Author Topic: JEF - Jefferies Group  (Read 598877 times)

Grenville

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Re: JEF - Jefferies Group
« Reply #410 on: November 12, 2012, 09:56:03 AM »
Good conference call. (~40mins)

Richard Handler, Brian Friedman, Peg Broadbent, Joe Orlando, Justin Wheeler, and Joe Steinberg ("coaxed onto the call and not an avid fan of conference calls") were on the conference call.

Richard Handler and Brian Friedman answered all the questions though.


Kiltacular

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Re: JEF - Jefferies Group
« Reply #411 on: November 12, 2012, 10:24:07 AM »
Quote
Based on the ways things are trading, you can buy LUK on the cheap through JEF shares.

1 JEF share = 0.81 LUK
or $16 for 0.81 LUK ~ $19.8/ LUK share

Does anyone disagree with this?

You'd think this spread would have closed by now today.

Sullivcd

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Re: JEF - Jefferies Group
« Reply #412 on: November 12, 2012, 10:30:15 AM »
What is the spread if Crimson Wine is spun off prior to the merger?

Parsad

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Re: JEF - Jefferies Group
« Reply #413 on: November 12, 2012, 12:15:12 PM »
Quote
Based on the ways things are trading, you can buy LUK on the cheap through JEF shares.

1 JEF share = 0.81 LUK
or $16 for 0.81 LUK ~ $19.8/ LUK share

Does anyone disagree with this?

You'd think this spread would have closed by now today.

No, you are correct.  We bought a bunch of JEF this morning.  The spread is still there because there is always the remote possibility the deal will be shot down by shareholders.  I don't think that is likely. 

It's a very good deal for both companies, and I think JEF under Leucadia could really start to take some market share away from the big boys over the ensuing 20 years, while Leucadia in one fell swoop has deepened their bench and solved any possible succession issues.  Cheers!
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A_Hamilton

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Re: JEF - Jefferies Group
« Reply #414 on: November 12, 2012, 12:27:17 PM »
Quote
Based on the ways things are trading, you can buy LUK on the cheap through JEF shares.

1 JEF share = 0.81 LUK
or $16 for 0.81 LUK ~ $19.8/ LUK share

Does anyone disagree with this?

You'd think this spread would have closed by now today.


Assuming Crimson is worth BV, you are talking about reduction needing to be applied to JEF.

No, you are correct.  We bought a bunch of JEF this morning.  The spread is still there because there is always the remote possibility the deal will be shot down by shareholders.  I don't think that is likely. 

It's a very good deal for both companies, and I think JEF under Leucadia could really start to take some market share away from the big boys over the ensuing 20 years, while Leucadia in one fell swoop has deepened their bench and solved any possible succession issues.  Cheers!

Sorry to disagree guys, but a buyer of LUK today receives LUK inclusive of Crimson Wine Group. A buyer of JEF receives 0.81 shares of LUK ex-crimson wine group.

It has a material effect on the arb spread.


Kraven

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Re: JEF - Jefferies Group
« Reply #415 on: November 12, 2012, 12:34:55 PM »
Quote
Based on the ways things are trading, you can buy LUK on the cheap through JEF shares.

1 JEF share = 0.81 LUK
or $16 for 0.81 LUK ~ $19.8/ LUK share

Does anyone disagree with this?

You'd think this spread would have closed by now today.


Assuming Crimson is worth BV, you are talking about reduction needing to be applied to JEF.

No, you are correct.  We bought a bunch of JEF this morning.  The spread is still there because there is always the remote possibility the deal will be shot down by shareholders.  I don't think that is likely. 

It's a very good deal for both companies, and I think JEF under Leucadia could really start to take some market share away from the big boys over the ensuing 20 years, while Leucadia in one fell swoop has deepened their bench and solved any possible succession issues.  Cheers!

Sorry to disagree guys, but a buyer of LUK today receives LUK inclusive of Crimson Wine Group. A buyer of JEF receives 0.81 shares of LUK ex-crimson wine group.

It has a material effect on the arb spread.

Anyone have a sense of what Crimson is worth?  I just did a quick look in the K and it appears that it's about 75 cents of BV for each LUK share.  Sales for 2011 were around $36 mil.  I didn't see any info on the profitability.
Buy cheap and something good might happen.

A_Hamilton

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Re: JEF - Jefferies Group
« Reply #416 on: November 12, 2012, 12:39:03 PM »
Quote
Based on the ways things are trading, you can buy LUK on the cheap through JEF shares.

1 JEF share = 0.81 LUK
or $16 for 0.81 LUK ~ $19.8/ LUK share

Does anyone disagree with this?

You'd think this spread would have closed by now today.


Assuming Crimson is worth BV, you are talking about reduction needing to be applied to JEF.

No, you are correct.  We bought a bunch of JEF this morning.  The spread is still there because there is always the remote possibility the deal will be shot down by shareholders.  I don't think that is likely. 

It's a very good deal for both companies, and I think JEF under Leucadia could really start to take some market share away from the big boys over the ensuing 20 years, while Leucadia in one fell swoop has deepened their bench and solved any possible succession issues.  Cheers!

Sorry to disagree guys, but a buyer of LUK today receives LUK inclusive of Crimson Wine Group. A buyer of JEF receives 0.81 shares of LUK ex-crimson wine group.

It has a material effect on the arb spread.

Anyone have a sense of what Crimson is worth?  I just did a quick look in the K and it appears that it's about 75 cents of BV for each LUK share.  Sales for 2011 were around $36 mil.  I didn't see any info on the profitability.

I don't know what is worth. Seems like BV is generous for a pretty difficult business/trophy business. That said, do you want to be short an illiquid name as part of trying to arb the spread?

Kraven

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Re: JEF - Jefferies Group
« Reply #417 on: November 12, 2012, 12:43:24 PM »
Quote
Based on the ways things are trading, you can buy LUK on the cheap through JEF shares.

1 JEF share = 0.81 LUK
or $16 for 0.81 LUK ~ $19.8/ LUK share

Does anyone disagree with this?

You'd think this spread would have closed by now today.


Assuming Crimson is worth BV, you are talking about reduction needing to be applied to JEF.

No, you are correct.  We bought a bunch of JEF this morning.  The spread is still there because there is always the remote possibility the deal will be shot down by shareholders.  I don't think that is likely. 

It's a very good deal for both companies, and I think JEF under Leucadia could really start to take some market share away from the big boys over the ensuing 20 years, while Leucadia in one fell swoop has deepened their bench and solved any possible succession issues.  Cheers!

Sorry to disagree guys, but a buyer of LUK today receives LUK inclusive of Crimson Wine Group. A buyer of JEF receives 0.81 shares of LUK ex-crimson wine group.

It has a material effect on the arb spread.

Anyone have a sense of what Crimson is worth?  I just did a quick look in the K and it appears that it's about 75 cents of BV for each LUK share.  Sales for 2011 were around $36 mil.  I didn't see any info on the profitability.

I don't know what is worth. Seems like BV is generous for a pretty difficult business/trophy business. That said, do you want to be short an illiquid name as part of trying to arb the spread?

I'm not arbing anything.  Just asking a question, my friend.  It wasn't intended to be directed to you. 
Buy cheap and something good might happen.

joepublic

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Re: JEF - Jefferies Group
« Reply #418 on: November 12, 2012, 12:46:43 PM »
I am not sure what it is worth, but we have a precedent.

About 10 years ago, Leucadia spun off a company called HomeFed (HOFD). It is very illiquid and the current quote is around 25. It has 2 land areas in California that are going to become master planned communities (I am not sure what stage of development they are in.)

At the time of the spinoff, it traded for about $4/share (around book value as in LUK's balance sheet.) It is currently around $25. It reached as high as $60 dollars around 2006.

I am hoping for a similar run-up in the price. I do not believe that a company of this size in the wine industry will trade as an independent for long.

JRH

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Re: JEF - Jefferies Group
« Reply #419 on: November 12, 2012, 01:30:01 PM »
Interesting liquidity guidelines Leucadia has identified (slide 30). 

Looks like they currently have more than adequate liquidity, although I don't think it is necessarily apparent just from this whether their recent FMG, MLI, Keen sales are related solely to meeting those conditions for the JEF merger.  It is interesting to note that they are stating that they will not make new equity investments in excess of 10% of book value "at time of investment".  Also:

"Leucadia will target (i) a minimum liquid assets / parent debt ratio >1.0x (current ratio of 3.0x) and (ii) minimum cash and cash equivalents equal to 10% of book value (excluding Jefferies)."

(ii) seems to imply ~$520M is an operating cash buffer (same slide + supplement on 32 shows adjusted book value of ~$5.2B without Crimson and Jefferies).  They announced an authorization to buyback <=25M shares (~$500M).  That gives them as little as a half billion and as much as a billion in cash to work with, depending on actual number of shares bought back.

Seems to me like the merger prompted a re-assessment of their holdings on a marginal benefit basis against what they expect to be able to make on the opportunity flow from Jefferies.  That would explain past and future (Crimson) liquidations.
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