JEF - Jefferies Group

[fareastwarriors]

http://professional.wsj.com/article/SB10001424127887324407504578187141899534544.html?mod=WSJ_hp_LEFTWhatsNewsCollection

 

 

Jefferies Group Profit Up 48%

 

 

Jefferies Group Inc.'s fiscal fourth-quarter earnings rose 48% as revenue rose sharply and as the year-earlier period was affected by questions about its European exposure following the bankruptcy of MF Global MFGLQ -8.16%.

 

In the latest period, Jefferies' fixed-income trading revenue more than doubled to $293 million in the latest quarter. Investment-banking revenue grew 8.3% to $283 million.

 

Jefferies, the first U.S. investment bank to report fourth-quarter results, is often viewed as a barometer for reports from larger rivals because its fiscal period ends a month earlier.

 

Jefferies recently agreed to be bought by Leucadia National Corp. LUK +0.80%in a stock deal that is expected to close in the first quarter of next year.

 

Chairman and Chief Executive Richard B. Handler on Tuesday said "2013 will mark the beginning of a new era for Jefferies. We believe our imminent merger with Leucadia will result in an even stronger Jefferies, as well as making us even more distinguished from our bank holding company competitors."

 

For the quarter ended Nov. 30, Jefferies reported a profit of $72 million, or 31 cents a share, up from $48 million, or 21 cents a share, a year earlier. Excluding merger-related costs, a year-earlier debt-extinguishment-related gain and other items, adjusted earnings were up at 35 cents from 17 cents.

 

Revenue climbed 37% to $760.6 million.

 

Analysts polled by Thomson Reuters most recently projected earnings of 32 cents on revenue of $723 million.

 

 

[Parsad]

Knight to be sold to Getco with Jefferies assisting in the financing.  Cheers!

 

http://www.cnbc.com/id/100325960

[Grenville]

Here's the official release from Knight regarding the merger.

 

http://www.knight.com/investorRelations/pressReleases.asp?compid=105070&releaseID=1768498

 

Cash and stock deal w/cash at 3.75/share.

[fareastwarriors]

http://www.bloomberg.com/news/2012-12-18/knight-backs-getco-bid-ending-saga-that-began-with-trade-mishap.html

 

 

 

Knight Capital Group Inc. (KCG)’s decision to pursue a takeover by Getco LLC gives its shareholders, mostly Wall Street firms, an opportunity for stock appreciation while surrendering the certainty of cash.

 

Knight, pushed to the brink of bankruptcy in August by a trading error, chose Getco’s proposal yesterday over a competing offer from Virtu Financial LLC, three people with direct knowledge of the matter said yesterday. The Chicago-based high- frequency trader offered $3.75 a share for Knight, one-third of it in stock, for a total value of $1.4 billion, according to a statement from Knight today. Virtu’s offer was all-cash.

 

...

 

Under the terms of the agreement today, existing Knight shareholders can receive $3.75 per share in cash or one share in the combined firm. The payout will be pro-rated if shareholders elect to receive more than $720 million in cash. Jefferies, which provided financing to Getco, agreed to limit the cash portion to 50 percent of their Knight shares, according to the statement

[Myth465]

I hope someone has been buying back shares. This is the gift that keeps on giving. I have been looking to get into LUK for the better part of a year and now its a much simpler investment. Its also has less dingy assets and is less commodity focused. There is alot of embedded upside that has been released over the last few weeks.

[valueinvesting101]

Does any one know what relationship between Leucadia and Pershing Square Capital. As per http://www.jefferies.com/CMSFiles/Jefferies.com/files/PressReleases/2012/Leucadia-Jefferies%20Presentation_12%2007%2012(1).pdf

 

looks like Leucadia as redeemed their investment in Pershing as of 09/30/2012.

 

Any details about when this was done exactly? I read somewhere, they had invested $200 millions during Target turnaround/takeover by Pershing.

[rogermunibond]

Google Ackman and Leucadia.

 

They were the original backer of PS. But Leucadia's association with Ackman goes back farther to 1995 when they partnered on a shareholder proposal for Rockefeller Center Properties, which is a whole nother story involving Japanese owners, the Rockefeller family, Goldman, and Sam Zell.

[Sportgamma]

"First Quantum Minerals Ltd. (FM), a producer of copper in Africa, took its C$5.1 billion ($5.17 billion) bid for Inmet (IMN) Mining Corp. straight to shareholders as it seeks control of a project in Panama.

First Quantum’s C$72-a-share offer in cash and stock is 36 percent more than Inmet’s closing price on Nov. 27, the day before Toronto-based Inmet said it had rejected two unsolicited proposals. The bid will expire Feb. 14 and requires acceptance by holders of 66 percent of Inmet shares, First Quantum said today in a statement."

 

....

 

"First Quantum made an offer of C$62.50 a share for Inmet on Oct. 28 and another at C$70 on Nov. 25, before announcing Dec. 16 it would take a sweetened C$72 a share bid straight to Inmet shareholders.

 

The cash component of the latest offer will be financed through existing cash resources, undrawn financing facilities of $1.25 billion and a $2.5 billion acquisition facility provided by Standard Chartered Bank, the company said today.

 

Inmet said Nov. 28 it adopted a shareholder-rights plan, or poison pill, to block an unsolicited bid.

 

Goldman Sachs Group Inc., Jefferies Group Inc. and RBC Capital Markets are advising First Quantum."

 

http://www.bloomberg.com/news/2013-01-09/first-quantum-takes-c-5-1-billion-bid-for-inmet-mining-hostile.html?cmpid=yhoo

 

How is it not a conflict of interest that Jeffries is an advisor to First Quantum?

[Kraven]

How is it not a conflict of interest that Jeffries is an advisor to First Quantum?

 

I have no idea about the details on this matter, but note that most conflicts of interest can be waived by the applicable parties. 

[Parsad]

Berkadia update:

 

http://www.bloomberg.com/news/2013-01-09/berkshire-venture-buys-hendricks-in-buffett-apartment-bet.html?cmpid=yhoo

 

Cheers!

[Grenville]

Berkadia update:

 

http://www.bloomberg.com/news/2013-01-09/berkshire-venture-buys-hendricks-in-buffett-apartment-bet.html?cmpid=yhoo

 

Cheers!

 

Thanks for the post!

 

Here is the release from Berkadia:

Berkadia Acquires One of the Nation's Largest Multifamily Investment Sales and Research Firms, Hendricks & Partners

http://www.berkadia.com/newsandresearch/SitePages/NewsRead.aspx?storyID=259

 

"Since the company was formed back in 2009, Berkadia has been able to steadily grow its strength and presence in the commercial real estate industry," said Warren Buffett, Berkshire Hathaway Inc. Chairman and CEO. "We see Berkadia's acquisition of Hendricks as another significant step in the growth of their multifamily expertise and services."

 

---

 

Also while looking around the Berkadia site I found these interesting nuggets:

1.Randall Jenson

"Randall Jenson is president, chief financial officer and a member of the Executive Committee.  In this role he is responsible for the finance, accounting, treasury, process improvement and risk divisions as well as mergers and acquisitions and general management. Prior to joining Berkadia, Mr. Jenson spent nine years with Ranch Capital, LLC as co-founder and president.  Ranch identified the investment in Berkadia and introduced it to Leucadia and Berkshire.  While at Ranch he also worked as interim chief financial officer of Hawaiian Holdings, Inc., the parent company of Hawaiian Airlines, a Ranch Capital portfolio company, and currently serves on the board of directors for Hawaiian Holdings, and several private companies.  Prior to joining Ranch, he held various positions at Leucadia National Corporation, including business development and president and CEO of Banking and Lending Operations for more than five years. Mr. Jenson is a Certified Public Accountant and has a Bachelor of Arts degree in accounting from the University of Utah and an MBA degree from Harvard Business School."

 

2.India Ops

"Mark E. McCool is an executive vice president and member of the Executive Committee of Berkadia Commercial Mortgage, one of the largest commercial real estate finance companies in the nation. Berkadia, a privately held company in which Berkshire Hathaway Inc. and Leucadia National Corporation each hold a 50 percent ownership interest, acquired the loan origination and servicing businesses of Capmark Financial Group Inc. in December 2009.

 

Mr. McCool currently oversees all Servicing Operations as well as Strategic Initiatives with management responsibility of Asset & Portfolio Management, Servicing Administration, Offshore Administration, BPO Administration, Strategic Initiatives and Banking for a $215 billion portfolio.

 

Mr. McCool joined GMAC Commercial Mortgage in January 1998 as Vice President of Negotiated Transactions where he was responsible for the valuation of servicing rights and the negotiation of structured finance and servicing agreements. Prior to this position, he served from 1987 as a manager in various capacities for GMAC Financial Services and has more than 20 years’ experience in the commercial real estate business.

 

He actively participates in various industry trade groups, task forces and committees, CREF-C Board of Governors and the CREF-C Executive Committee, is a former Co-Chairman of the Freddie Mac Seller/Servicer Advisory Council and currently sits on the Board of Directors of Berkadia’s wholly owned India subsidiary, Berkadia Services India Pvt. Ltd. Mr. McCool holds a B.S. from the University of Scranton. "

--> The office is in Hyderabad India

[Parsad]

Leucadia will tender Inmet Mining shares barring any other superior offer.  Cheers!

 

http://finance.yahoo.com/news/leucadia-national-corporation-indicates-current-201100668.html

[Parsad]

Jefferies increases bond offering to $1B.  Taking advantage of the rates.  Cheers!

 

http://www.bloomberg.com/news/2013-01-15/jefferies-said-to-plan-750-million-of-bonds-in-first-since-2011.html?cmpid=yhoo

[fareastwarriors]

Jefferies Grants CEO Handler $58 Million in 2012, Future Pay

 

 

http://www.bloomberg.com/news/2013-01-29/jefferies-grants-ceo-58-million-in-2012-pay-future-incentives.html

 

Jefferies Group Inc. (JEF), the investment bank that agreed to sell itself to Leucadia National Corp. (LUK), paid Chief Executive Officer Richard Handler $19 million for fiscal 2012 and approved $39 million in restricted stock awards for the next three years.

 

 

[plato1976]

while I recognize that Handler is an exceptional CEO

sometimes I wonder if such a pay is really in line with the contribution

I guess it's a tradition in the  IB sector but I really don't like it

20M per year is a very big percentage of the profit itself ...

This is probably one of the reasons that I am keeping the LUK position small in my portfolio

 

Jefferies Grants CEO Handler $58 Million in 2012, Future Pay

 

 

http://www.bloomberg.com/news/2013-01-29/jefferies-grants-ceo-58-million-in-2012-pay-future-incentives.html

 

Jefferies Group Inc. (JEF), the investment bank that agreed to sell itself to Leucadia National Corp. (LUK), paid Chief Executive Officer Richard Handler $19 million for fiscal 2012 and approved $39 million in restricted stock awards for the next three years.

[twacowfca]

while I recognize that Handler is an exceptional CEO

sometimes I wonder if such a pay is really in line with the contribution

I guess it's a tradition in the  IB sector but I really don't like it

20M per year is a very big percentage of the profit itself ...

This is probably one of the reasons that I am keeping the LUK position small in my portfolio

 

Jefferies Grants CEO Handler $58 Million in 2012, Future Pay

 

 

http://www.bloomberg.com/news/2013-01-29/jefferies-grants-ceo-58-million-in-2012-pay-future-incentives.html

 

Jefferies Group Inc. (JEF), the investment bank that agreed to sell itself to Leucadia National Corp. (LUK), paid Chief Executive Officer Richard Handler $19 million for fiscal 2012 and approved $39 million in restricted stock awards for the next three years.

 

 

Don't disagree.  I think he did, however, voluntarily waive his bonuses in 2011 when Jefferies was the target of unfounded rumors about major exposure to MF Global fallout.

[Parsad]

while I recognize that Handler is an exceptional CEO

sometimes I wonder if such a pay is really in line with the contribution

I guess it's a tradition in the  IB sector but I really don't like it

20M per year is a very big percentage of the profit itself ...

This is probably one of the reasons that I am keeping the LUK position small in my portfolio

 

Jefferies Grants CEO Handler $58 Million in 2012, Future Pay

 

 

http://www.bloomberg.com/news/2013-01-29/jefferies-grants-ceo-58-million-in-2012-pay-future-incentives.html

 

Jefferies Group Inc. (JEF), the investment bank that agreed to sell itself to Leucadia National Corp. (LUK), paid Chief Executive Officer Richard Handler $19 million for fiscal 2012 and approved $39 million in restricted stock awards for the next three years.

 

 

Don't disagree.  I think he did, however, voluntarily waive his bonuses in 2011 when Jefferies was the target of unfounded rumors about major exposure to MF Global fallout.

 

I'm also not a big fan of these huge compensation packages, but let's take a look at what shareholders are getting.  The combined vehicle will have equity of $9B or so (I can't be bothered to read the presentation at this second), but assume that Handler achieves 12% on that equity into the future...that's about $1.08B pre-tax for shareholders to start with.  Of which, Handler will be the largest, or at least one of the largest shareholders, in the combined vehicle.  His compensation works out to about $20M a year. 

 

Nothing like Buffett or Munger's, Jim Sinegal, nor even Prem's, but relative to what he's achieved in the past, the industry in general, and the solution to Leucadia's succession plan...it seems to be fair.  I would have loved to see him take a $1M dollar salary with no bonuses, but those guys are few and far between.  Cheers! 

[twacowfca]

while I recognize that Handler is an exceptional CEO

sometimes I wonder if such a pay is really in line with the contribution

I guess it's a tradition in the  IB sector but I really don't like it

20M per year is a very big percentage of the profit itself ...

This is probably one of the reasons that I am keeping the LUK position small in my portfolio

 

Jefferies Grants CEO Handler $58 Million in 2012, Future Pay

 

 

http://www.bloomberg.com/news/2013-01-29/jefferies-grants-ceo-58-million-in-2012-pay-future-incentives.html

 

Jefferies Group Inc. (JEF), the investment bank that agreed to sell itself to Leucadia National Corp. (LUK), paid Chief Executive Officer Richard Handler $19 million for fiscal 2012 and approved $39 million in restricted stock awards for the next three years.

 

 

Don't disagree.  I think he did, however, voluntarily waive his bonuses in 2011 when Jefferies was the target of unfounded rumors about major exposure to MF Global fallout.

 

I'm also not a big fan of these huge compensation packages, but let's take a look at what shareholders are getting.  The combined vehicle will have equity of $9B or so (I can't be bothered to read the presentation at this second), but assume that Handler achieves 12% on that equity into the future...that's about $1.08B pre-tax for shareholders to start with.  Of which, Handler will be the largest, or at least one of the largest shareholders, in the combined vehicle.  His compensation works out to about $20M a year. 

 

Nothing like Buffett or Munger's, Jim Sinegal, nor even Prem's, but relative to what he's achieved in the past, the industry in general, and the solution to Leucadia's succession plan...it seems to be fair.  I would have loved to see him take a $1M dollar salary with no bonuses, but those guys are few and far between.  Cheers!

 

 

Are we perhaps a  little off on the decimal places?  ???

[Parsad]

Tim?  In reference to ROE or equity...?  Cheers!

[twacowfca]

Tim?  In reference to ROE or equity...?  Cheers!

 

Sorry, I misread your statement.

[Parsad]

No worries.  Cheers!

[biaggio]

Compensation package is disappointing.

 

I am going to take a wait and see approach.

 

While I would take a 12% return, I would not think he would be worth this pay for such a return.

 

Very much like how FFH has it set up.

 

Would have preferred a decent base salary with a sizable stock holding with "bonus" being distributed to everyone via buy back or dividend.

 

Now if he were to return 20% per year- that would be another $720 million which would make it a decent return on $20 million- though I would think the rest of his management team would have to be given some credit.

 

I am mindful of what I think Mr Buffett was quoted as saying that it is hard to overpay a really capable operator/manager.

[Parsad]

Compensation package is disappointing.

 

I am going to take a wait and see approach.

 

While I would take a 12% return, I would not think he would be worth this pay for such a return.

 

Very much like how FFH has it set up.

 

Would have preferred a decent base salary with a sizable stock holding with "bonus" being distributed to everyone via buy back or dividend.

 

Now if he were to return 20% per year- that would be another $720 million which would make it a decent return on $20 million- though I would think the rest of his management team would have to be given some credit.

 

I am mindful of what I think Mr Buffett was quoted as saying that it is hard to overpay a really capable operator/manager.

 

Hi Bill, I agree with you, but Buffett tends to agree with huge pay packages at times too.  I was quite disappointed with the huge payout the CEO of Gillette received when they sold to Proctor & Gamble, but he was perfectly happy at the time. 

 

I think Handler's pay is what the market would pay him.  My opinion would be that if he owns so much, then his salary and bonus should be lower, but the business industry in general does not feel that way.  Buffett, Prem, Patrick Byrne, etc aren't that common.  Cheers!

[ShahKhezri]

I also think they have some traders/MD's that make north of $1MM, part of the industry. 

[twacowfca]

Compensation package is disappointing.

 

I am going to take a wait and see approach.

 

While I would take a 12% return, I would not think he would be worth this pay for such a return.

 

Very much like how FFH has it set up.

 

Would have preferred a decent base salary with a sizable stock holding with "bonus" being distributed to everyone via buy back or dividend.

 

Now if he were to return 20% per year- that would be another $720 million which would make it a decent return on $20 million- though I would think the rest of his management team would have to be given some credit.

 

I am mindful of what I think Mr Buffett was quoted as saying that it is hard to overpay a really capable operator/manager.

 

Hi Bill, I agree with you, but Buffett tends to agree with huge pay packages at times too.  I was quite disappointed with the huge payout the CEO of Gillette received when they sold to Proctor & Gamble, but he was perfectly happy at the time. 

 

I think Handler's pay is what the market would pay him.  My opinion would be that if he owns so much, then his salary and bonus should be lower, but the business industry in general does not feel that way.  Buffett, Prem, Patrick Byrne, etc aren't that common.  Cheers!

 

The greatest NA industrialist in the 19th cent, Andrew Carnegie, put such a premium on capable management that his managers became enormously wealthy.  If a manager is truly exceptional, it is hard to overpay.