Here is What Black Bear Value Partners Thinks About Jefferies Financial Group Inc. (JEF)

Black Bear Value Partners recently shared its thoughts on Jefferies Financial Group Inc. (NYSE:JEF) in its Q1 2019 Investor Letter. If you are interested you can download a copy of the letter here, while we bring you that part of the letter that discusses only Jefferies:


Jefferies is an investment bank and merchant bank AKA the former Leucadia.

The business is valued cheaply with thoughtful and talented capital allocators at the top buying back tons of stock at a significant discount to its intrinsic value. Absent a major shift in the company’s performance, the value will be realized, and we will own an increasing amount of the company. There are “hidden” assets within the merchant bank that are undervalued on the balance sheet due to GAAP accounting. Economic accounting would result in a far higher value on the balance sheet.

To be fair, the investment banking business is tough. It’s competitive, people-intensive, and somewhat dependent on the health of the economy. The price we are paying for the bank and the underlying assets provides a margin of safety.

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Jefferies Group is an NYC-based investment bank and financial services company. Since the beginning of the year, the company’s stock gained 13.9% having a closing price of $20.16 on April 19th. Its market cap is $5.87 billion, and the stock is trading at a P/E ratio of 6.38.

At Q4’s end, a total of 36 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -8% from the previous quarter. Let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Of the funds tracked by Insider Monkey, First Pacific Advisors LLC, managed by Robert Rodriguez and Steven Romick, holds the number one position in Jefferies Financial Group Inc. (NYSE:JEF). First Pacific Advisors LLC has a $358.7 million position in the stock, comprising 3.4% of its 13F portfolio. On First Pacific Advisors LLC’s heels is Arlington Value Capital, led by Allan Mecham and Ben Raybould, holding a $68.2 million position; 5.4% of its 13F portfolio is allocated to the company. Remaining members of the smart money that are bullish consist of Amit Wadhwaney’s Moerus Capital Management, Scott Wallace’s Wallace Capital Management and Gregg J. Powers’s Private Capital Management.


Disclosure: None.

This article was originally published at Insider Monkey.