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No. of Recommendations: 7
I posted the below on another board in response to a question basically asking if JEF was cheap at the current price of <$20. It seemed worth posting to the relevant, if mostly deserted, board:


It is trading below tangible book value, so certainly conventionally cheap. The main issue is that book value had not grown for several years, making it difficult to justify paying a multiple to book value. Currently, the market seems to be valuing them on tangible book or less. The stock occasionally swoons very deeply, which seem like good opportunities to me.

In general, their future is now very much tied to the core Jefferies Finance investment banking business (relative to historically) and they have made some simplifying moves that make this ever more the case. If you don't think the investment bank has good prospects, probably best to steer clear. They like to tout their increased market position in several of the IB areas, but they give it as a rank position rather than in terms of the total size of the IB market segments, so sometimes not clear how much absolute growth this represents.

They have been repurchasing shares - diluted shares were down about 5.2% year-over-year. They've been maxing out their repurchase authorizations, having just authorized a new one for $500M in January 2019.

The most recent 10-K reported a book value of $32.72, a 15% increase over the 2017 $28.37 figure (which has been flat since at least 2014). I calculate that tangible book was $23.26, a 12.8% increase over the 2017 $20.62 figure.

They seem to be pulling the levers they have to push up tangible book, as the executive compensation is heavily incentivized toward return on tangible equity and total shareholder return. Most of these are individually smallish moves, but eventually may add up. Occasionally they make a nice exit on an older position, which also helps.
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