Leucadia Is Still Lovable
Leucadia: Trading At 70% Fair Value Despite Long-Term Growth Potential
Liu Capital • 113 Comments
Liu Capital • 113 Comments
Leucadia National Corp.: Where Value Investors Can Still Find Good Opportunity In This Inflated Market
Mingran Wang • 33 Comments
Mingran Wang • 33 Comments
Tue, Jun. 21, 8:37 AM
- For the quarter ended May 31, fixed-income trading revenue rose 55% to $238.5M - it's the best Mar-May quarter since 2012, and the largest quarterly increase since 2014.
- Net income for Jefferies (NYSE:LUK), however, fell 9.9% Y/Y to $53.9M as stock and bond underwriting fees fell by more than half.
- Employee compensation of $765M fell 13.6% Y/Y vs. just a 4.2% Y/Y decline for the previous quarter.
- "We are pleased to report quarterly results at a more normal level, reflecting better equity and fixed-income secondary trading conditions, although new-issue capital-markets activity remained somewhat muted," says CEO Richard Handler. One quarter earlier, Handler had pronounced himself "humbled" and vowing to do better.
Fri, Jun. 17, 3:24 PM
- The financial sponsor division manages relationships with private-equity firms, and the moves come following the departure of the group's global head in March.
- Out is Theodore Tutun, and in is Christopher Ooten, who is coming over from BAML. Jefferies (NYSE:LUK) is also holding talks with P-E specialists at other banks, but no hires have yet been made.
- With stricter regulation crimping action at rival investment banks, Jefferies has been able to take market share. In leveraged loans, Jefferies climbed to 11th place in the standings last year from 35th in 2008.
Sat, Jun. 4, 1:19 PM
- Impossible Foods aims to disrupt the food industry by developing meat products from plant-based ingredients. Launched by a top biochemist from Stanford, the startup says it's on the verge of offering meat lovers an alternative that looks, smells, and even sizzles (video) like regular ground beef.
- Science timeout: Impossible honed in on a molecule called heme that catalyzes the flavors in meat. A legume-derived heme-containing protein is put to the task of creating the meat taste that even top chefs have raved about.
- The first Impossible Burgers are expected to be launched this year in the U.S.
- Notable names are taking in an interest in the concept. During the last venture capital round, Impossible brought in fresh funds from Bill Gates and Hong Kong tycoon Li Ka-shing. Former Nest/Google exec Tony Fadell is also an angel investor. Impossible Foods CEO Patrick Brown confirmed at Recode's Code conference that the company turned down an offer from Google (pre-Alphabet split) for somewhere between $200M and $300M.
- If the startup were to ramp up at scale, the development might be something to watch for meat giants such as Cargill, Tyson Foods (NYSE:TSN), JBS (OTC:JBSAF), and National Beef Packaging Company (NYSE:LUK). Kraft Heinz (NASDAQ:KHC) and Kellogg (NYSE:K) are already active in the frozen veggie burger category, while Whole Foods Market (NASDAQ:WFM) has been dabbling with indie brands. There's also an interesting tie-in with McDonald's (NYSE:MCD) looking to appeal to millennials and Chipotle (NYSE:CMG) working on developing a "better burger" concept.
Thu, May 26, 3:31 PM
Wed, May 4, 5:44 PM
Mon, Apr. 18, 2:58 PM
- Leucadia National (LUK +0.5%), the developer of a planned liquefied natural gas export terminal on the Oregon coast, reportedly has withdrawn its proposal to build the facility because of a lack of funding.
- The $6.3B Oregon LNG project near Warrenton, Ore., was designed to have a liquefaction capacity of 9M metric tons/year and construction was expected to begin next year.
- The project had faced several setbacks, including a legal fight with the U.S. Army Corps of Engineers over rights to land for the facility, and local opposition because of effects on the fishing industry and the environment.
Tue, Mar. 15, 8:45 AM
- "Our overall Q1 results reflect an exceptionally volatile and turbulent market environment during our first fiscal quarter," says Jefferies (NYSE:LUK) CEO Richard Handler. "A quiet December was followed by an extremely challenging January and first few weeks of February."
- The investment bank posted a loss of $166.8M in Q1 vs. a profit of $12.9M a year ago. Revenue of $299M fell a full 49%, led by an 82% plunge in trading revenue to $58.8M. Of this, fixed-income revenue fell to $56.8M from $126M. Equity trading revenue fell to just $1.7M from $203.5M thanks to markdowns on two equity block trades.
- Good times ahead: Not only have markets stabilized, says management, they've "aggressively snapped back" in the early part of Q2.
- Coming one month ahead of the rest of the Wall Street banks, Jefferies results are often seen as a bellwether of what to expect. It sounds like Goldman (NYSE:GS), Morgan Stanley (NYSE:MS), Bank of America (NYSE:BAC), CItigroup (NYSE:C), and JPMorgan (NYSE:JPM) have the month of March to make up for what was a very lame start to the quarter.
- ETFs: IAI, KCE, KBWC
Thu, Mar. 10, 4:26 PM
- The two have entered an MOU which, among other things, extends the credit agreement by one year to Jan. 2018, allowing FXCM more the time necessary to get the best price on its asset sales. FXCM will have the right to defer interest payments by paying interest in kind (IOUs).
- A long-term incentive program has been put in place to make it worth staying for FXCM senior management.
- FXCM will be changing its name and ticker symbol at a later date.
- Source: Press Release
- Shares about flat in active after hours action.
Mon, Mar. 7, 10:02 AM
- The tough times in fixed-income land continue, with Jefferies' (LUK -0.6%) global head of leveraged finance and global head of sponsors both exiting as the bank merges its junk-rated loans and bonds business with the junk debt unit of its JV with MassMutual Financial, according to Reuters.
- Banks of late are having trouble moving junk-rated product, including November's failure by Jefferies and others to syndicate the loans to Carlyle Group for its $8B purchase of Symantec's Veritas.
- Jefferies frames the moves as a way to boost efficiency and focus on clients, rather than in response to troubled deals.
- The bank has been a beneficiary of D.C.'s new regulatory regime because it doesn't come under the oversight of the Fed, OCC, or FDIC. It ranked second last year for leveraged buyout financing with a 7.8% market share.
Fri, Feb. 19, 4:33 PM
Thu, Jan. 14, 3:32 PM
- Leucadia's (LUK +4.9%) Jefferies unit has been burned by its exposure to commodities, high-yield, and distressed energy debt investments (and LUK has given up 40% of its market cap since the summer), but Oppenheimer Chris Kotowski calls Leucadia a "uniquely positioned financial institution."
- Oppenheimer this week hosted a dinner for LUK's CEO and CFO, and Kotowski came away with added belief in the management team and greater conviction of the company's value at current prices.
- CEO Richard Handler says one should think of Leucadia as a holding company with two components - an investment bank and a merchant bank - and that having the investment bank makes them a better merchant bank. "You are a better merchant banker with more bats," says Handler, noting LUK's 700 investment bankers.
- However, one views LUK, says Kotowski, the key for the stock will be to return Jefferies to a decent level of profitability - an assessment Handler agrees with.
Dec. 1, 2015, 11:48 AM
- While on first glance, Leucadia (LUK +1.2%), says Chris Kotowski, looks like an "oddball hodgepodge of businesses" - among them, a broker-dealer, a beef processor, an auto dealership system, a maker of plastic netting, an Italian fixed wireless broadband provider - the company should be viewed as a merchant bank with a unique permanent capital capability.
- Kotwoski notes the well-timed taking of sizable equity stakes in Knight Capital, FXCM, and Harbinger Group, and valuable platforms in asset management, real estate development, and energy.
- "This distinguishes it from its bulge bracket and boutique peers. Investors in Leucadia need to take a long view and be tolerant of lumpy earnings, but we believe they will be amply rewarded."
Nov. 5, 2015, 9:28 AM
- Leucadia National (NYSE:LUK): Q3 EPS of -$0.47
- Revenue of $2.37B (-21.0% Y/Y)
Oct. 30, 2015, 9:28 AM
- Leucadia National (NYSE:LUK) declares $0.0625/share quarterly dividend, in line with previous.
- Forward yield 1.25%
- Payable Dec. 28; for shareholders of record Dec. 14; ex-div Dec. 10.
Sep. 18, 2015, 8:56 AM
- Often seen as a bellwether for the major investment banks, investors are likely to brush off a 50% plunge in trading revenue for the three months ended Aug. 31 reported by Jefferies (NYSE:LUK) yesterday.
- Bloomberg's Matt Levine notes Jefferies' focus on distressed energy debt trading and underwriting did it no favors last quarter, with the bank posting $90M of distressed energy losses. Instead of Jefferies being a microcosm of the larger banks, it's instead what those banks might look like were in not for the Volcker Rule, i.e. losing a lot of money on distressed energy debt!
- In investor conferences this week, both Bank of America and Citigroup said to expect about a 5% decline in FICC revenue in Q3.
- ETFs: XLF, FAS, FAZ, UYG, VFH, IYF, BTO, IAI, SEF, IYG, FXO, FNCL, FINU, KCE, RWW, RYF, KBWC, FINZ
Aug. 5, 2015, 9:07 AM
- Leucadia National (NYSE:LUK): Q2 EPS of $0.11
- Revenue of $2.84B (-0.4% Y/Y)
Leucadia National Corp. is a diversified holding company. It engages in a variety of businesses, including investment banking and capital markets, beef processing, manufacturing, oil and gas exploration and production and asset management. The company was founded in 1968 and is headquartered in... More
Industry: Diversified Investments
Country: United States
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