JEF - Jefferies Group

[thepupil]

Jefferies has killed it for 2 quarters in a row

[ukvalueinvestment]

From a financial perspective: Great results.  Surely this will rerate (and they are buying back stocks anyway).

From a human perspective, they raised $9,25ln in memory of their CFO who died of COVIC-19 and I liked this:

"Finally, we implore everyone to wear a mask when out in public. When you wear a mask, you do it out of respect for your fellow humans and we believe masks (and testing) will be critical to allowing all of us to protect those most at risk as our medical experts work tirelessly to develop the needed therapeutics, vaccines and methods of delivering them in mass quantities. Working together will allow us all to best navigate this incredibly difficult period and bridge our path to a more normal way of life that we will never take for granted."

[A_Hamilton]

Jefferies has killed it for 2 quarters in a row

Yeah, but we need to see how they are getting to their marks on Jefferies Finance (JFIN JV with Mass Mutual that is levered with CLO's) and then how they are coming up with their fair value mark on Vitesse. They still have Vitesse marked at ~$550 million in equity value. Sure it has hedged oil at $65 this year, but WTI at $39 beyond that does not do wonders for Vitesse. It can't be the only name in the Bakken to not have lost value.

[thepupil]

Jefferies has killed it for 2 quarters in a row

Yeah, but we need to see how they are getting to their marks on Jefferies Finance (JFIN JV with Mass Mutual that is levered with CLO's) and then how they are coming up with their fair value mark on Vitesse. They still have Vitesse marked at ~$550 million in equity value. Sure it has hedged oil at $65 this year, but WTI at $39 beyond that does not do wonders for Vitesse. It can't be the only name in the Bakken to not have lost value.

I agree with you and sold in early March for this reasons (see a couple posts up). That decision has been very additive to only slightly so based on subsequent drawdown and recovery of things purchased with JEF proceeds. Nevertheless, I am positively surprised by the operating results (though I agree more write downs are likely). I bought a starter position. Every time I’ve bought JEF in the mid teens it’s worked out, but would like to see more write downs before buying a real position.

[benhacker]

firing on all cylinders here it appears.  Market price has continued to confuse me, but oh well.

[scorpioncapital]

Is it because the annual earnings are not so easy to predict? can be higher or lower based on variables not as consistent as an operating company?

[ratiman]

Principal transactions have almost quadrupled since last year. Is that because other banks have pulled back? That's been the prediction since the GFC but maybe it's actually happening.

[benhacker]

Principal transactions have almost quadrupled since last year. Is that because other banks have pulled back? That's been the prediction since the GFC but maybe it's actually happening.

It definitely was clear in March - May, they did some transactions when things were closed that were usurious in nature.  There is more constraint to big banks, but hard to say what is persistent here.  It does feel like it may be more permanent, but we will have to see... not sure I think you can say it's a long term trend yet.

[Foreign Tuffett]

A very impressive quarter. Investment bank is performing very well, Idaho Timber is doing better than ever, and it's a great time to own a minority interest in an operational gold mine.


* Edited to remove a bunch of nonsense because I just realized I wasn't reading the full earnings release.

[ratiman]

There should be less competition. This slide from JMP shows all the firms that have disappeared since GFC: