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Egan Jones With Latest Jefferies Shocker: "Unsustainable... 77 Cent Recovery On Senior Debt... We Will Cut Without A Major Deleveraging"

Tyler Durden's picture


And here is Egan-Jones again:

Synopsis: Unsustainable, in our opinion - 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 RJR 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%. Email us for a more granular liq. analysis showing a 77% recovery for the sen. debt. Watch the recent rise in int. exp. relating to an acq. and the cost and avail. of funding. We will cut without a major deleveraging.

Full note


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Tue, 11/22/2011 - 13:45 | 1903105 redpill
redpill's picture

Jefferies is fine


Tue, 11/22/2011 - 13:52 | 1903140 slaughterer
slaughterer's picture

Egan-Jones and ZH really have a hard on for JEF.  

Tue, 11/22/2011 - 13:56 | 1903157 a growing concern
a growing concern's picture

Something something smoke something something fire.

Tue, 11/22/2011 - 14:11 | 1903226 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

Luckily for me silver doesn't burn.

Tue, 11/22/2011 - 14:55 | 1903469 redpill
redpill's picture

Luckily Groupon Stock Certificates do, because at this rate all they will be good for is kindling soon.

Tue, 11/22/2011 - 13:58 | 1903172 cbaba
cbaba's picture

They are the underwriters for MF Global Bonds and they are liable for various law suits now.

Of course they will be under scrunity.

Then there will be the next, and next and next....until all the dominoes fall.

Remember if there is one cockroach in the kitchen, there will always be some others that you don't see them yet.

Tue, 11/22/2011 - 14:12 | 1903229 sitenine
sitenine's picture

Cockroaches indeed. Corzine hasn't been questioned, and will likely be hired by GS or the like in short order. Justice is blind... Yeah, real blind. Just read this yahoo story, and nearly puked on my keyboard -

Tue, 11/22/2011 - 14:50 | 1903435 mrgneiss
mrgneiss's picture

Someone should do some heavy editing on his Wiki bio to help portray the real incompetent and criminal that he is.

It is interesting reading his bio, his ex-wife said he let his family down and would let down the people of New Jersey as well, how prescient of her!

He was injured in an accident once, not wearing a seatbelt, way over the speed limit, with a state trooper driving him..................didn't requalify for certain FINRA licenses............obviously someone who felt the laws for the little people didn't apply to him..........when reading of these incidents in his bio no one should be surprised by the looting of the customer accounts at MF Global by this kind of narcissistic sociopath...........

Tue, 11/22/2011 - 16:14 | 1903861 smlbizman
smlbizman's picture

fuckin o.j. knows corzines guilty....

Tue, 11/22/2011 - 14:00 | 1903180 redpill
redpill's picture

The Tylers have a good nose for smelling bullshit, which is all Jefferies has been talking since MF Global went tits up.

Tue, 11/22/2011 - 14:08 | 1903216 slaughterer
slaughterer's picture

Cue Dick Bove:

(out on Fox just one minute ago):

Rochdale Securities analyst Dick Bove told FOX Business that Jefferies is an "acquisition target" and the most likely acquirers are capital rich Canadian banks, which include Royal Bank of Canada and TD Bank Group. 

Read more:

Tue, 11/22/2011 - 14:51 | 1903443 ItsDanger
ItsDanger's picture

Someone tell the 2 dicks, thats not happening.  Canadian banks are more interested in regional bank acquisitions.

Tue, 11/22/2011 - 16:05 | 1903817 earnyermoney
earnyermoney's picture

Tricky Dick starting a rumor to ramp the stock. Must have a rather large sack of JEF turds over his shoulder.

Tue, 11/22/2011 - 14:19 | 1903257 HedgeAccordingly
HedgeAccordingly's picture

Hope they are long crude -

Tue, 11/22/2011 - 13:56 | 1903154 GeneMarchbanks
GeneMarchbanks's picture

Should of went for that discount window but Nooo you wanted to be The Last True Investment Bank didn't ya?

Tue, 11/22/2011 - 14:09 | 1903215 WestVillageIdiot
WestVillageIdiot's picture

By the way, when will Goldman be opening up a bank branch near me?  I thought there were rules for banks about making sure they have enough locations to serve the public.  Surely, Goldman must have branches all around the country, if they are a bank.  I am walking distance to their headquarters.  Do they have ATMs in there?  Do they offer personal checking with BillPay? 

Tue, 11/22/2011 - 14:15 | 1903241 GeneMarchbanks
GeneMarchbanks's picture

Funny you ask. The Squid doesn't so much have 'branches' as full service tentacles. Also, they have ATMs but it stands for something else and you absolutely must be a customer.

Tue, 11/22/2011 - 14:32 | 1903327 MachoMan
MachoMan's picture

I'm pretty sure they hand out ATMs to most people, not just clients proper...

Tue, 11/22/2011 - 13:58 | 1903171 jcaz
jcaz's picture

LOL-  Dick, Dick, Dick.....   Find out where Corzine is hiding, go join him while you can......

Tue, 11/22/2011 - 14:10 | 1903222 Beam Me Up Scotty
Beam Me Up Scotty's picture

That sounds an aweful lot like Tick, Tick, Tick.......

Tue, 11/22/2011 - 14:05 | 1903206 catacl1sm
catacl1sm's picture

Timely, from the Jefferies Winning Battle vs Critics, Shorts

Tue, 11/22/2011 - 19:13 | 1904605 Buck Johnson
Buck Johnson's picture

I knew Jeffries was BS everybody.  They are the next one to go and it will be nasty.

Tue, 11/22/2011 - 13:45 | 1903109 c'mon man
c'mon man's picture

12 page letter from Jefferies in 3...2...1....

Tue, 11/22/2011 - 13:57 | 1903165 GeneMarchbanks
GeneMarchbanks's picture

Yadda Yadda IMF Yadda Italian bonds

We'll be fine.

Tue, 11/22/2011 - 14:10 | 1903221 fonestar
fonestar's picture

Or another 2 page pdf a la MF'ing Global "highest ethical standards" type crap!

Tue, 11/22/2011 - 13:48 | 1903120 Smithovsky
Smithovsky's picture

I'd like to hear Whitney's opinion on this before I do anything.  

Tue, 11/22/2011 - 14:00 | 1903184 Mark123
Mark123's picture

Funniest comment this morning!

Tue, 11/22/2011 - 14:10 | 1903223 WestVillageIdiot
WestVillageIdiot's picture

I think he meant Whitney Houston. 

Tue, 11/22/2011 - 14:04 | 1903203 tekhneek
tekhneek's picture

"Jefferies is undervalued compared to its assets. I'm a buyer."

Tue, 11/22/2011 - 14:33 | 1903340 1a2b3c4d
1a2b3c4d's picture

Whitney Houston? What the hell would she know about this?

Tue, 11/22/2011 - 13:52 | 1903133 Carlyle Groupie
Carlyle Groupie's picture

"We will cut without a major Deleveraging".

Newest EJ consultant: David Copperfield

Tue, 11/22/2011 - 13:52 | 1903136 economessed
economessed's picture

Then what did they look like 2 months ago before they "fixed everything"? -- YIKES!!!! 

Tue, 11/22/2011 - 13:52 | 1903141 Vagabond
Vagabond's picture

But the Dick Handler said everything was okay ???

Tue, 11/22/2011 - 13:55 | 1903156 slaughterer
slaughterer's picture

I think his name is Rich Handler.   

Tue, 11/22/2011 - 14:06 | 1903208 MsCreant
MsCreant's picture

And that is better? Seriously? Look at what you wrote. 

Tue, 11/22/2011 - 14:58 | 1903487 MsCreant
MsCreant's picture

If I had significant wealth, I would not go to someone named "Rich Handler." I do not desire to be "Handled."

Tue, 11/22/2011 - 13:57 | 1903163 a growing concern
a growing concern's picture

The only other person with a worse name is racecar driver Dick Trickle.  Seriously???

Tue, 11/22/2011 - 14:16 | 1903246 WestVillageIdiot
WestVillageIdiot's picture

The Detroit Lions used to have a player by the name of Harry Colon.  I always thought that was an unfortunate name. 

Tue, 11/22/2011 - 14:37 | 1903362 Tsar Pointless
Tsar Pointless's picture

When I was coaching baseball back in the 1990s, I knew a kid named Royal Ferry.

Real name, real spelling.

Tue, 11/22/2011 - 15:05 | 1903530 Capt Tripps
Capt Tripps's picture

Worst thing I ever heard on the radio was a snippet of a NASCAR race:  "He started on the pole, and now, I can't believe it... He is lapping Dick Trickle!"


/true story

Tue, 11/22/2011 - 16:34 | 1903977 MarcusLCrassus
MarcusLCrassus's picture

All time worst has to be "Dick Buttkiss"

Tue, 11/22/2011 - 18:41 | 1904519 lotsoffun
lotsoffun's picture

this footballer had a good one:

at least he was the dean of the family


Tue, 11/22/2011 - 13:55 | 1903152 junkyardjack
junkyardjack's picture

"Egan-Jones Ratings Company"? Hmmm, sounds like a speculator trading on more lies to me. I'm sure JEF would be fine if these speculators stopped trying to release facts.


"Science is like a blabbermouth who ruins a movie by telling you how it ends! Well I say there are some things we don't want to know! Important things!" - Ned Flanders

Tue, 11/22/2011 - 13:57 | 1903161 stop.snitching
stop.snitching's picture

When are all the (second) European country downgrades coming from EJ?

Tue, 11/22/2011 - 13:58 | 1903168 slaughterer
slaughterer's picture

I would like to see the granular liquidity analysis from EJ and then JEF's refutation.  

Tue, 11/22/2011 - 14:00 | 1903176 slaughterer
slaughterer's picture

77 cents recovery: it was trading at 90 cents just last week.   That IS a haircut for sure.  

Tue, 11/22/2011 - 14:00 | 1903181 Caviar Emptor
Caviar Emptor's picture

 Latvia cancels an auction of 10 year bonds - maybe nothing, but maybe a canary in a coal mine. "My perception of eurozone debt markets is that they are now on strike," says Charles Robertson

Tue, 11/22/2011 - 14:04 | 1903202 a growing concern
a growing concern's picture

In Soviet Latvia, bonds buy you.

Tue, 11/22/2011 - 14:09 | 1903220 GeneMarchbanks
GeneMarchbanks's picture

' "My perception of eurozone debt markets is that they are now on strike," says Charles Robertson '

Way to go Charlie, you certainly have a pair of eyes and firing synapses. Here's a million €.

Tue, 11/22/2011 - 14:02 | 1903187 Seasmoke
Seasmoke's picture

Jefferies is fine.............until they arent

Tue, 11/22/2011 - 14:02 | 1903188 Piranhanoia
Piranhanoia's picture

Everyone will get a chit for their losses. Calm down now.  Go on with your business.  

No, you can't redeem the chit for money or trade it for goods.

it's a chit, and you took it.  

Tue, 11/22/2011 - 14:02 | 1903190 WVO Biker
WVO Biker's picture

I have two US futures accounts. One was MF (ex Lind) and the other is cleared through Jefferies. And I am still happy.

Tue, 11/22/2011 - 14:15 | 1903243 Nobody For President
Nobody For President's picture

WVO, can I have some of what you are smoking? I KNOW I've got my old "Be Happy, Don't Worry" sign around here, with the picture of the dopey guru...

Tue, 11/22/2011 - 14:20 | 1903264 WestVillageIdiot
WestVillageIdiot's picture

I believe it is "Don't Worry, Be Happy". 

Tue, 11/22/2011 - 14:02 | 1903194 Tsar Pointless
Tsar Pointless's picture

"We will cut. If you don't clean up your act, mister, we're gonna cut. We mean it this time - we'll cut ya!"

Enough already with the foreplay. Stick it in.

Tue, 11/22/2011 - 14:06 | 1903209 a growing concern
a growing concern's picture

Just the tip?

Tue, 11/22/2011 - 14:13 | 1903232 Tsar Pointless
Tsar Pointless's picture

No, you can go "all in".

Tue, 11/22/2011 - 14:17 | 1903251 junkyardjack
junkyardjack's picture

Jefferies: Actually I don't have any cash

Tue, 11/22/2011 - 14:12 | 1903230 topcallingtroll
topcallingtroll's picture

In a fascinating how a chicken can sometimes run around after its head was cut off.

Jefferies is dead. They just dont know it yet.

Where is the white knight? Nowhere to be seen.

Tue, 11/22/2011 - 14:24 | 1903278 InternetInfidel
InternetInfidel's picture

Speaking of chickens with no heads there's BAC

 "In the absence of progress, the informal order could turn into a formal and public action, which would likely mean intensified scrutiny and greater restrictions." 

 Maybe after "intensified scruntiny" people will start to realise what "technically insolvent" means

Tue, 11/22/2011 - 14:26 | 1903291 NotApplicable
NotApplicable's picture

*John Carney of CNBS blogging fame rides in on his trusty steed, Bullshitter.*

Jefferies Winning Battle Against Critics

Tue, 11/22/2011 - 18:45 | 1904527 lotsoffun
lotsoffun's picture

white knight is michael millken.  on the way!

oh.  except he can't work in the securities industry any longer.

check out the millken/ handler legacy.



Tue, 11/22/2011 - 14:19 | 1903263 imsaul0968
imsaul0968's picture

For those of you who invest in an IRA or for long term goals, theres a better approach than buy,hold,hope. Stocks follow the economy so analyzing the economy, specifically the factors that are "leading indicators" and having exposure to equities only when the economy is headed in the right direction and avoiding equities in favor of safe haven baskets is a much more logical approach. And missing the major drawdowns is the only way to help ensure meeting your goals.  If you are interested in investing in a portfolio that tactically invests in equity and safe haven baskets via ETF's automatically, please email me at:

and I'll add you to the weekly market commentary & portfolio update distribution list.  Its free to add you and you can follow along our model and our views.  We have been RISK-OFF since 6/30 so have missed all this wicked volatility. Currently invested in short duration treasury baskets as flight to safety drives interest in our debt. 

Tue, 11/22/2011 - 14:23 | 1903276 stop.snitching
stop.snitching's picture

You're an idiot...enjoy your posting freedom while it lasts.

Tue, 11/22/2011 - 14:38 | 1903366 fuu
fuu's picture

After nearly 36 straight hours of it I am guessing the Tylers don't really mind.

Tue, 11/22/2011 - 14:41 | 1903382 crawldaddy
crawldaddy's picture

I mean who wouldnt trust a forum troll and spammer with their money, I mean it only makes sense.  As for me, as soon as this Nigerian prince forks over the 2.3 million Im due anyday, Im all over this forum guru equity specialist.  He sounds awesome.

Tue, 11/22/2011 - 14:49 | 1903428 bbq on whitehou...
bbq on whitehouse lawn's picture

"We will cut without a major deleveraging."

This is what the future holds, for S&P.  Without Qe3 (free money) you need to deleverage.

This is how depressions work.

Tue, 11/22/2011 - 20:45 | 1904839 rational
rational's picture

Here's what Jeffries had to say in an investor-letter about ZH's favorite short-seller paid rating agency analyst:

Second, we were both shocked and perversely amused when the analyst who first misled the public about our sovereign debt exposure being 77% of our shareholders’ equity actually had the temerity to state on widely broadcast television that he omitted the material fact that we had almost equal and offsetting short sovereign debt positions because, and we quote, he had “space constraints.” (By the way, that same analyst also points to our 12.9x leverage at the end of August to be too high, but omits here the further material point that we have been operating successfully and profitably with similar leverage for years, including during the 2008-09 financial meltdown. In addition, he said that our leverage ratio was now higher because our stock was trading lower. As all of you probably recognize, trading prices are irrelevant to a company’s leverage ratio. Neither our equity, our debt obligations nor the cost to us of our existing debt changes one iota with market prices. What more can we say on this one?)

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