Jefferies Management In Crisis

Jefferies (JEF) released its quarterly financials yesterday morning and claimed to have achieved records in everything. It made particular note of a record EPS number. Investors, it beat its previous high by one penny a share.

The result is not worthy of banging the big drum but Jefferies needs some positive headlines so it ginned up its own. The last major news it had was a downgrade by Goldman Sachs on April 2.

The press release is Reg FD challenged. Other than announcing records and providing basic numbers, it has really not said anything about the business. It has referred one and all to the conference call which will be live one hour after the press release. If the conference call contains significant substance and the press release is an empty document, Jefferies will have some regulatory scrutiny to deal with.

Jefferies is playing a dangerous game. It knows most investors and financial media will not listen to and or read the conference call transcript. The press release has such poor disclosure that it will be ignored and viewed as useless by investors. Jefferies knows it has a less than stellar story and it is attempting to place a cone of silence over the proceedings. This way investors will have a dim memory of the negative. When Jefferies starts to come out with good news which it needs, the story will not have to overcome as much skepticism.

This is a management group that is in crisis and showing signs of desperation. This is not where reasonable investors want to put their money.

JEF 1-yr chart