Following the earlier spirited defense of JEF by Oppenhemier and outright bashing of Egan Jones, Sean Egan fires right back.
Synopsis: Prior reports excluded projections because of the skewed financials relating to the FYE change; a more granular liquidation analysis is avail. upon request. JEF needs to raise equity (i.e., $1B) AND deleverage to reduce its 9.5+% LT yield. JEF's total debt to capital is 90.4% vs. 67% for IBKR, 62% for RJF and 43% for GFIG. GS and MS have ratios near 88% but they are significantly larger and should have some federal support via their banking charters. Furthermore, MF's freezing and shortchanging client funds have increased scrutiny of other medium-sized brokers. Raising $1B in new equity and reducing assets by $5B would reduce total debt to capital to only 86%. Watch the cost and availability of funding. We will cut without a major deleveraging.