JEF - Jefferies Group

[jay21]

If BAC can restore profitability and become a WFC type franchise, then it will be very good. Buffet holds WFC for very long term and did pretty well, though I like the shorter term thesis better.
What confuses me about LUK is where the synergy will come from. BRK/MKL/FFH have free insurance float to invest, but LUK does not have that.

Plenty of companies/investment vehicles have high ROEs that do not have float.

[twacowfca]

Following what Parames is doing is a very good strategy.  Based on valuation,  Parames rotates in and out of maybe 80 or so mostly European companies he has identified as being better businesses with family ownership and/or ethical management.  He pretty much does what Buffett did up until the 1980's wham a change in the tax law made it expensive for corporations to flip stock investments.

 In Europe, there is absolutely no taxable event when funds like Parames sell shares they bought for a profit. Taxation of profits is delayed until an investor in his funds sells his shares in the fund at a profit.  Even then, shares in one of his funds can be rolled over to another fund tax free. 

As a result of the favorable tax regime,, Parames gets in and out of the  stocks in the set that he likes a lot more frequently than Buffett did when he employed that same strategy.
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Twa, this is not quite true for the capital gains.  Some countries, like Spain where Parames is based, have nominal capital gains for funds when they sell their stocks, about 1% if my memory serves me right.  In France, on the other hand there are no such gains.  For European investors it is usually a good thing to hold a top performing fund as you get both market beating performance and much better tax treatment.

Parames gets good recognition for good reason but his track record is not as good as Thierry Flecchia leading the Flinvest Entrepreneurs fund and before this a couple Oddo funds.   Flecchia has better net performance than Parames despite higher fees.

Thank you for the clarification and the info about Flecchia. 

[Christopher1]

Link to the last LUK shareholder letter signed by Cumming and Steinberg:

https://materials.proxyvote.com/Approved/527288/20130605/AR_173639.PDF

[muscleman]

There is no doubt LUK is in the "recharging the elephant gun phase". It's ROE is pitiful at the moment. It is trading slightly below tangible book. It has sold and liquidated many of its public investments and owns a few large private businesses. Therefore, the thing to watch is what they are going to do with their resources in the next little while both at investing HQ and at Jefferies HQ. With 10 billion in equity, to achieve a 20% ROE which is what would lead to a 20% growth in book value, they must produce $2 billion per year of gains and/or income. They are nowhere close to that...I would say that the current "complex" can produce - in a stretch , no better than 1 billion per year, so the other billion must come from new investments.

Is it trading already below tangible book? From the latest 10-Q, the tangible book is about $7.6 bn. The current market cap is 9.11 bn.
Regarding Rich Handler, I remember Bruce mentioned somewhere before that he thinks Rich is the best investment banker on Wall Street, but I can't find the source anymore. Anyone?
Note that top IBs like GS is currently trading at about 10% above tangible book, while LUK is currently at 19% above book.

[Grenville]

Link to the last LUK shareholder letter signed by Cumming and Steinberg:

https://materials.proxyvote.com/Approved/527288/20130605/AR_173639.PDF

Awesome! Thanks for posting. They posted the proxy on the sec site as well.
http://www.sec.gov/Archives/edgar/data/96223/000090951813000167/mm06-2413_def14a.htm

[rjstc]

Link to the last LUK shareholder letter signed by Cumming and Steinberg:

https://materials.proxyvote.com/Approved/527288/20130605/AR_173639.PDF

Great read. Going to miss their reports like we'll someday miss Buffetts.

[giofranchi]

Link to the last LUK shareholder letter signed by Cumming and Steinberg:

https://materials.proxyvote.com/Approved/527288/20130605/AR_173639.PDF

Grazie Cristoforo! E a presto!

Giovanni

[rjstc]

From reading the letter it sure looks like Steinberg & Cummings have done a good job of picking their successors and one will still be involved in being there for advice.

[fareastwarriors]

These guys will be missed!

[Grenville]

Link to the last LUK shareholder letter signed by Cumming and Steinberg:

https://materials.proxyvote.com/Approved/527288/20130605/AR_173639.PDF

Enjoyed the letter! I liked the recap of history along with the stories of their successes and failures. The background adds a bunch to the past letters, a good amount of detail not found in the old letters. Whoever writes the letter is very good!

I do wish they had more details on the operating businesses outside of JEF. Each letter has been helpful in assessing the businesses and their potential future value. They do talk about the gasification project briefly and the creation of an auto finance business. Also they talk at length about Jefferies and the new leadership which will be a large chunk of the go forward value of LUK.

I am surprised that they still haven't put a link to the new AR and letter on the Leucadia website. Thanks again for posting the proxyvote link.