Author Topic: JEF - Jefferies Group  (Read 538134 times)

Spekulatius

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Re: JEF - Jefferies Group
« Reply #1390 on: February 13, 2018, 03:23:24 PM »
The sale of National Beef should significantly juice reported book value.

LUK is carrying Beef at around $700M (BV) & the co did $500M in EBITDA.

LUK owns 79% of National Beef.

I think a sale is on the horizon.

Buying LUK today

But they also have $450-500M charge from deferred tax asset revaluation pending that is going to hit the book value.
To be a realist, one has to believe in miracles.


VersaillesinNY

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Re: JEF - Jefferies Group
« Reply #1391 on: February 26, 2018, 03:07:03 AM »
LUK letter 2017

https://www.leucadia.com/CMSFiles/Leucadia.com/files/c-p_letters/leucadia_2017_shareholders_letter.pdf

Quote
You should sit on a porch, watch the world go by and then if you see something succulent, jump on it.
Ian Cumming
« Last Edit: February 26, 2018, 03:09:31 AM by VersaillesinNY »

scorpioncapital

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Re: JEF - Jefferies Group
« Reply #1392 on: February 26, 2018, 03:24:51 AM »
LUk is a tricky beast. I read their letters. They use honey words. But their record is atrocious and has resulted in the burning of one's capital. I moved out of LUK almost 10 years ago and cannot ignore that the stock has gone nowhere - if not down, while my new portfolio (including a big chunk of Berkshire) is up over 100%.
I suspect the problem is a disconnect between good intentions but too much of a speculative streak, a bet on inflation, and investing in low quality cyclical businesses or businesses with 'headaches' such as investment banking. Still...their stubborn one-way bet on inflation - a kind of broken clock is right twice - may pay off shortly but missing such a long accumulation of value in stocks is expensive since even if stocks go down by half, they will still be above the purchase price of an investor who bought in a decade ago.
However it is really tempting to perhaps switch into LUK right about now, not because management is good or isn't going to make any more blunders, just the assets they hold have a tailwind :) However I always wonder if management is a liability which is going to make some freak stupid investment.






mcliu

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Re: JEF - Jefferies Group
« Reply #1393 on: February 26, 2018, 12:30:38 PM »
Is that what they're good at though? Judging from their history, the founders seem to have a talent for acquiring assets that make no sense at the time, but are extremely valuable 5 or 10 years later.. It seems like they're moving away from this model of betting on home-runs and opportunistically buying/selling to actually operating companies for the long-run.. In which case, you might see more steady increases in BV compared to the past..

petec

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Re: JEF - Jefferies Group
« Reply #1394 on: March 05, 2018, 10:41:29 AM »
LUk is a tricky beast. I read their letters. They use honey words. But their record is atrocious and has resulted in the burning of one's capital. I moved out of LUK almost 10 years ago and cannot ignore that the stock has gone nowhere - if not down, while my new portfolio (including a big chunk of Berkshire) is up over 100%.
I suspect the problem is a disconnect between good intentions but too much of a speculative streak, a bet on inflation, and investing in low quality cyclical businesses or businesses with 'headaches' such as investment banking. Still...their stubborn one-way bet on inflation - a kind of broken clock is right twice - may pay off shortly but missing such a long accumulation of value in stocks is expensive since even if stocks go down by half, they will still be above the purchase price of an investor who bought in a decade ago.
However it is really tempting to perhaps switch into LUK right about now, not because management is good or isn't going to make any more blunders, just the assets they hold have a tailwind :) However I always wonder if management is a liability which is going to make some freak stupid investment.

10 years ago this was trading on a tbv of 2x based on a brilliant track record. That's seldom a recipe for share price performance because all investment managers go through fallow patches.

Both management teams had superb records in the individual entities. That doesn't mean every decision was good but multidecade bvps growth says something.

Of course, pretty much every bit of the business was hugely challenged over the last 10 years. So management suddenly looked stupid and the shares derated. But in the background, management transformed the company. JEF isn't spectacular but it is generating reasonable profits and comes at a reasonable price. LAM is very early days but might (might)become the second anchor business - nice option if you don't have to pay for it. The portfolio is very different from what this management team were handed on day 1, and every major business in it is heading the right way and/or is being turned into cash. So is the NOL - remember how they were never going to earn enough profits to use it? Jefferies and National Beef would now beg to differ.

Given the dealflow they see at Jefferies, cash could be a very valuable asset. 

I kinda like it.

Ballinvarosig Investors

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Re: JEF - Jefferies Group
« Reply #1395 on: March 05, 2018, 01:55:52 PM »
LUk is a tricky beast. I read their letters. They use honey words. But their record is atrocious and has resulted in the burning of one's capital.
Book ten years ago was $11.22, the book value today is $28.37. Revenue was $1bn in 2008. Operating income alone in 2017 was $1bn. If that is atrocious, then please don't ever let me have you evaluating my performance.

scorpioncapital

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Re: JEF - Jefferies Group
« Reply #1396 on: March 05, 2018, 02:44:54 PM »
Yet the stock is down 50% while the S&P is up 100% for a divergence of 150%. BV doesn't always measure value that's why even Berkshire has started to add a market value/share growth in the columns each year. Imagine all you had to do was buy an index for a decade to not 'lose' half your money. Opportunity cost is expensive.


petec

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Re: JEF - Jefferies Group
« Reply #1397 on: March 06, 2018, 12:53:15 AM »
Yet the stock is down 50% while the S&P is up 100% for a divergence of 150%. BV doesn't always measure value that's why even Berkshire has started to add a market value/share growth in the columns each year. Imagine all you had to do was buy an index for a decade to not 'lose' half your money. Opportunity cost is expensive.

Yes but is it management's fault that p/bv went from 2 to 1? Or was the market overvaluing the stock in the first place? It's the market that destroyed value here IMHO. Reminds me of my all time favourite investing quote, from Scott McNealy, the then CEO of Sun Microsystems, in 2002:

"But two years ago we were selling at 10 times revenues when we were at $64. At 10 times revenues, to give you a 10-year payback, I have to pay you 100% of revenues for 10 straight years in dividends. That assumes I can get that by my shareholders. That assumes I have zero cost of goods sold, which is very hard for a computer company. That assumes zero expenses, which is really hard with 39,000 employees. That assumes I pay no taxes, which is very hard. And that assumes you pay no taxes on your dividends, which is kind of illegal. And that assumes that with zero R&D for the next 10 years, I can maintain the current revenue run rate. Now, having done that, would any of you like to buy my stock at $64? Do you realize how ridiculous those basic assumptions are? You donít need any transparency. You donít need any footnotes. What were you thinking?"   

ABM

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Re: JEF - Jefferies Group
« Reply #1398 on: March 06, 2018, 09:04:14 AM »
Definitely don't like the change in the comp plan for Friedman and Handler. 

Past 2 years, it was modeled generously to give them ~10% of the value creation per year if they hit targets.  2016 and 2017 were 100% RSU based with target payout of $50M per year combined based on 3Y TSR and ROTE.  Looks like in 2018 they are switching back to   
 cash/stock mix of 36%/64% per 10K.  2018 is $50M target but $18M cash  /$32M RSU. 

I already had issues with the level of incentive comp but thought alignment was strong so I looked passed it as they have to hold RSU for 3 full years after they vest or 6 yrs from grant date. Now things are changing a bit.   

woltac

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Re: JEF - Jefferies Group
« Reply #1399 on: March 07, 2018, 08:18:50 PM »
LUk is a tricky beast. I read their letters. They use honey words. But their record is atrocious and has resulted in the burning of one's capital.
Book ten years ago was $11.22, the book value today is $28.37. Revenue was $1bn in 2008. Operating income alone in 2017 was $1bn. If that is atrocious, then please don't ever let me have you evaluating my performance.

The favorable ten year performance you describe is not attributable to current management.  Jefferies merged into Leucadia in March 2013 and Jeffries management took the helm.  At year end 2012, the last year Joe Steinberg & Ian Cummings ran Leucadia, book value was $27.67 and net income was $854 million. 

I gave up on current management and sold during the January surge in the stock price.  I probably waited too long to sell.
« Last Edit: March 07, 2018, 08:31:20 PM by woltac »