Jefferies (JEF) is an investment banking and financial services company which I discovered in Q1 because I wanted to play the sector rotation which became very distinct around Mid-February when growth and tech stocks began their free-fall whereas financials and other cyclicals just kept ascending. The run-up in cyclicals has been sharp in the past months but my investment thesis is that they still have much room to grow if macro-economists are right about record GDP growth rates for the US, inflation or no inflation.
Jefferies is one company that has rebounded very strongly from their pandemic lows, beating analyst expectations for 5 out of 5 quarters by delivering record earnings each time - and this includes Q1 2021 with the announcement just out yesterday.
Yahoo finance: https://finance.yahoo.com/news/jefferies-record-q-1-results-201804235.html
Company announcement: https://www.jefferies.com/Letters/ltr/1647/03242021
Richard Handler, their CEO, strikes me as a likeable and down to earth person who I can trust with my money. I believe that only such a person would be able to come up with posts such as these: https://jefferies.com/Letters/Pages/2783 "10 Random musings from a boomer who has been in the Financial World for three decades". He readily takes on the 'boomer' title in his stride, acknowledges the power of momentum trading (which has been unbelievable in post-covid 2020), but still has the fortitude to assert his own stance about the eventual return of stocks towards their fundamental valuations (which we have seen play out over the past weeks).
When the news came up about the Fed removing capital requirement concessions given to banks due to Covid (in my mind, it likely meant lower earnings growth), I discarded most of my us banking stocks and was seriously considering taking profits on Jefferies too but I opted not to in the end because earnings were due soon and I had great confidence that they would not disappoint. That faith has since been repaid and I couldn't be happier 😄. I almost feel like putting more money into JEF but that would be violating my portfolio diversification rules.
Going forwards, I expect a gradual slowdown in growth rates (it would be incredible if they could keep up such immense rates of quarterly growth) but Jefferies still looks like a promising play that gets bolstered by the recovery and growth of the US economy. Cyclicals (except maybe airlines who are sitting on a mountain of debt) are my defensive/safe haven stocks for the time being while the speculative growth stocks sort themselves out (i don't feel the correction is quite done yet). Of course, only time will tell if my strategy works out well.
Submitted March 25, 2021 at 01:31AM by ck3isbugged https://ift.tt/39dQsMj
