Author Topic: JEF - Jefferies Group  (Read 595186 times)

Spekulatius

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Re: JEF - Jefferies Group
« Reply #780 on: May 31, 2014, 08:59:05 AM »
Yes, LUK for me is an investment bank with some mostly mediocre business attached to it, trading at 1.1 x tangible book.

That is roughly the same multiple than GS is trading at, but GS has a lower PE and probably is a better franchise than Jeffries. I own a little GS and I think it is the better deal relative to LUK.
To be a realist, one has to believe in miracles.


bookie71

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Re: JEF - Jefferies Group
« Reply #781 on: May 31, 2014, 09:24:52 AM »
I had been in LUK for many years, but since the merger, I just didn't feel comfortable so I closed out my position.
Always remember, Pigs get fat and hogs get slaughtered.

jay21

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Re: JEF - Jefferies Group
« Reply #782 on: May 31, 2014, 10:05:58 AM »
Pretty much everything LUK owns is pretty cyclical. I can't think of one business that isn't. Cyclical businesses are up and down. It's no Berkshire. National Beef is down. Jefferies is down too (most investment banks are down, returning hardly 10% on equity). It would be best to read up on how to value cyclical businesses because that is what we have here ...plus a few new projects. Now what I want to understand is compensation in cyclical companies. It seems LUK is paying as if it assumes an average over the cycle because one can't justify such high compensation during the low parts and I think this is evidenced by the large block of 'no' votes for a compensation-related vote at the latest AGM.

This is close to how I see LUK.  A lot of these businesses can earn significantly more than what they currently are.

There are quite a few reasons why I got comfortable with LUK after the merger:

1. JEF bought back stock and debt during the rating agency situation
2. Knight Capital
3. Harbinger
4. All 3 above were lead by JEF people
5. JEF was instrumental in fortescue
6. Berkadia and Garcadia - they don't move the needle but were incredibly smart and are doing well. 
7. >$2b to deploy
@jay_21_

scorpioncapital

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Re: JEF - Jefferies Group
« Reply #783 on: May 31, 2014, 10:53:26 AM »
Now if I had only invested in BAM...5x the return of LUK over last 5 years and 4x over 10 years, all in similar fields, real estate, energy, asset management, resources.

matjone

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Re: JEF - Jefferies Group
« Reply #784 on: May 31, 2014, 12:08:51 PM »
I was looking the other day at these holding company stocks with good track records and seeing how you would have done buying at book, sitting for 10 yrs, and then selling at book. BAM was by far the best of the ones I looked at, but they all did relatively well.

The interesting thing to me is that you could put together a portfolio of these things today and most of them are reasonably close to BV.  I could just buy them and sit on them and feel safe, and incur zero costs doing so.  Maybe Gio has the right idea with this strategy.
When stocks are high, money rates rising, and business prosperous, at least half a given fund should be placed in short-term bonds. - Philip Carret

plato1976

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Re: JEF - Jefferies Group
« Reply #785 on: May 31, 2014, 03:36:08 PM »
Are we sure this down cycle of investment bank purely cyclical or somehow structural?

Pretty much everything LUK owns is pretty cyclical. I can't think of one business that isn't. Cyclical businesses are up and down. It's no Berkshire. National Beef is down. Jefferies is down too (most investment banks are down, returning hardly 10% on equity). It would be best to read up on how to value cyclical businesses because that is what we have here ...plus a few new projects. Now what I want to understand is compensation in cyclical companies. It seems LUK is paying as if it assumes an average over the cycle because one can't justify such high compensation during the low parts and I think this is evidenced by the large block of 'no' votes for a compensation-related vote at the latest AGM.

This is close to how I see LUK.  A lot of these businesses can earn significantly more than what they currently are.

There are quite a few reasons why I got comfortable with LUK after the merger:

1. JEF bought back stock and debt during the rating agency situation
2. Knight Capital
3. Harbinger
4. All 3 above were lead by JEF people
5. JEF was instrumental in fortescue
6. Berkadia and Garcadia - they don't move the needle but were incredibly smart and are doing well. 
7. >$2b to deploy

VersaillesinNY

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Re: JEF - Jefferies Group
« Reply #786 on: May 31, 2014, 05:58:20 PM »
I attended the Leucadia annual meeting a couple weeks ago. I didn't take many notes because I believed that the Brooklyn Investor (Blog) would post his. Pardon the poor quality of my recollections and comments. They should not be relied upon.

This yearís meeting took place at the Axa auditorium midtown Manhattan. Joe Steinberg, Richard Handler and Brian Friedman were on stage while the other Board members were sitting on the front row. Leucadia's primarily male Board of Directors finally includes one female and one Afro-American. Board diversity in corporate America is in progress.

Meeting slides

http://www.sec.gov/Archives/edgar/data/96223/000119312514195955/d728050dex99.htm

History

Joe Steinberg reminded us that the company was founded in 1854 in Connecticut as a factory selling to the U.S. Army. In 1979 Talcott National manufacturing business was sold when Ian and Joe took control. More on the topic:
http://www.fundinguniverse.com/company-histories/leucadia-national-corporation-history/

Leucadia is now a holding company with an entrepreneurial spirit.

Richard Handlerís comments

-   We like strategic partners, we have dry power. Every 3-5 years we face extreme dislocations on the market. We like to keep cash for opportunities.
-   We see opportunities on Oil & Gas projects. We now own 20.1% Harbinger with Joint Ventures such as Exco ressources.
-   JEF increased its ownership in Homefed to 65 %. There is a lot of value in real estate assets.
-   Berkadia now has 700 employees in India.
-   Garcadia: US sales of vehicles are as high as 2006.
-   Eventually interest rates will go up.
-   We are success fee oriented.

Brian Friedman's comments

-   We have a long term orientation not like private equity firms.

Q&A

-   Can you illuminate us on the Harbinger/ Phil Falcone deal?
Harbinger has a $ 14.82 NAV (slide 11) while we bought it at $ 9.
Spectrum Brand was created through debt.

-   Does political atmosphere favors exports of LNG?
We hope.

-   Would you consider share repurchases?
The Board authorized a $ 25 M share buyback. We will deploy capital depending on opportunities. We are all long term shareholders.

-   As Ian and Joe mentioned in the past, is Leucadia built for an inflation environment?
We have an hedge against inflation.
With current rates, fixed income is tuff.
There will be a period in time when we will get our cash back.

-   Leucadiaís Book Value has been flat for 4 years?
Richard Handler says that he is sorry for that but that they are trying their best through blood sweat and tears. Richard & Brian are also shareholders.

Although my truncated notes only give a superficial idea of the meeting. I feel that Richard & Brian make a talented duo mentored by Joe Steinberg. They seem frustrated with the current stock price but are patient value investors who will deploy cash at the right time and place. I might be wrong but Leucadia's best days lie ahead. 
« Last Edit: June 02, 2014, 09:11:19 AM by VersaillesinNY »

greenwave

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Re: JEF - Jefferies Group
« Reply #787 on: May 31, 2014, 08:09:10 PM »
I attended the Leucadia annual meeting a couple weeks ago. I didn't take many notes because I believed that the Brooklyn Investor (Blog) would post his. Pardon the poor quality of my recollections and comments. They should not be relied upon.

This yearís meeting took place at the Axa auditorium midtown Manhattan. Joe Steinberg, Richard Handler and Brian Friedman were on stage while the other Board members were sitting on the front row. Leucadia's primarily male Board of Directors finally includes one female and one Afro-American. Diversity in corporate America is in progress.

Meeting slides

http://www.sec.gov/Archives/edgar/data/96223/000119312514195955/d728050dex99.htm

History

Joe Steinberg reminded us that the company was founded in 1854 in Connecticut as a factory selling to the U.S. Army. In 1979 Talcott National manufacturing business was sold when Ian and Joe took control. More on the topic:
http://www.fundinguniverse.com/company-histories/leucadia-national-corporation-history/

Leucadia is now a holding company with an entrepreneur spirit.

Richard Handlerís comments

-   We like strategic partners, we have dry power. Every 3-5 years we face extreme dislocations on the market. We like to keep cash for opportunities.
-   We see opportunities on Oil & Gas projects. We now own 20.1% Harbinger with Joint Ventures such as Exco ressources.
-   JEF increased its ownership in Homefed to 65 %. There is a lot of value in real estate assets.
-   Berkadia now has 700 employees in India.
-   Garcadia: US sales of vehicles are as high as 2006.
-   Eventually interest rates will go up.
-   We are success fee oriented.

Brian Friedman's comments

-   We have a long term orientation not like private equity firms.

Q&A

-   Can you illuminate us on the Harbinger/ Phil Falcone deal?
Harbinger has a $ 14.82 NAV (slide 11) while we bought it at $ 9.
Spectrum Brand was created through debt.

-   Does political atmosphere favors exports of LNG?
We hope.

-   Would you consider share repurchases?
The Board authorized a $ 25 M share buyback. We will deploy capital depending on opportunities. We are all long term shareholders.

-   As Ian and Joe mentioned in the past, is Leucadia built for an inflation environment?
We have an hedge against inflation.
With current rates, fixed income is tuff.
There will be a period in time when we will get our cash back.

-   Leucadiaís Book Value has been flat for 4 years?
Richard Handler says that he is sorry for that but that they are trying their best through blood sweat and tears. Richard & Brian are also shareholders.

Although my truncated notes only give a superficial idea of the meeting. I feel that Richard & Brian make a talented duo mentored by Joe Steinberg. They seem frustrated with the current price of the stock but are patient value investor who will deploy cash at the right time and place. I might be wrong but Leucadia's best days lie ahead.
-----------
Thank you VersaillesinNY  for posting your meeting notes.

I share your view that significantly better days are ahead  for Leucadia over the longer term.

greenwave

Grenville

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Re: JEF - Jefferies Group
« Reply #788 on: June 02, 2014, 08:03:36 AM »
VersaillesinNY,

Thank you for posting your notes!

ajc

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Re: JEF - Jefferies Group
« Reply #789 on: June 02, 2014, 08:33:51 AM »
VersaillesinNY,

Thank you for posting your notes!

+1