post it?  Thanks.
@jay_21_

racemize

  • Lifetime Member
  • Hero Member
  • *****
  • Posts: 2727
Re: JEF - Jefferies Group
« Reply #605 on: June 20, 2013, 05:38:14 AM »
Has anyone seen a compelling SOTP valuation analysis on LUK?  If so, could you please post it?  Thanks.

I'm not sure there would be an up-to-date one--LUK has a lot of asset churn, so in the past, you were buying the machine, not really the parts.  If you buy at near NAV, and they compound at anywhere close to historic rates, then you do very well.

I find it a bit more uncertain with the old guard leaving, so I haven't added.

muscleman

  • Hero Member
  • *****
  • Posts: 3176
Re: JEF - Jefferies Group
« Reply #606 on: June 20, 2013, 09:58:53 AM »
LUK's tangible book per share is around $21, according to the latest 10-Q.
BAC is already trading at tangible book value. Which one is better? Are we sure LUK can continue to compound at 20% per year after Handler takes over?
I am muslceman. I have more muscle than brain!

racemize

  • Lifetime Member
  • Hero Member
  • *****
  • Posts: 2727
Re: JEF - Jefferies Group
« Reply #607 on: June 20, 2013, 10:50:21 AM »
LUK's tangible book per share is around $21, according to the latest 10-Q.
BAC is already trading at tangible book value. Which one is better? Are we sure LUK can continue to compound at 20% per year after Handler takes over?

I don't think it is very easy to compare LUK and BAC directly, at least in this manner.  With BAC, the thesis is that underlying earning's power will emerge, e.g., at the 1.85 to 2.00 range, in the relatively near future, and with that the price should increase to 18-20 dollars correspondingly.  After that occurs, I think we will all have to think pretty hard about whether to keep holding it (probably compounding returns will drop down to 10% range?).  Some may hold until it gets to normalized environment for all banks, but some may drop out sooner.  Holding banks for very long periods seems to be a dangerous thing to do, since they all jump off a cliff every 10 or 20 years.  Thus, BAC is a return to average thesis, which is much shorter term than LUK. 

LUK, on the other hand, is a compounding machine, but it isn't based on earnings that much, or at least it wasn't in the past.  Now that they own all of Jefferies, it may be a bit different, and so I'm curious as to what it will be like (but do note that Jefferies was able to compound their book very well, even better than LUK in corresponding time periods).

Additionally, I would not estimate that LUK can compound at 20% per year going forward, though it may be possible.  Personally, I view lots of these compounders (e.g., BRK/FFH/MKL) as somewhere in the 12-15% compounding range, over long periods of time, if bought at the right prices.

muscleman

  • Hero Member
  • *****
  • Posts: 3176
Re: JEF - Jefferies Group
« Reply #608 on: June 20, 2013, 11:46:33 AM »
LUK's tangible book per share is around $21, according to the latest 10-Q.
BAC is already trading at tangible book value. Which one is better? Are we sure LUK can continue to compound at 20% per year after Handler takes over?

I don't think it is very easy to compare LUK and BAC directly, at least in this manner.  With BAC, the thesis is that underlying earning's power will emerge, e.g., at the 1.85 to 2.00 range, in the relatively near future, and with that the price should increase to 18-20 dollars correspondingly.  After that occurs, I think we will all have to think pretty hard about whether to keep holding it (probably compounding returns will drop down to 10% range?).  Some may hold until it gets to normalized environment for all banks, but some may drop out sooner.  Holding banks for very long periods seems to be a dangerous thing to do, since they all jump off a cliff every 10 or 20 years.  Thus, BAC is a return to average thesis, which is much shorter term than LUK. 

LUK, on the other hand, is a compounding machine, but it isn't based on earnings that much, or at least it wasn't in the past.  Now that they own all of Jefferies, it may be a bit different, and so I'm curious as to what it will be like (but do note that Jefferies was able to compound their book very well, even better than LUK in corresponding time periods).

Additionally, I would not estimate that LUK can compound at 20% per year going forward, though it may be possible.  Personally, I view lots of these compounders (e.g., BRK/FFH/MKL) as somewhere in the 12-15% compounding range, over long periods of time, if bought at the right prices.

If BAC can restore profitability and become a WFC type franchise, then it will be very good. Buffet holds WFC for very long term and did pretty well, though I like the shorter term thesis better.
What confuses me about LUK is where the synergy will come from. BRK/MKL/FFH have free insurance float to invest, but LUK does not have that.
I am muslceman. I have more muscle than brain!

racemize

  • Lifetime Member
  • Hero Member
  • *****
  • Posts: 2727
Re: JEF - Jefferies Group
« Reply #609 on: June 20, 2013, 12:02:17 PM »
If BAC can restore profitability and become a WFC type franchise, then it will be very good. Buffet holds WFC for very long term and did pretty well, though I like the shorter term thesis better.
What confuses me about LUK is where the synergy will come from. BRK/MKL/FFH have free insurance float to invest, but LUK does not have that.

That would certainly be ideal (re BAC), but I am still fairly cautious on indefinite holding periods for banks--of course, they tend to pay good dividends, over time, and if you bought at dirt-cheap prices, you are getting a lot of dividends off of your tax-free loan from the government, which might entice you to hold on forever, depending on what type of investor you are.

Re LUK's competitive advantage--they've just been really good at moving in and out of investments, in a value-oriented manner, so you have to trust their judgement to do things really, really well.  Since there's management changes, that makes the investment quite a bit different, hence the caution several of us have been talking about.  That being said, Jefferies should beable to eat up all those NOLs that they have, which is very nice and should give some nice returns.  (I guess the NOLs has been some of the secret sauce for LUK, similar to float, to answer your question).