Author Topic: JEF - Jefferies Group  (Read 600754 times)

Fat Pitch

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Re: JEF - Jefferies Group
« Reply #910 on: November 03, 2014, 04:49:51 PM »
Handler has definitely pissed off some competitors over the years by stealing their bankers I think.  The continued small little anti-JEF stories in the news is clearly a PR campaign of some kind.

Most of this stuff *if* it were true, wouldn't even be newsworthy, but somehow a bank most folks have never heard of gets media stores covering it's bankers???  Yeah, call me skeptical.

Chance to buy cheaper.

Or are they just getting the bottom of the barrel type deals/people? This is an industry where if you aren't 1st then donít bother.
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merkhet

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Re: JEF - Jefferies Group
« Reply #911 on: November 03, 2014, 04:52:32 PM »
Why do you think that it's an industry where being first matters?

scorpioncapital

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Re: JEF - Jefferies Group
« Reply #912 on: November 03, 2014, 05:16:20 PM »
I've always suspected the argument advanced about paying a large comp ratio upfront and even ongoing to retain high talent should be viewed with skepticism - especially on Wall Street, in an overcrowded industry where everyone is doing the same thing. Great people don't "need" the highest amount of money to work with you, they just need a decent amount. If Goldman can get by with 40% comp ratio why does Jefferies need 60%, is there something 20% more brilliant about their people?






mcliu

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Re: JEF - Jefferies Group
« Reply #913 on: November 03, 2014, 06:30:06 PM »
I've always suspected the argument advanced about paying a large comp ratio upfront and even ongoing to retain high talent should be viewed with skepticism - especially on Wall Street, in an overcrowded industry where everyone is doing the same thing. Great people don't "need" the highest amount of money to work with you, they just need a decent amount. If Goldman can get by with 40% comp ratio why does Jefferies need 60%, is there something 20% more brilliant about their people?


There's a big ego factor on the street so the best needs to be paid more. Bankers seem to care a lot about their relative comps.

Fat Pitch

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Re: JEF - Jefferies Group
« Reply #914 on: November 03, 2014, 07:40:23 PM »
Why do you think that it's an industry where being first matters?

Read up on Solomon Brothers and their clientele such as the "Bouncing Czech". If you are a Fortune 500 company and you need an ibanker you go to Goldman. These guys get first dibs on all the best deals and pass on anything that looks suspect. Guess who gets the sloppy seconds?
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benhacker

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Re: JEF - Jefferies Group
« Reply #915 on: November 03, 2014, 08:21:22 PM »
For those of you who think their comp & ben expense is out of line, I think you may just be not comparing them properly.  GS is not a good comp (it's 15x the size with different business composition).

LAZ, GHL, EVR are all better comps, will similar (slightly higher) comp ratios (in the 55-65% ranges).

Also, to those who think JEF has 2nd rate MDs / teams, I'd love to see any serious data / insight you have on that.  It hasn't been my findings from research I've done.  Also, just qualitatively, JEF did a lot of poaching of their teams (and yes, paid top dollar) from '07-'11 from other big IB's as they were hampered with lawsuits, bad press, additional regulation, etc, and I really don't think they were in the weaker position in those transactions (and I do believe a lot of the bad press and bear raiding is a direct result of Handler sticking it to the likes of UBS et al by taking their best employees).

In the end, I agree that comp is too high in IB land, but I focus on end ROE.  I feel quite similarly about exec comp overall in corporate America / World.  But unless there is a culture of corruption, I don't see the absolute level of comp at any company as being the most important metric, and it certainly doesn't stand on it's own.  I've studied a lot of JEF's history, and I really don't see them being at the bottom of the barrel for talent or ethics, it's quite the opposite actually (again, IMO).  I think aside from GS, no IB firm has better ROE for the last 15-20 years.  *if* you adjust for risk / leverage and perhaps some "luck" GS got during the crisis (AIG contracts), perhaps JEF is better both absolute and risk adjusted.

Just my 2 cents.

This is a really hated industry (for a lot of good reasons), so I understand why many aren't interested.

« Last Edit: November 03, 2014, 08:30:38 PM by benhacker »
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thepupil

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Re: JEF - Jefferies Group
« Reply #916 on: November 03, 2014, 08:22:53 PM »
Why do you think that it's an industry where being first matters?

Read up on Solomon Brothers and their clientele such as the "Bouncing Czech". If you are a Fortune 500 company and you need an ibanker you go to Goldman. These guys get first dibs on all the best deals and pass on anything that looks suspect. Guess who gets the sloppy seconds?

Interesting, I didn't realize the Goldman Sachs was number 1 in all league tables and had 100% market share amongst large issuers...I guess my salary, bonus and dividends were funded with something else when I worked for another bank.

Sloppy seconds seemed to work pretty well for JEF from 1990 to its acquisition by LUK over which time the stock returned 28X and 16% CAGR.

Sloppy seconds is sending a more modest, but still decent relative to its $3.6B tangible common equity, $500-$600MM pretax to mother Leucadia.

JEF pays high cash bonuses and is not as regulated/scrutinized as the big boys. It should continue to grow and take share.

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jay21

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Re: JEF - Jefferies Group
« Reply #917 on: November 04, 2014, 04:33:27 AM »
Why do you think that it's an industry where being first matters?

Read up on Solomon Brothers and their clientele such as the "Bouncing Czech". If you are a Fortune 500 company and you need an ibanker you go to Goldman. These guys get first dibs on all the best deals and pass on anything that looks suspect. Guess who gets the sloppy seconds?

Imo, one thing you should focus on is what can JEF do that GS and the other i-banks can't? That list has grown since the financial crisis due to regulations. 

Tbh, I should spend more time on it because I think that's going to be a measurable competitive advantage.
@jay_21_

scorpioncapital

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Re: JEF - Jefferies Group
« Reply #918 on: November 04, 2014, 06:06:12 AM »
"In the end, I agree that comp is too high in IB land, but I focus on end ROE"

There is some truth to this - no I-bank has had >10% ROE since the crisis. It's been a long time getting back to normal but I feel the tide is turning slowly and over the next 2-3 years will improve. Obviously compensation is a lever you can control to fiddle with your ROE, trying to balance growth vs profitability. But if the mandate in the latest Jefferies memo about being better not bigger is to be the case, I would imagine profitability plays a key role there. (I would also add FBRC as another example of a small ibank with 50%+ comp ratio).

« Last Edit: November 04, 2014, 06:08:18 AM by scorpioncapital »

ajc

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Re: JEF - Jefferies Group
« Reply #919 on: November 05, 2014, 09:00:22 AM »