Author Topic: JEF - Jefferies Group  (Read 598920 times)

prevalou

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Re: JEF - Jefferies Group
« Reply #230 on: April 06, 2012, 01:23:14 PM »
FMG can wait until the litigation is over and they prevail (hopefully for them before 2019!) to dilute LUK.


link01

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Re: JEF - Jefferies Group
« Reply #231 on: April 07, 2012, 05:04:43 AM »
According to 8K posted today it looks like National Beef earned 221 mil + 52 mil(D&A) = 273 mil and since LUK has NOL assets they will not be paying any taxes on this earning. This seems very good deal at the price of 870 mil.
Am I miscalculating something here?
http://www.sec.gov/Archives/edgar/data/96223/000090951812000089/mm03-0512_8kea1991.htm

not sure you should add back the D&A, at least not the depreciation....adding back depreciation - normalized capex plus amortization assuming, ok. but the NOL's wont need to shield that portion of cash earnings because its not taxable anyway. more importantly NBP was an LLC so its earnings were pass-tru to the partners, i believe, & taxable mostly at the partner level. i think thats why we see only an insignificant income tax liabilty on the NBP staement of income. so those 221mln of earnings taxed at a ordinary 40% fed/state income rate for a C Corp would equate to 137mln after tax. luk's 80% share of that equals 109mln not counting their ability to shield those earnings with their NOL's. so that means luk bought at just under a 8 after tax PE.

i dont have a feel for how sustainable or normalized those 2011 earnings of 221mln are either. i noticed that they earned 143mln in 2009 so they've added almost 80mln to earnings in 2 yrs, a 50% increase. i wonder how the pink slime controvery will affect 2012 earnings?

interestingly, NBP tried to do an IPO in 2009 or 2010 but backed out do to low valuation in the markets. in 2009 they had also accepted a buyout offer from JBS s.a for 560 mln but that was called off for anti trust reasons. that would have been a 3.9 pretax PE purchase, cheaper than luk's today, btw, assuming thay were contemplating a 100% buyout vs luk's 80%. here are 2 links:

http://www.bizjournals.com/kansascity/stories/2009/02/16/daily40.html

http://seekingalpha.com/article/178529-will-investors-be-hungry-for-national-beef-ipo


link01

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Re: JEF - Jefferies Group
« Reply #232 on: April 07, 2012, 05:17:11 AM »
FMG can wait until the litigation is over and they prevail (hopefully for them before 2019!) to dilute LUK.

FMG can wait until the litigation is over and they prevail (hopefully for them before 2019!) to dilute LUK.

well, they'll have to win the lawsuit 1st & then be willing to suffer even more reputational damage if it appears they won on a technicality due to some poor contract agreement wording on luk's part that failed to nail down their INTENT according to the letter of the law. which could be the case judging form luk mngts kind of sheepish tone, imo, that i think i detected in some of their comments. or it could just be that they are annoyed at themselves for misjudging andrew "twiggy" forrest in the beginning.

prevalou

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Re: JEF - Jefferies Group
« Reply #233 on: April 07, 2012, 05:48:52 AM »
Anyway, from Leucadia point of view, it seems to be a risk and it is difficult to price this risk, or to dismiss it.

tombgrt

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Re: JEF - Jefferies Group
« Reply #234 on: April 11, 2012, 04:54:56 AM »
In any case, current share price is under BV again. Guessing something of 0.9x not adjusting for DTA and FMG note. I have been looking to buy more but haven't pulled the trigger yet because it's such a big position already.

Reread some annual letters in anticipating of the new one this week or the next. More details on succession plan on the way? We'll see!


Quote from: LUK 2010 AL
Our Board of Directors continues to urge us to provide a succession plan. We have been
working hard on that problem for several years. We have made some progress and hope by next
year it will be more palpable.
« Last Edit: April 11, 2012, 05:00:38 AM by tombgrt »

scorpioncapital

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Re: JEF - Jefferies Group
« Reply #235 on: April 11, 2012, 07:40:14 AM »
hopefully this friday on the letter.

Parsad

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Re: JEF - Jefferies Group
« Reply #236 on: April 11, 2012, 11:51:21 AM »
In any case, current share price is under BV again. Guessing something of 0.9x not adjusting for DTA and FMG note. I have been looking to buy more but haven't pulled the trigger yet because it's such a big position already.

Reread some annual letters in anticipating of the new one this week or the next. More details on succession plan on the way? We'll see!


Quote from: LUK 2010 AL
Our Board of Directors continues to urge us to provide a succession plan. We have been
working hard on that problem for several years. We have made some progress and hope by next
year it will be more palpable.

You can't really teach what they do.  And the stuff they buy isn't as straight forward as the businesses Berkshire, Markel or Fairfax buy where there is management in place and they are businesses that are working just fine.  Succession is going to be very difficult at Leucadia if both are gone.  Cheers!
No man is a failure who has friends!

tombgrt

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Re: JEF - Jefferies Group
« Reply #237 on: April 11, 2012, 12:49:53 PM »
Correct Parsad. On the other hand, their employment agreements won't expire until June 30th 2015. A minimum of 3 years more of their magic plus a price under - imo slightly understated - book value is a good deal if you ask me.

scorpioncapital

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Re: JEF - Jefferies Group
« Reply #238 on: April 11, 2012, 01:11:31 PM »
I disagree, I think LUK owns mostly public shares and profitable private businesses. This is exactly like Berkshire. If Buffett stops buying new companies, Berkshire return = return of existing businesses. Same with LUK. Somebody is always making new investments until they stop - then somebody else has to do it. No guarantee the next person is any good.

I only see a marginal difference in the selling strategy, but the current investments can be held indefinitely either way.

Parsad

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Re: JEF - Jefferies Group
« Reply #239 on: April 11, 2012, 01:38:23 PM »
I disagree, I think LUK owns mostly public shares and profitable private businesses. This is exactly like Berkshire. If Buffett stops buying new companies, Berkshire return = return of existing businesses. Same with LUK. Somebody is always making new investments until they stop - then somebody else has to do it. No guarantee the next person is any good.

I only see a marginal difference in the selling strategy, but the current investments can be held indefinitely either way.

Many of their businesses, especially in the past, were distressed turn around situations.  As long as they stick to things like Jefferies, Mueller, National Beef Packing, etc, it will be fine.  But if you find situations where they are buying things that are distressed, in need of a turnaround, or complicated...think Finova or Berkadia...then it is going to be difficult to replicate that ability.  They are the best at what they do...pure Ben Graham distress plays, tax losses, analyzing complex financial structures...two brilliant guys! 

That's much harder to replace than Buffett where the company is slowly being put onto auto-pilot.  Even at Fairfax, with Andy Barnard in place and so much depth at Hamblin-Watsa, Prem is putting together a good succession plan.  What you can't replace with Buffett and Prem is leadership.  And Cummings and Steinberg are also two good leaders.  Cheers!
No man is a failure who has friends!