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Leucadia National Corporation Message Board

mastermind_not 16 posts  |  Last Activity: 10 hours ago Member since: Apr 23, 2010
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  • mastermind_not by mastermind_not 10 hours ago Flag

    The shareholder letter is out, and the annual report (10-K).

    I just posted a bunch of random highlights/lowlights. And then yahoo deleted my post. No time to repost now.

    12/31 BV/share ex GW = $23.29
    12/31 BV/share ex GW and other intangibles = $20.63

    Interestingly, LUK repurchased ~ 700k shares in Q4 for $15m (avg price ~ $21.55/share). Big step in the right direction in my view.

  • Reply to

    Lawsuit settled

    by dickeypiper1 Jan 20, 2015 1:58 PM
    mastermind_not mastermind_not Feb 13, 2015 11:01 PM Flag

    Yeah, I got my info package as well. I haven't had time to skim it yet.

  • Reply to

    Ethan Rejection

    by alexalekhine Feb 12, 2015 10:59 AM
    mastermind_not mastermind_not Feb 13, 2015 12:08 PM Flag

    Okay, so maybe I was wrong about the energy content -- I was thinking that ethane had higher energy content than methane, but maybe it's the reverse. However, it's definitely a function of pricing -- when ethane pricing gets too low, it doesn't make sense to process out the ethane (not cost efficient) -- so they reject ethane and sell the molecules at the natural gas price.

  • Reply to

    Ethan Rejection

    by alexalekhine Feb 12, 2015 10:59 AM
    mastermind_not mastermind_not Feb 12, 2015 4:10 PM Flag

    Here's my layman's understanding. Ethane is a natural gas liquid (NGL) and has a higher energy content than natural gas itself (methane). If you are processing and selling ethane, you are selling more NGL barrels and your production overall has a higher energy content (BOE is higher). If you are rejecting ethane, you are effectively selling more natural gas at a lower energy content (BOE is lower); also, pricing is lower.

    Someone else with more technical expertise may jump in. I've had to puzzle this out over the last year.

  • Reply to

    Why the focus the last year on new A/C?

    by vanmusicblues Feb 9, 2015 2:26 PM
    mastermind_not mastermind_not Feb 10, 2015 4:44 PM Flag

    Just trying to grow earnings / cash from operations. If it's not growing, FLY is just a liquidating trust -- with a high-cost management structure.

  • Reply to

    Handler and Friedman decline bonuses

    by mastermind_not Feb 6, 2015 12:48 PM
    mastermind_not mastermind_not Feb 9, 2015 5:11 PM Flag

    Yes, that's been my view since the merger was announced. "Old LUK" is gone; "New LUK" is "Old JEF" with some legacy "distraction" investments that should be monetized when valuations are favorable. Like yesterday, if not today. (Team Handler did the right thing by stopping the bleed in Sangart and some of the ill-timed "energy" plays -- which were really "political subsidy" plays.)

  • Reply to

    Handler and Friedman decline bonuses

    by mastermind_not Feb 6, 2015 12:48 PM
    mastermind_not mastermind_not Feb 9, 2015 1:50 PM Flag

    I'm not arguing that these guys are sleeping in homeless shelters. But they deserve some credit -- this year -- for declining bonuses during a period of extended LUK shareholder pain and suffering.

    Your example is mixing apples and oranges. If JEF has a killer year, and the JEF management team gets paid for killing it, I have no problem with that. If LUK's other investments underperform, and LUK shares continue underperforming, then LUK's senior execs (Handler and Friedman) should continue to suffer along with shareholders.

    Longer-term, maybe LUK should spin out 20% of JEF, and then JEF management can be compensated in shares that track the underyling business. I've always viewed this as a long-term option; LUK needs to own 80% of JEF to consolidate for tax purposes, but all stakeholders might benefit if JEF floated its shares again.

  • mastermind_not by mastermind_not Feb 6, 2015 12:48 PM Flag

    Credit to both those guys. I've never understood how Comp Committees can rationalize big bonus payments to execs that drive negative stock performance. Look, I understand that the CEO/CFO role at a large public company is intense, difficult and complex. But ultimately, exec comp should reflect investment performance, i.e., returns to shareholders. LUK has been miserable.

    Handler and Friedman are truly a changing of the guard. Cumming & Steinberg would have lobbied for, and accepted, a $25 million stock bonus for their role in a couple deals back in the '90s and '80s.

  • Reply to

    LUK wants to do FXCM Bad

    by wise4us Jan 16, 2015 3:44 PM
    mastermind_not mastermind_not Jan 20, 2015 1:00 PM Flag

    FXCM released more details re: the loan terms. You can find an SEC filing on the SEC website or FXCM investor relations.

    1. The loan coupon ratchets up from 10% to 17% over time.

    2. Here is a summary of the equity kicker (if this copy and paste works...):

    In connection with the financing, the parties also entered into an agreement that provides, among other things, that Newco will pay in cash to Leucadia and its assignees a percentage of the proceeds received in connection with certain transactions, including any sale of assets, any dividend or distribution or the sale or indirect sale of Newco (whether by merger, stock purchase, sale of all or substantially all of Newco’s assets or otherwise). That agreement, which remains in place until the sale of Newco, allocates proceeds as follows:

    Aggregate amount of sale proceeds or dividend/distributions Leucadia FXCM Holdings

    Amounts due under Leucadia term loan, including fees 100% 0%

    Next $350 million 50% 50%

    Next amount equal to 2 times the balance outstanding on the term loan and fees as of April 16, 2015, such amount not to be less than $500 million or more than $680 million 90% 10%

    All aggregate amounts thereafter 60% 40%

  • Reply to

    LUK wants to do FXCM Bad

    by wise4us Jan 16, 2015 3:44 PM
    mastermind_not mastermind_not Jan 16, 2015 4:13 PM Flag

    From SeekingAlpha:

    Leucadia to keep FXCM in operation with $300M in financing

    Jan 16 2015, 15:41 ET | About: FXCM Inc. (FXCM) | By: Stephen Alpher, SA News Editor Contact this editor with comments or a news tip

    The $300M will allow FXCM to meet regulatory capital requirements and stay in business after clients blew a $225M hole in the company yesterday.

    In exchange for giving FXCM $300M, Leucadia (LUK +0.9%) gets a 2-year senior secured note for $250M and a claim to 75% of any proceeds should FXCM pay a dividend or be sold, reports CNBC.

    FXCM remains halted from trade after falling nearly 90% in the premarket.Dropping in sympathy in early action, GAIN Capital (GCAP +2.7%) is higher on the session, and Interactive Brokers (IBKR -0.5%) is down just modestly.

  • Reply to

    Aer Lingus auction

    by edsha28 Jan 10, 2015 7:18 PM
    mastermind_not mastermind_not Jan 15, 2015 2:11 PM Flag

    A 50% position says to me that each side has veto rights over material transactions, changes to the business, etc. So even if Onex wanted to do something material, the senior execs at BBAM would need to agree; and vice versa.

  • Reply to

    executive compensation comparison

    by diezveiga Jan 13, 2015 1:02 PM
    mastermind_not mastermind_not Jan 14, 2015 1:40 PM Flag

    No matter how you slice it -- LUK management is getting way overcompensated to drive incredibly weak returns for shareholders. And yes, many of the senior execs are also major shareholders. But if I'm collecting a few million in cash each year, along with my stock bonuses etc. etc., I'm fat and happy regardless of whether the stock price goes up or down.

  • Reply to

    Aer Lingus auction

    by edsha28 Jan 10, 2015 7:18 PM
    mastermind_not mastermind_not Jan 13, 2015 12:15 PM Flag

    Let's say that you're a senior exec at BBAM. You have a nice, fat annuity stream from FLY. You aren't working because you need to work; you're working because you enjoy controlling the deals and collecting your fat annuity stream. Why would you agree to sell BBAM? FLY is stapled to BBAM as a practical matter.

    Onex is basically a passive, financial investor. It may want to sell, but it would need to persuade BBAM's senior execs to go along with that plan. I don't see why someone with a fat annuity stream and relatively interesting workflow is going to cash out -- look at the Buffetts and Icahns who keep "working" in the investment space far beyond the "normal" retirement age.

  • mastermind_not by mastermind_not Dec 16, 2014 8:19 PM Flag

    Very depressing. Did we need more evidence that LUK overpaid for JEF? Start with $60m in goodwill and Bache write-offs.

    Shocker. Net revenues were down more (36%) than compensation expense (35%).

    And now we see why Ian Cumming has been dumping 40-years worth of LUK shares in a 12-month period.

  • Reply to

    Whatever happened to Fortress Leucadia?

    by besterman2006 Dec 16, 2014 3:17 PM
    mastermind_not mastermind_not Dec 16, 2014 8:10 PM Flag

    Unfortunately, I'm inclined to agree.

    The LUK conglomerate model is just not working. The "Old LUK" management team gorged on corporate resources, despite more strike outs than home runs. The "New LUK" management team, Team Handler, seems distracted by the conglomerate model. They should be focusing on the core JEF business, which had an immensely bad quarter.

    Key highlights over the last two to three years? LUK overpaid for National Beef during a market top. LUK burned tens of million (hundreds of millions?) in pie-in-the-sky energy development schemes. LUK entered the oil market during another market top. Meanwhile, JEF overpaid for the Bache business and overpays its employees, to the detriment of LUK shareholders.

    Notice a common theme? Virtually no alignment between senior execs -- who are rich, fat and happy -- and long-term shareholders. It's very easy to play with other people's money.

  • Reply to

    Suggestion to Management

    by beachlawyer2003 Dec 5, 2014 3:32 PM
    mastermind_not mastermind_not Dec 10, 2014 12:12 PM Flag


    I agree with your overall sentiment. However, the "management team" from Old LUK has passed the baton to Team Handler at New LUK. I'm a frustrated long-term shareholder, but I still think you have to give Team Handler time to perform. The old management team had a couple home runs (and Fortescue may have been a grand slam). But they also overpaid on two of the later, big ticket deals (JEF and NB). (Because executive comp was linked to deal flow, senior management profited at the expense of shareholders.)

    So again, I agree with your sentiment big picture. But you have to distinguish between the old management team and the new management team.

    Now ... all that said ... the fact that Ian Cumming has so quickly exited his enormous LUK position, with his years of institutional knowledge, suggests that LUK shares are fairly valued at best. He must not have faith in Team Handler, to say the least. And he is implicitly acknowledging that Old LUK was overpaying to do mediocre deals and justify large comp deals for senior management (and deal guys).

23.70-0.03(-0.13%)Mar 2 4:04 PMEST

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