Tuesday, April 17, 2007

Jefferies Poor Disclosure

Jefferies (NYSE:JEF) released their quarterly financials this morning and claimed to have achieved records in everything. They made particular note of a record EPS number. Investors, they beat their previous high by one penny a share. The result is not worthy of banging the big drum but Jefferies needs some positive headlines so they ginned up their own. The last major news they had was a downgrade by Goldman Sachs (NYSE:GS) on April 2.

The press release is Reg FD challenged. Other than announcing records and providing basic numbers they have really not said anything about the business. They have referred one and all to the conference call which will be live one hour after the press release. If the conference call contains significant substance and the press release is an empty document Jefferies will have some regulatory scrutiny to deal with.

Jefferies is playing a dangerous game. They know most investors and financial media will not listen to and or read the conference call transcript. The press release has such poor disclosure that it will be ignored and viewed as useless by investors. Jefferies knows they have a less than stellar story and they are attempting to place a cone of silence over the proceedings. This way investors will have a dim memory of the negative. When Jefferies starts to come out with good news which they need the story will not have to overcome as much skepticism.

This is a management group that is in crisis and showing signs of desparation. This is not where a reasonable investor wants to put their money.