FPA Crescent Fund on Jefferies Financial Group Inc.
Thesis
Jefferies has momentum in core investment banking and equities trading, which generated record quarterly net revenues. The fund values significant management ownership and a history of increasing tangible book value. Monetization of merchant banking investments may provide an additional route to value realization.
“We continue to view Jefferies as an owner-oriented financial services business, with meaningful management ownership”
Key risks
- A subdued fixed-income environment
- Challenges in portions of the asset management business
- Volatility in investment banking and capital markets