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Jefferies Financial Group Inc. JEF

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Japan's SMBC bought over 12 million Jefferies shares in the open market this spring and summer, roughly $650M at $48 to $55, while the stock sat 25% below its high.

The setup turns on whether Jefferies is finally just an investment bank, the quarter said emphatically yes, up 35%, or still the conglomerate whose side pockets periodically ambush the income statement.

JEF · price with moving averages

Daily · 6MWeekly · 3Y
$28$42$56$71$85 Sep '23Apr '24Nov '24Jun '25Jan '26Aug '26 BID
EMAs82140

Source: market data.

The business

Jefferies is the largest independent full-service investment bank: merger advice, equity and debt underwriting, a markets floor that just printed a record equities quarter, and an asset-management arm that holds the firm's legacy investments. Unlike the advisory boutiques it pays for a balance sheet, which lets it lead underwritings and prime-broker hedge funds, and unlike the megabanks it answers to no Federal Reserve. The moat is the franchise's middle position, big enough to matter in league tables, small enough to take share from banks that cannot move quickly, plus the deepening alliance with SMBC, which routes Japanese deal flow through the firm and keeps buying the stock.

Inside the complete Back of Napkin

  1. 01The business
  2. 02The numbers
  3. 03Management
  4. 04How it fails or surprises you
  5. 05The shape of the payoff
  6. 06Closing thoughts
  7. 07Methodology

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