JEF - Jefferies Group

[racemize]

anyone attend the meeting today?  They posted the presentation.

[benhacker]

The next shoe to drop here is a massive write-down of intangible assets. National Beef is carried at $650M of intangible assets. Is there a buyer out there for National Beef at all, or for that much? Jefferies has intangible assets of $1.9B which HAHAHAHAHAHAHAHAHA. And once Jefferies and National Beef are written down, then the $320 tax asset possibly gets written down. I could see this returning to the old lows of $10 once management throws in a huge writedown. It should have happened already.

 

Re-reading part of the thread.  This post was interesting to re-read... from 6 months ago....

 

National Beef just did +$104m pre-tax... in Q3 '16.  on pace to breach $250m for '16 as a whole, maybe $300m.

 

$700m for the "book" value though... seems wrong for sure to me.  Just maybe not in the direction (nearly) everyone seems to have thought recently.

 

And there is this...

 

http://www.wsj.com/articles/brazils-jbs-to-spin-off-international-business-1463015752

 

4 competitors today.  What if there were only 3?

 

We'll see.

[racemize]

What do you think of the stuff going on at Jefferies?  Even the adjusted numbers still seem low to me.  (Have a decent position in the company, and think there is limited downside, but ready to see some growth again)

[benhacker]

What do you think of the stuff going on at Jefferies?  Even the adjusted numbers still seem low to me.  (Have a decent position in the company, and think there is limited downside, but ready to see some growth again)

 

I do not have any great insight beyond my long term view posted earlier.

 

the results have been worse than I had expected by a fair amount, and I would like to see some improvement (like most would).

 

Generally, at this valuation I don't think about it a lot, and my view (from my original stake in JEF) is that one day down the line, JEF gets merged / sold / JV'd into a bigger bank.  Still my view, not sure the exact structure it will take or when.

 

Again, nothing great to add on that front.

[ratiman]

Why is there still $1,900,000,000 of intangible assets on the Jefferies balance sheet? Nobody believes there is $1 of intangible assets at Jefferies.

 

Here is what Jefferies says about goodwill: "Our annual goodwill impairment testing at August 1, 2015 did not indicate any goodwill impairment in any of our reporting units. Substantially all of our goodwill is allocated to our Investment Banking, Equities, and Fixed Income reporting units for which the results of our assessment indicated that these reporting units had a fair value in excess of their carrying amounts based on current projections. At November 30, 2015, goodwill allocated to these reporting units is $1,653.6 million of total goodwill of $1,656.6 million."

 

 

Here is what Goldman Sachs says about it's capital markets goodwill: "However, the estimated fair value of the Fixed Income, Currency and Commodities Client Execution reporting unit, which represents approximately 7% of our goodwill, was not substantially in excess of its carrying value. This reporting unit and the industry more broadly have been adversely impacted by the currently challenging operating environment and increased capital requirements. We will continue to closely monitor it to determine whether an impairment is required in the future. As of December 2015, the goodwill related to the Fixed Income, Currency and Commodities Client Execution reporting unit was $269 million, substantially all of which originated from the acquisition of Goldman Sachs Australia Pty Ltd in 2011."

 

 

Handler is delusional. That is why he continues to pour money into the Jefferies money pit. He will not stop until he sets the money pit on fire and then throws himself into it.

[scorpioncapital]

Whether they write it off or not officially probably makes no difference as the market has already written it off. However, I agree that he is quite stubborn, reminds me a bit of that Lampert guy who just keeps chipping away at Sears, one day it will work. But I have to say that Jefferies is not in as bad a state as Sears. You can see the difference pretty clearly, with Jefferies making maybe 300m per year in net income. But both are not run optimally in relation to their assets. LUK is what's called a 'secondary type stock' as described in Graham's works. What this means is that it serves as a good canary in the coal mine of when to start selling primary stocks before the next business cycle turns down. Namely, when secondary stocks start perking up and doing pretty well, that's often a sign that a little bit down the road there may be a turning of the cycle.

 

 

 

[thepupil]

That is why he continues to pour money into the Jefferies money pit.

 

Jefferies LoanCore and Jefferies Finance have been distributing cash, right?

 

Have there been any capital contributions to Jefferies since LUK bought it? I guess you could say Knight Capital and FXCM rescues, but those feel more like opportunistic rescues. I honestly don't know and am asking. I don't think there have been.

[ratiman]

Making $300M a year? JEF has lost about $75M so far in the first nine months. Yet if you visit the website, JEF touts itself as "The Global Investment Bank." Global? This is a little $3.5B bank. It's a third rate bank in its own country. The only reason for Handler and JEF to have offices in Mumbai and Tokyo is to stoke Handlers ego. Jefferies won't write down all that goodwill because Handler would have to admit that he made some bad acquisitions. He won't do that.

 

Banking is a cyclical industry that used to be a growth industry. That's a very dangerous situation because some of the banks still think they  are in a growth industry. JEF is the most likely candidate to get wiped out in the next cyclical downturn. Is it really going to compete in Stockholm, Mumbai, and Tokyo five years from now? No, those offices will get shut down and JEF will eventually take billions in writedowns in tangible capital and goodwill. It's insane for JEF to have a vast European operation when it can't make money in the US. If JEF decided to pursue a strategy like Greenhill of mostly being an advisory firm, that might work, though it's not really working for Greenhill either. But JEF is doing the exact opposite. I agree that Jefferies will probably sell itself or merge or something (again). But only when it has no choice and has already lost a ton of money. Handler is not going to make the decision to pull back on his own,  the market is going to do it for him. And remember he is the chairman and the CEO. There is nobody there who is going to tell him that maybe hiring more bankers isn't a great idea.

[thepupil]

JEF is the most likely candidate to get wiped out in the next cyclical downturn.

why? It has a pretty liquid balance sheet and has been decently tested in '08 and '11. Any IB collapsing is a possibility, just curious as to why you think JEF has greater risk?

[Ballinvarosig Investors]

Making $300M a year? JEF has lost about $75M so far in the first nine months. Yet if you visit the website, JEF touts itself as "The Global Investment Bank." Global? This is a little $3.5B bank. It's a third rate bank in its own country. The only reason for Handler and JEF to have offices in Mumbai and Tokyo is to stoke Handlers ego. Jefferies won't write down all that goodwill because Handler would have to admit that he made some bad acquisitions. He won't do that.

 

Banking is a cyclical industry that used to be a growth industry. That's a very dangerous situation because some of the banks still think they  are in a growth industry. JEF is the most likely candidate to get wiped out in the next cyclical downturn. Is it really going to compete in Stockholm, Mumbai, and Tokyo five years from now? No, those offices will get shut down and JEF will eventually take billions in writedowns in tangible capital and goodwill. It's insane for JEF to have a vast European operation when it can't make money in the US. If JEF decided to pursue a strategy like Greenhill of mostly being an advisory firm, that might work, though it's not really working for Greenhill either. But JEF is doing the exact opposite. I agree that Jefferies will probably sell itself or merge or something (again). But only when it has no choice and has already lost a ton of money. Handler is not going to make the decision to pull back on his own,  the market is going to do it for him. And remember he is the chairman and the CEO. There is nobody there who is going to tell him that maybe hiring more bankers isn't a great idea.

LUK has problems, but capital or liquidity certainly aren't the issue here. I haven't looked at all the investment banks exhaustively, from what I can see though, LUK is the least leveraged out of any of them. All things being the same, I'd say it'd be one of the last survivors if there was a collapse in the sector. As for the goodwill write-off, that isn't something that should affect the investment bank, and indeed, even excluding it, the company still sells for below book value.

 

Having defended LUK a bit, I am going to stick the knife in now. If you want to have a pop at LUK, then I suggest you look at the profitability of JEF. If anything, the climate has gotten even worse and LUK have only struggled the greater. At this stage, you have to wonder whether their current investment banking business model is permanently impaired. I don't have a view on that, but if the very best investment bank out there is priced at almost the same discount to tangible book, then why not buy it instead? I am of course talking about Goldman Sachs. If the environment for investment banks does recover, then it's likely that Goldman will be the first beneficiary to that. Why bother owning a third-rate operation (because really it is) and some other mediocre businesses?

 

Maybe there's something I am missing, but it does look like a lot of people are backing the jockey here, even though the jockey has buggered off to go run a winery!

[merkhet]

LUK has problems, but capital or liquidity certainly aren't the issue here. I haven't looked at all the investment banks exhaustively, from what I can see though, LUK is the least leveraged out of any of them. All things being the same, I'd say it'd be one of the last survivors if there was a collapse in the sector. As for the goodwill write-off, that isn't something that should affect the investment bank, and indeed, even excluding it, the company still sells for below book value.

 

Having defended LUK a bit, I am going to stick the knife in now. If you want to have a pop at LUK, then I suggest you look at the profitability of JEF. If anything, the climate has gotten even worse and LUK have only struggled the greater. At this stage, you have to wonder whether their current investment banking business model is permanently impaired. I don't have a view on that, but if the very best investment bank out there is priced at almost the same discount to tangible book, then why not buy it instead? I am of course talking about Goldman Sachs. If the environment for investment banks does recover, then it's likely that Goldman will be the first beneficiary to that. Why bother owning a third-rate operation (because really it is) and some other mediocre businesses?

 

Maybe there's something I am missing, but it does look like a lot of people are backing the jockey here, even though the jockey has buggered off to go run a winery!

 

That's the main reason I've been reluctant to dig deeper into Leucadia/Jeffries.

[undervalued]

LUK has problems, but capital or liquidity certainly aren't the issue here. I haven't looked at all the investment banks exhaustively, from what I can see though, LUK is the least leveraged out of any of them. All things being the same, I'd say it'd be one of the last survivors if there was a collapse in the sector. As for the goodwill write-off, that isn't something that should affect the investment bank, and indeed, even excluding it, the company still sells for below book value.

 

Having defended LUK a bit, I am going to stick the knife in now. If you want to have a pop at LUK, then I suggest you look at the profitability of JEF. If anything, the climate has gotten even worse and LUK have only struggled the greater. At this stage, you have to wonder whether their current investment banking business model is permanently impaired. I don't have a view on that, but if the very best investment bank out there is priced at almost the same discount to tangible book, then why not buy it instead? I am of course talking about Goldman Sachs. If the environment for investment banks does recover, then it's likely that Goldman will be the first beneficiary to that. Why bother owning a third-rate operation (because really it is) and some other mediocre businesses?

 

Maybe there's something I am missing, but it does look like a lot of people are backing the jockey here, even though the jockey has buggered off to go run a winery!

 

That's the main reason I've been reluctant to dig deeper into Leucadia/Jeffries.

 

Maybe we should be buying the wineries instead?

[Jurgis]

Maybe we should be buying the wineries instead?

 

If you want to live like that Mexican guy from the story in portfolio thread...  8)

[Spekulatius]

For what it's worth, and assuming I read their annual report correctly, this week is the first time the stock traded under book value since 1998 (using year-end data).

 

GS trades around book value too, pays a dividend and is more profitable than Jeffries. I think it is a better buy than LUK. why buy a second rate investment bank, when you can buy the real thing for an equal or better price?

[doughishere]

Making $300M a year? JEF has lost about $75M so far in the first nine months. Yet if you visit the website, JEF touts itself as "The Global Investment Bank." Global? This is a little $3.5B bank. It's a third rate bank in its own country. The only reason for Handler and JEF to have offices in Mumbai and Tokyo is to stoke Handlers ego. Jefferies won't write down all that goodwill because Handler would have to admit that he made some bad acquisitions. He won't do that.

 

Banking is a cyclical industry that used to be a growth industry. That's a very dangerous situation because some of the banks still think they  are in a growth industry. JEF is the most likely candidate to get wiped out in the next cyclical downturn. Is it really going to compete in Stockholm, Mumbai, and Tokyo five years from now? No, those offices will get shut down and JEF will eventually take billions in writedowns in tangible capital and goodwill. It's insane for JEF to have a vast European operation when it can't make money in the US. If JEF decided to pursue a strategy like Greenhill of mostly being an advisory firm, that might work, though it's not really working for Greenhill either. But JEF is doing the exact opposite. I agree that Jefferies will probably sell itself or merge or something (again). But only when it has no choice and has already lost a ton of money. Handler is not going to make the decision to pull back on his own,  the market is going to do it for him. And remember he is the chairman and the CEO. There is nobody there who is going to tell him that maybe hiring more bankers isn't a great idea.

LUK has problems, but capital or liquidity certainly aren't the issue here. I haven't looked at all the investment banks exhaustively, from what I can see though, LUK is the least leveraged out of any of them. All things being the same, I'd say it'd be one of the last survivors if there was a collapse in the sector. As for the goodwill write-off, that isn't something that should affect the investment bank, and indeed, even excluding it, the company still sells for below book value.

 

Having defended LUK a bit, I am going to stick the knife in now. If you want to have a pop at LUK, then I suggest you look at the profitability of JEF. If anything, the climate has gotten even worse and LUK have only struggled the greater. At this stage, you have to wonder whether their current investment banking business model is permanently impaired. I don't have a view on that, but if the very best investment bank out there is priced at almost the same discount to tangible book, then why not buy it instead? I am of course talking about Goldman Sachs. If the environment for investment banks does recover, then it's likely that Goldman will be the first beneficiary to that. Why bother owning a third-rate operation (because really it is) and some other mediocre businesses?

 

Maybe there's something I am missing, but it does look like a lot of people are backing the jockey here, even though the jockey has buggered off to go run a winery!

 

Merk, Ballinvarosig.....what if LUK was trading at 50% discount to NAV...would you still invest in the 3rd rate Ibank?

[merkhet]

It would depend on whether Goldman Sachs was also trading at 0.5x book. I would then still prefer Goldman Sachs. However, if Goldman Sachs was at 1.0x book, then probably LUK is more attractive (depending on where you think you are in the cycle, etc.).

[WhoIsWarren]

Making $300M a year? JEF has lost about $75M so far in the first nine months. Yet if you visit the website, JEF touts itself as "The Global Investment Bank." Global? This is a little $3.5B bank. It's a third rate bank in its own country. The only reason for Handler and JEF to have offices in Mumbai and Tokyo is to stoke Handlers ego. Jefferies won't write down all that goodwill because Handler would have to admit that he made some bad acquisitions. He won't do that.

 

Banking is a cyclical industry that used to be a growth industry. That's a very dangerous situation because some of the banks still think they  are in a growth industry. JEF is the most likely candidate to get wiped out in the next cyclical downturn. Is it really going to compete in Stockholm, Mumbai, and Tokyo five years from now? No, those offices will get shut down and JEF will eventually take billions in writedowns in tangible capital and goodwill. It's insane for JEF to have a vast European operation when it can't make money in the US. If JEF decided to pursue a strategy like Greenhill of mostly being an advisory firm, that might work, though it's not really working for Greenhill either. But JEF is doing the exact opposite. I agree that Jefferies will probably sell itself or merge or something (again). But only when it has no choice and has already lost a ton of money. Handler is not going to make the decision to pull back on his own,  the market is going to do it for him. And remember he is the chairman and the CEO. There is nobody there who is going to tell him that maybe hiring more bankers isn't a great idea.

 

I've had a long position in Leucadia for around 5 years and like Ballinvarosig have defended the company in the past (in other words, I've been wrong).  There are plenty of knives out now and certainly my own patience and confidence in the company's future has been tested.  But let's keep to the facts and avoid hype.  Ratiman, you make some good points in your post, but in my view you lose credibility with some incorrect or truth-stretching statements.

 

For example, you say that Handler won't write down the value of the investments because it would be akin to admitting past mistakes.  Firstly, a decision to write down goodwill is one that will be taken by the auditors, not Handler (though he inputs into the decision).  But secondly, most of the goodwill relating to Jefferies had nothing to do with Handler / Friedman - it relates to the merger with Leucadia.  If you're to 'blame' anyone, blame Cummings / Steinberg.

 

You also say that Hander is chairman and CEO and effectively is unanswerable.  Well I just don't accept that.  Now presumably you're talking about him being chairman and CEO of Jefferies because he is only CEO of Leucadia (Steinberg is Chairman).  So yes, Handler / Friedman have a huge input into how Jefferies is run, but Steinberg and the rest of the Leucadia board will have the final say.  Let's remind ourselves that Steinberg owns over $400m worth of Leucadia stock , so he's motivated to put the brakes on a bad idea.  Also let's remind ourselves that Handler / Friedman own around $370m worth of Leucadia stock.  They may be wrong, but they should be well meaning.

 

That is why he continues to pour money into the Jefferies money pit. He will not stop until he sets the money pit on fire and then throws himself into it.

 

Again, I'm not sure the tone of this comment is helpful but, like thepupil, I would like to hear more about what you're saying.  I can't see that Jefferies has received any capital injections since being taken over by Jefferies.  Then again, I don't think Jefferies has returned capital to the parent either (unlike GS), so maybe 'pour money into the....pit' is a commentary on retained earnings rather than new capital.  If so, fair enough.

 

The last thing I would like to say is that a number of you have commented on Jefferies being a 2nd or 3rd tier investment bank.  This may be the case, but I think some balance should be applied.  I believe (correct me if I'm wrong) that Jefferies has so far avoided a major fine relating to mis-selling / fraud / market manipulation, issues that have plagued ALL of the so-called 1st tier competitors.  GS, ML, MS, Barclays, RBS, UBS, CS.......and most recently Deutsche Bank. These banks have all been hit with multi-billion penalties.  As far as I can tell, Jefferies incurred a $25 million fine.  Now I know that there have been some pretty juicy tabloid reports into some of the goings on among some Jefferies employees, but on balance the culture of the firm must be reasonable for it to have avoided the fate of its 'more successful' peers.  Seems to me that Jefferies don't play so close to the line.  And arguably, the most money is made by playing close to or beyond the line and hence reducing Jefferies' profits. [e.g. Goldman Sachs and Malaysian government sponsored fund IMDB http://www.wsj.com/articles/goldman-sachs-subpoenaed-by-u-s-agencies-for-documents-related-to-1mdb-1469838131].

 

Management has made some mis-steps in the last few years for sure - they would admit this themselves.  For example, with Bache; they took their medicine and have moved on (Yes - Handler admitted he made a mistake!).  They also had too much inventory in bonds of energy companies in 2015 if I'm not mistaken.  Maybe their geographic expansion will prove to be similarly foolhardy, but it does seem sensible to me to try to take advantage of your competitors when they are being forced to shrink.  But really I don't know.  I'm hoping that reasonable, financially-motivated people that see a range of interesting opportunities will figure things out.

 

Benhacker, your comment on Jefferies being sold or merged with another is on the money. Handler / Friedman feel that there are any number of non-US (Asian?) banks that are looking to gain a meaningful US presence.  I also believe this to be true.  What would such a bank be prepared to pay for that?  Well, if they were to do it organically, it would take them many years and probably result in a high level of losses to replicate the reputation and relationships that Jefferies has built up over the years (2nd tier as it may be).  Therefore I believe Jefferies should be worth meaningfully above tangible book value.  The base value for Jefferies is probably around 0.9x tangible book, which is what you'd be able to realise in an orderly wind-down of the bank.  Ah but, I hear you say, what trade buyer would buy Jefferies at a premium to book when GS trades at tangible book?  A fair comment, though I would question whether the mighty GS would be for sale.....especially to a Chinese bank.  Besides a large premium would have to be paid and not too many could afford the price tag. Of course, the average Joe can go in and buy Goldies without a paying premium to current book (I haven't looked at GS in any detail).  The real value hunters can pick up Deutsche Bank at 0.25x, but personally that's not one I'd touch.

 

I hope I'm being somewhat balanced in my response, though given the level of negativity here I think it's no harm to have a positively biased voice (ha ha).  Comments / push back welcome.

[benhacker]

Well said WIW, I agree with much of your view, and thanks for sharing your thoughts.

 

Further, to amplify the goodwill point:

 

If you think JEF is a terrible crap bank worth very little, or a huge discount to book.  I think then you have to admire the amazing capital allocation ability of the current LUK CEO.  I hear he bamboozled some sharpy's at his last job and sold a shit investment bank for ~1.5x+ book value... Seems like a CEO one might want to pay attention to...

 

If you think one and not the other (both extremes), I think it's questionable logic; I think Handler is good, and I think JEF is probably worth close to the price sold.

 

Ben

[arcticfox]

I have included my notes from the Investor day. I have not edited them and they were written during the meeting so I was able to get many of the key points but also probably missed a few things. I tried to keep my opinions out of the notes.

Some of my opinions and thoughts are below

 

Leucadia is a different company from before in  many ways and as Joe Steinberg said 1 year ago at the investor meeting, the old Leucadia is gone. The one way in which it remains the same is they they are  opportunistic value investors looking to build shareholder value. Since the transition it has been poor to say the least. It has taken way more time than I would of expected but I do think the foundation for value creation is there. Their big subsidiaries need to start generating more cash which will allow them to dramatically increase their flexibility and go on the offensive when necessary. Looking out 3 years as their most recent investments have begun to mature and bear fruit it is not difficult to see a revaluation towards book value and higher but they need to grow book value.

 

Full Disclosure: I am a shareholder and have been for some time. Paid as low as $11(2009) and as high as $26 (2013), was a seller at $32 (2011) a couple years back.

 

Enjoy the notes and let me know if you have any questions.

Leucadia_Investor_Day_Meeting_Notes_10-5-2016.docx

Leucadia_Investor_Day_Meeting_Notes_10-5-2016.docx

[racemize]

Thanks for posting.  Glad they are focused on double digit ROTCE.  Did they give any timeline on that target?

[Foreign Tuffett]

Thanks for the notes.

 

It's good to hear that they are open to selling off a minority stake in Jefferies. I could see an Asian buyer paying a decent premium over what the market seems to value the bank at now (under tangible book).

 

Leucadia is effectively holding company "grab bag" of assorted assets/companies. Moving forward the market is likely to always (or almost always) price it at a discount to its intrinsic value. The discount will vary over time of course.

 

 

 

[thepupil]

LUK sold Conwed for $295mm ($104mm book value, $46mm tangible book value), 2.83X Book and 6.4X tangible. The sale will result in $180mm of taxable gain which will used up $75mm of the DTA, so book value will increase by about $220mm (about 2%) and LUK will get $295mm in cash plus potentially up to $40mm from earnouts.

 

HRG getting cleaned up is probably a 2017 event, and more material.

 

Leucadia Announces Sale of Conwed

 

Business Wire

 

NEW YORK -- December 14, 2016

 

Leucadia National Corporation (NYSE:LUK) (“Leucadia”) today announced that it has entered into a definitive purchase agreement to sell 100% of Leucadia’s wholly owned subsidiary, Conwed Plastics (“Conwed”), to Schweitzer-Mauduit International, Inc., (NYSE:SWM) (“SWM”). Under the terms of the transaction, which is expected to close in January 2017, Leucadia will receive $295 million in cash at closing plus potential earn-out payments over five years of up to $40 million in cash to the extent the results of Conwed’s subsidiary, Filtrexx International, exceed certain performance thresholds. As of September 30, 2016, Leucadia’s net investment in Conwed was $104 million, of which $46 million was tangible book value. Leucadia estimates it will recognize a pretax gain of approximately $175-185 million (excluding value associated with the earn-out) upon the closing of this sale.

 

Rich Handler, Chief Executive Officer, and Brian Friedman, President of Leucadia, stated: "Conwed has been a solid Leucadia business for over thirty years; however, SWM approached us as a compelling buyer and we agreed. We look forward to watching Conwed’s outstanding CEO, Chris Hatzenbuhler, help propel Conwed to even greater heights under its new partnership with SWM, and we want to take this opportunity to express our most sincere thanks to Chris and the entire Conwed team for their hard work and excellent performance.”

 

Headquartered in Minnesota, Conwed is the leading light-weight plastic netting manufacturer in the world with more than forty-five years of experience developing netting solutions to help its customers improve their products in a wide range of industries. From agriculture, automotive, building and construction and consumer products to filtration, hygiene, medical and packaging applications, Conwed’s netting portfolio provides essential performance functionalities.

 

About Leucadia

 

Leucadia National Corporation is a diversified holding company that invests in a broad array of businesses. The Company’s financial services businesses and investments include investment banking and capital markets (Jefferies), asset management (Leucadia Asset Management), foreign exchange trading services (FXCM), real estate (HomeFed), commercial mortgage banking and servicing (Berkadia), and vehicle finance (Foursight and Chrome). The Company’s merchant banking businesses and investments include beef processing (National Beef), a diversified holding company (HRG), oil and gas exploration and production (Vitesse Energy and Juneau Energy), automobile dealerships (Garcadia), manufacturing (Idaho Timber), telecommunication services in Italy (Linkem), and a gold and silver mine (Golden Queen).

 

This press release may contain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 and other federal securities laws that are subject to the safe harbor created by such laws and other legal protections. Caution should be taken not to place undue reliance on any such forward-looking statements because actual results may differ materially from the results suggested by these statements. These forward-looking statements are made only as of the date of this presentation. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. In addition, forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from our historical experience and present expectations or projections. These risks and uncertainties include, but are not limited to, those described in Part I, “Item 1A. Risk Factors” and elsewhere in our Annual Report on Form 10-K for the period ended December 31, 2015 and those described from time to time in our periodic and other reports filed with the Securities and Exchange Commission.

 

Tangible book value is a non-GAAP financial measure used by Leucadia when reviewing each of our businesses and investments and may not be comparable to non-GAAP measures used by other companies. We believe that this information is useful to investors as it allows them to view our businesses and investments through the eyes of management while facilitating a comparison across historical periods. We define tangible book value as shareholders’ equity less intangible assets, net and goodwill. Our net investment (shareholders’ equity) in Conwed at September 30, 2016 was $104 million, intangible assets, net and goodwill totaled $58 million and tangible book value was $46 million.

[benhacker]

Nearly 2x my high case valuation...

 

Sitting on my hands while this one runs.

 

Ben

[no_free_lunch]

Ben,

 

Are you referring to LUK in general or Conwed valuation?

[benhacker]

Are you referring to LUK in general or Conwed valuation?

 

hahah... Conwed valuation.  In my sum-of-parts, I explicitly gave Conwed a much lower valuation.

 

I think LUK is probably worth high $30's.  My largest position.