Author Topic: JEF - Jefferies Group  (Read 599219 times)

Parsad

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Re: JEF - Jefferies Group
« Reply #390 on: October 31, 2012, 06:22:29 PM »
Wonder who would work on it with them? On second thought, a PE fund isn't likely due to duration of the project. Leukadia will need someone more longterm.

How about Warren???

If it's a good idea and there is money to be made, you can bet Berkshire or MAE would work with them.  On another note, how about another guy named Watsa?  Cheers!
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OracleofCarolina

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Parsad

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Re: JEF - Jefferies Group
« Reply #392 on: November 06, 2012, 03:12:59 PM »
Walmart is pulling their case-ready business from National Beef.  No impairment yet, but they may take one at some point if they cannot find replacement business for their two case-ready facilities.  Accounts for about 7% of sales, but higher on the net margin side for those products.  A bit of a hit, but not too significant.  I suspect they will replace some of that space with new customers.  Cheers!
No man is a failure who has friends!

frog03

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Re: JEF - Jefferies Group
« Reply #393 on: November 07, 2012, 08:42:41 AM »
Deferred tax asset still a huge portion of BVPS.  Excluding the tax asset, the book value as of Q3 is about $19.

WhoIsWarren

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Re: JEF - Jefferies Group
« Reply #394 on: November 07, 2012, 09:37:22 AM »
Deferred tax asset still a huge portion of BVPS.  Excluding the tax asset, the book value as of Q3 is about $19.

Yes, you could look at it that way.  But to value Leucadia like this doesn't recognise that the post-tax profitability of Leucadia's businesses (or its post-tax capital gains) will be higher than they would otherwise be in the absence of the DTA.  Perhaps you are of the view that Leucadia won't make sufficient profits to utilise all the DTA, but I'm willing to bet they will.

Regardless of how you take my argument above, you should note that the zero coupon bonds issue wasn't sorted until after the balance sheet date.  This was a pre-tax gain of $526m.  I'm not sure how much tax they'll have to pay on that, but even assuming 15% capital gains tax rate it gives them $450m additional equity.  This adds $1.8 per share to book value, unless I've got my sums wrong.  Without wanting so split hairs, Inmet and Jefferies are up somewhat on their end-September valuations, which adds around another bit to book value.  Making the above adjustments puts tangible equity, notwithstanding my above comments, at around $21.5.

scorpioncapital

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Re: JEF - Jefferies Group
« Reply #395 on: November 07, 2012, 10:41:52 AM »
"This was a pre-tax gain of $526m"

Maybe they don't pay any? I think I read once that cap gains are included in the DTA and can be used against that just as much as income.

Kraven

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Re: JEF - Jefferies Group
« Reply #396 on: November 12, 2012, 04:09:33 AM »
Leucadia buying Jefferies.  0.81 shares of LUK for each share of JEF.  At current price around $17.65 for JEF; aggregate around $3.7 bil. 
Buy cheap and something good might happen.

orion

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Re: JEF - Jefferies Group
« Reply #397 on: November 12, 2012, 04:55:56 AM »

Sportgamma

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Re: JEF - Jefferies Group
« Reply #398 on: November 12, 2012, 05:08:44 AM »

Quote
Jefferies currently pays substantial Federal income taxes and thus its expected ongoing pre-tax earnings will materially accelerate utilization of Leucadia’s net operating losses, creating incremental value for all shareholders.

Quote
Leucadia will continue to operate in its current form, except that the merger agreement contemplates that Leucadia’s Crimson Wine Group, with a book value of $197 million, will be spun out in a distribution that is intended to be tax-free to current Leucadia shareholders prior to the completion of the merger.


WhoIsWarren

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Re: JEF - Jefferies Group
« Reply #399 on: November 12, 2012, 05:13:23 AM »
I guess you could call it 'obvious', but it never is until it happens.  My thoughts so far:

They've sorted out the succession issue anyway, with Richard Handler coming in as Leucadia CEO.  And in Handler / Friedman, you've got two guys with significant Leucadia stock, so their interests are aligned (unlike say Justin Wheeler).

The argument for putting a discount on Leucadia for the $1.4bn DTA is also lessening.  Jefferies makes c.$450m pre-tax; at 35% that's $160m of tax a year.

I'm not a fan of leveraged financials as a rule, mainly it's because of the complexity and the inability of Outside Passive Minority Investors to be able to see what the assets and liabilities are, and what the risks around them are.  At least by owning 100% of Jefferies, Leucadia management will know exactly what it holds and should be better able to manage risks and value the business.

One disappointment for me is that Leucadia is using its own stock to fully fund the deal.  In my opinion Leucadia is very cheap!  But I trust the Leucadia guys and besides they need cash for the gasification project....

Hopefully we'll get more info on the call this morning....