Author Topic: JEF - Jefferies Group  (Read 603917 times)

mcliu

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Re: JEF - Jefferies Group
« Reply #620 on: June 25, 2013, 02:48:37 PM »
Thanks for the link. Has anyone updated their model/valuation of the company and are willing to share? :)


scorpioncapital

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Re: JEF - Jefferies Group
« Reply #621 on: June 25, 2013, 03:06:27 PM »
The wildcard is Handler. From what we know, since he took over management of Jefferies in 1990, he has compounded book value at 22% per year. This is "Buffet" territory returns. I am wondering what the future holds for LUK and his plans. Obviously, investment banking is only one of two major pillars. The other one is investing the large amounts of capital and equity that LUK has into investments that give good returns. In this respect, we don't know his experience outside of investment banking. Another possibility is bolt-on aquisitions in investment banking as opposed to the more electic investing in stocks, and "unrelated" businesses.

hellsten

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Re: JEF - Jefferies Group
« Reply #622 on: June 25, 2013, 03:21:16 PM »
Really good letter and funny too:
Quote
Shortly after the acquisition one of us got a call from a gentleman who introduced himself as
David Mitchell, President of “our” power companies. We demurred saying we owned no power
companies, but David insisted, telling us that buried in the files of Baldwin United were stock
certificates representing controlling ownership positions in Barbados Power and Light,
El Salvador Electric, and Bolivia Power. To say the least, we were astounded. We were a utility!
One of us seized the day and became Chairman of all three and for years worked on maximizing
the value of these companies.

These guys earned a lot of money on bad businesses like telecom and mining…

twacowfca

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Re: JEF - Jefferies Group
« Reply #623 on: June 25, 2013, 04:08:25 PM »
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.


I thinkI heard him say that recently on a panel at a conference, maybe Ira Sohn

racemize

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Re: JEF - Jefferies Group
« Reply #624 on: June 25, 2013, 04:35:59 PM »
I wonder if Handler et al. will continue the tradition of picking up NOLs from companies to achieve the tax benefits?

mcliu

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Re: JEF - Jefferies Group
« Reply #625 on: June 25, 2013, 06:21:48 PM »
Have you guys taken a look at the 10-Q for Q1? I was wondering, how do you separate the Jefferies assets from the Leucadia assets?
Specifically, there's $2.3B in available-for-sale fixed income securities. Is that part of Jefferies' trading book or is that part of Leucadia's investment portfolio?
Also, the $3.1B in cash, is that part of Leucadia's portfolio?

scorpioncapital

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Re: JEF - Jefferies Group
« Reply #626 on: June 25, 2013, 10:09:12 PM »
I believe they said they are going to publish a "look through" balance sheet of LUK owning JEF, but I'm not sure if that's in Q2 or a supplementary...

Grenville

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Re: JEF - Jefferies Group
« Reply #627 on: June 25, 2013, 10:45:23 PM »
Have you guys taken a look at the 10-Q for Q1? I was wondering, how do you separate the Jefferies assets from the Leucadia assets?
Specifically, there's $2.3B in available-for-sale fixed income securities. Is that part of Jefferies' trading book or is that part of Leucadia's investment portfolio?
Also, the $3.1B in cash, is that part of Leucadia's portfolio?

Just compare JEF Q1 10Q with LUK Q1 10Q and you can subtract out the JEF BS to get the LUK BS ex JEF. For example, the cash at LUK is 122,463. The AFS portfolio is all LUK, trading assets is JEF.

Hope that helps.


giofranchi

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Re: JEF - Jefferies Group
« Reply #628 on: June 26, 2013, 12:45:34 AM »
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.

Ron,
I am a romantic! And I have no problem at all to admit that I enjoyed the letter immensely… and that I even shed a tear! :'(
But… when it comes to understand a business, I suddenly become as unemotional and detached as possible. That is the way I am done, and I like stories, but I find them of little use.
Sincerely, I had hoped I would have found out more about the future of LUK than about its past… This was supposed to be the missive with which Mr. Cumming and Mr. Steinberg officially introduced Mr. Handler and Mr. Friedman to LUK’s shareholders.
Though, in the first two pages of the letter they write about Jefferies, there is very little we didn’t already know… Then, we are left with 8 pages of “memorabilia”… don’t get me wrong: 8 wonderful pages!… But, unfortunately, not very useful (with the possible exception of “A Major Future Opportunity”).
Though I would sentimentally like to say that I feel more confident now about LUK’s future prospects, I must acknowledge that it would not be based upon any new substantial piece of information…
Very interesting price right now: no doubt about that, and I am sure a lot of you are buying! But I must wait. Because I require conviction first, then I look at the price! Otherwise, I know I will make mistakes.

giofranchi
« Last Edit: June 26, 2013, 12:49:44 AM by giofranchi »
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WhoIsWarren

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Re: JEF - Jefferies Group
« Reply #629 on: June 26, 2013, 03:01:27 AM »
gio,

You are right.  There was not a lot of new information in the letter, though I at least learned that C&S first came across Handler in 1987, whereas I had thought they first started their relationship in 2000 with the setting up of the Jefferies Partners Opportunity Fund.  I take a huge amount of comfort from their long, long association.

However, your main disappointment appears to be that "I had hoped I would have found out more about the future of LUK".  Was this a realistic expectation?  Is it right to think that they should paint the canvas of their successors?  Or, given that C&S know and trust their successors -- and we know and trust C&S -- shouldn't they seal their lips and let the new maestros do their thing?