Author Topic: JEF - Jefferies Group  (Read 599197 times)

tombgrt

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Re: JEF - Jefferies Group
« Reply #190 on: November 28, 2011, 06:36:20 AM »
http://www.bloomberg.com/video/81699844/

Quote
Epic Errors in Egan's Jefferies Note, Kotowski Says

Nov. 28 (Bloomberg) -- Chris Kotowski, an analyst at Oppenheimer & Co., talks about Egan-Jones Ratings Co.ís analysis of Jefferies Group Inc. Egan-Jones said that Jefferies should raise $1 billion in equity and reduce leverage as MF Global Holdings Ltd.ís bankruptcy increases scrutiny of the firmís balance sheet and said it may cut Jefferiesís credit grade. Kotowski speaks with Stephanie Ruhle and Erik Schatzker on Bloomberg Television's "InsideTrack." (Source: Bloomberg)


Mark Jr.

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Re: JEF - Jefferies Group
« Reply #191 on: December 09, 2011, 08:03:31 PM »
Minor question: I'm reading the annual shareholder letters and they keep making references to "our 130th year", our "150th year", etc. How is that? They took over Talcott National in '78, was Talcott around for that long beforehand?

robface

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Re: JEF - Jefferies Group
« Reply #192 on: December 10, 2011, 11:05:28 AM »
Minor question: I'm reading the annual shareholder letters and they keep making references to "our 130th year", our "150th year", etc. How is that? They took over Talcott National in '78, was Talcott around for that long beforehand?

Which years letters are you looking at?

I've heard LUK's roots are from Civil War time when the predecessor company made socks for the Union army.

Mark Jr.

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Re: JEF - Jefferies Group
« Reply #193 on: December 10, 2011, 05:01:47 PM »
Minor question: I'm reading the annual shareholder letters and they keep making references to "our 130th year", our "150th year", etc. How is that? They took over Talcott National in '78, was Talcott around for that long beforehand?

Which years letters are you looking at?

I've heard LUK's roots are from Civil War time when the predecessor company made socks for the Union army.

1980, 1982, 1983, 1985.

robface

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Re: JEF - Jefferies Group
« Reply #194 on: December 10, 2011, 05:52:06 PM »
here's the best history of Leucadia that should help answer your question

http://www.fundinguniverse.com/company-histories/Leucadia-National-Corporation-Company-History.html

Both the Leucadia name and the corporate strategy that engendered its exponential increase in revenues emerged in 1980, but the foundation from which Leucadia was built was formed more than a century earlier, in 1854, when James Talcott, Inc. was established. James Talcott, Inc., incorporated 60 years after it was created as a factoring concern, generated revenue initially by accepting accounts receivable from companies involved in the textile industry and using those accounts as security to provide short-term loans. James Talcott, Inc.'s importance to Leucadia, however, did not arise until the company evolved into a more diversified concern, when it began acquiring numerous financial institutions during the 1950s and 1960s, becoming, in 1968, Talcott National Corporation, a company engaged in commercial financing, real estate mortgage financing, equipment financing and leasing, factoring, and consumer financing.

Grenville

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Re: JEF - Jefferies Group
« Reply #195 on: December 11, 2011, 02:20:17 PM »
In my research of Jefferies, I needed to find good references to understand the mechanics of securities lending & repurchase agreements. In addition, I wanted to make sure I understood the implications accounting wise on the balance sheet. Here are three books that I came across that were very helpful in my understanding of securities finance. The first book was by far the best reference.

The Repo Handbook by Moorad Choudhry (2nd Ed. 2010)
http://www.amazon.com/Handbook-Securities-Institute-Capital-Markets/dp/0750681594

Securities Finance editors Frank Fabozzi and Steven Mann (2005)
http://www.amazon.com/Securities-Finance-Lending-Repurchase-Agreements/dp/0471678910/ref=sr_1_1?s=books&ie=UTF8&qid=1323641789&sr=1-1

Audit and Accounting Guide: Brokers & Dealers in Securities by AICPA (2010)
http://www.amazon.com/Brokers-Dealers-Securities-AICPA-Accounting/dp/B004HZLXEG/ref=sr_1_3?s=books&ie=UTF8&qid=1323641955&sr=1-3

racemize

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Re: JEF - Jefferies Group
« Reply #196 on: December 11, 2011, 02:30:01 PM »
In my research of Jefferies, I needed to find good references to understand the mechanics of securities lending & repurchase agreements. In addition, I wanted to make sure I understood the implications accounting wise on the balance sheet. Here are three books that I came across that were very helpful in my understanding of securities finance. The first book was by far the best reference.

The Repo Handbook by Moorad Choudhry (2nd Ed. 2010)
http://www.amazon.com/Handbook-Securities-Institute-Capital-Markets/dp/0750681594

Securities Finance editors Frank Fabozzi and Steven Mann (2005)
http://www.amazon.com/Securities-Finance-Lending-Repurchase-Agreements/dp/0471678910/ref=sr_1_1?s=books&ie=UTF8&qid=1323641789&sr=1-1

Audit and Accounting Guide: Brokers & Dealers in Securities by AICPA (2010)
http://www.amazon.com/Brokers-Dealers-Securities-AICPA-Accounting/dp/B004HZLXEG/ref=sr_1_3?s=books&ie=UTF8&qid=1323641955&sr=1-3

Thanks Greenville, that first one looks very good.  Do you mind posting your current thoughts based on your new understanding?

Grenville

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Re: JEF - Jefferies Group
« Reply #197 on: December 11, 2011, 03:27:32 PM »
In my research of Jefferies, I needed to find good references to understand the mechanics of securities lending & repurchase agreements. In addition, I wanted to make sure I understood the implications accounting wise on the balance sheet. Here are three books that I came across that were very helpful in my understanding of securities finance. The first book was by far the best reference.

The Repo Handbook by Moorad Choudhry (2nd Ed. 2010)
http://www.amazon.com/Handbook-Securities-Institute-Capital-Markets/dp/0750681594

Securities Finance editors Frank Fabozzi and Steven Mann (2005)
http://www.amazon.com/Securities-Finance-Lending-Repurchase-Agreements/dp/0471678910/ref=sr_1_1?s=books&ie=UTF8&qid=1323641789&sr=1-1

Audit and Accounting Guide: Brokers & Dealers in Securities by AICPA (2010)
http://www.amazon.com/Brokers-Dealers-Securities-AICPA-Accounting/dp/B004HZLXEG/ref=sr_1_3?s=books&ie=UTF8&qid=1323641955&sr=1-3

Thanks Greenville, that first one looks very good.  Do you mind posting your current thoughts based on your new understanding?

Hi racemize,

After reading those three books and reading the last two annuals and the most recent 10Q, I feel comfortable with Jefferies. Based on my understanding of their balance sheet they are conservatively financed relative to equity. The have conservative exposures across their inventory positions. Most of their pledged securities are backed by liquid financial instruments so the risk of liquidity is reduced. If you net out all their financing, their financing comes from repurchase agreements and payables to customers. An increase in the payables to customers is a result of their recent commodities acquisition of Prudential Bache. Also their derivative positions and book is growing but a large percentage of the portfolio is exchange traded versus OTC. I also like the fact that their CDS on the liability size is related to index positions versus individual names.

With financial institutions you have the black box risk. In terms of Jefferies I feel comfortable with this risk knowing that Leucadia has two board members and have known Handler since at least 2000. Handler also owns a decent slug of equity. I also like that Jefferies has raised capital at decent equity prices and interest rates this year before the markets went haywire. The other thing I like is that when push came to shove they have been very transparent about their sovereign exposure and you got the long letter from Handler.

In terms of valuation, the company is trading below tangible book with a conservative estimate of shares outstanding (include RSUs and convertible prefs). Right now the company is making about 200mln a year in a muted environment. In addition, they are hiring aggressively in investment banking and building out the franchise across the world. The willingness to hire and take on the additional expense when things are tough shows me a capacity to suffer and an eye towards long term value creation.

It's a good company and I believe a good investment, but you really need to understand the balance sheet and their model. In these volatile times with MF global and all the rumors from certain websites, the share price seems to be pretty volatile.

I'm long JEF stock (~5%) and the bonds (~2%).

racemize

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Re: JEF - Jefferies Group
« Reply #198 on: December 11, 2011, 05:04:57 PM »
Thanks Grenville--I'm planning on taking a solid position in LUK given its downturn related to JEF, so this is very encouraging.  My less thorough research was making me feel similarly.

racemize

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Re: JEF - Jefferies Group
« Reply #199 on: December 14, 2011, 12:15:18 PM »
I'm thinking of taking a pretty major position in LUK tomorrow (hoping it goes down some more)--if anyone feels like telling me why this is a stupid idea, I'd love to hear it!