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Investor Day 2015 – Leucadia National Corp.

Leucadia National Corp. · Oct 30, 2015 · 184 slides

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  1. Investor Day 2015 – Leucadia National Corp. – slide 1
    Leucadia National Corporation 2015 Investor Day October 8, 2015
  2. Investor Day 2015 – Leucadia National Corp. – slide 2
    Leucadia Today Goal is long-term value creation Senior management is aligned with shareholders 11.2%(1) ownership for top three officers 14 of our 16 businesses are operating well and have strong value creation potential…
  3. Investor Day 2015 – Leucadia National Corp. – slide 3
    Leucadia Operating Profile in 2015 vs. 2012 12/31/12 Versus 06/30/15 Significant Businesses & Investments (ex- 10(1) +60% 16(2) Jefferies) 359 Million per Increased 199 Million per Average Size of Divestitures / Investments…
  4. Investor Day 2015 – Leucadia National Corp. – slide 4
    Leucadia Overview Common Equity 10.7 Billion (2) Leucadia National Corporation Preferred Equity 0.125 Billion Parent Capital 11.8 Billion (1) Parent Debt 1.0 Billion (1) Financial Services Merchant Banking Corporate / Liquidity…
  5. Investor Day 2015 – Leucadia National Corp. – slide 5
    Leucadias Potential Leucadia Tangible Opportunity % Capital ( Millions)(1) Jefferies Grow Investment Banking and Equities; Refocus Fixed Income 3,582 38.8% Berkadia Leveraging Our Momentum and the Growing Market Opportunity 207…
  6. Investor Day 2015 – Leucadia National Corp. – slide 6
    Footnotes: Leucadias Potential 1. Leucadia Tangible Capital is a non-GAAP financial measure excluding goodwill and intangibles from Book Value. See appendix on pages 174 for reconciliation to GAAP measures. 2. Our share of Garcadia…
  7. Investor Day 2015 – Leucadia National Corp. – slide 7
    A Unique Financial Services and Merchant Banking Platform Financial Services Our historic sector; post-crisis opportunity Jefferies Drive market share, margin expansion and earnings growth by growing Investment Banking and Equities…
  8. Investor Day 2015 – Leucadia National Corp. – slide 8
    A Unique Financial Services and Merchant Banking Platform Merchant Banking Opportunistic value investments in businesses we understand National Beef Manage business through the cattle cycle Maintain core market share and enhance…
  9. Investor Day 2015 – Leucadia National Corp. – slide 9
    Three Q & As IRQuestionsLeucadia.com
  10. Investor Day 2015 – Leucadia National Corp. – slide 10
    Leucadia Financial Services 8
  11. Investor Day 2015 – Leucadia National Corp. – slide 11
    Leucadia Financial Services Overview Common Equity 10.7 Billion (2) Leucadia National Corporation Preferred Equity 0.125 Billion Parent Capital 11.8 Billion (1) Parent Debt 1.0 Billion (1) Financial Services Merchant Banking…
  12. Investor Day 2015 – Leucadia National Corp. – slide 12
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  13. Investor Day 2015 – Leucadia National Corp. – slide 13
    Company Overview Berkadia is a full-service mortgage banking firm focused on providing clients best of class middle market mortgage finance and advisory services Business Lines: Permanent and construction loans Investment Sales…
  14. Investor Day 2015 – Leucadia National Corp. – slide 14
    Industry Update Positive Near-Term and Long-Term Market Opportunities Commercial maturities will rise significantly in 2016 as 10-year loans originated pre-2008 balloon presenting a short-term opportunity Multifamily maturities…
  15. Investor Day 2015 – Leucadia National Corp. – slide 15
    Financial Performance Loan Originations ( billion) Pre Tax Margin (% of revenue) 14.0 35% 32% 12.8 31% 31% 30% 29% 12.0 10.4 9.5 24% 10.0 25% 7.6 20% 8.0 6.0 5.2 15% 4.6 10% 3.7 9% 4.0 10% 2.0 5% - 0% 2010 2011 2012…
  16. Investor Day 2015 – Leucadia National Corp. – slide 16
    Servicing Portfolio Unpaid principal balance as of June 30, 2015 was 232 billion. 170 billion, or 73%, relate to loans added since initial acquisition (2009) Servicing Portfolio UPB in billions 300 250 237 238 232 220 198 197…
  17. Investor Day 2015 – Leucadia National Corp. – slide 17
    2015 Developments Berkadias 1H benefited from industry activity being significantly up year over year Our debt originations were up 109% compared to 1H 2014 Our sales transactions were up 76% compared to 1H 2014 Recruiting success…
  18. Investor Day 2015 – Leucadia National Corp. – slide 18
    2015-2016 Strategic Priorities Increase Business with Existing Clients Unique Ideas, Proprietary Databases and Solutions Speed Expand Client Reach Rifle-Shot Recruiting Continued Integration of Offices / Team Approach Drive…
  19. Investor Day 2015 – Leucadia National Corp. – slide 19
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  20. Investor Day 2015 – Leucadia National Corp. – slide 20
    Company Overview FXCM (NYSE: FXCM) is a leading online provider of foreign exchange trading services to approximately 180,000 retail customers globally Founded in 1999 by six partners five still active in the business, including…
  21. Investor Day 2015 – Leucadia National Corp. – slide 21
    Transaction Summary 2014 adjusted revenues of 453 million and adjusted EBITDA of 107 million; market capitalization of 1.2 billion prior to Swiss National Bank (SNB) currency adjustment Leucadia provided a two-year 300 million…
  22. Investor Day 2015 – Leucadia National Corp. – slide 22
    Industry Update FXCM is the largest retail FX broker in Asia (ex. Japan) and the U.S.; top five in Europe Fragmented industry, which has seen steady decline in the number of competitors as regulatory and compliance burdens have…
  23. Investor Day 2015 – Leucadia National Corp. – slide 23
    Financial Performance Cash position remains strong, with 208 million in operating cash in continuing operations (and an additional 65 million in discontinued operations) Customer equity from continuing operations increased from 667…
  24. Investor Day 2015 – Leucadia National Corp. – slide 24
    2015 Developments Near term goal remains to repay FXCM debt to Leucadia through non- Entity Ownership Notes core asset sales and cash generated from operations FXCM Japan 100% Sold for 62M Have generated 148 million of…
  25. Investor Day 2015 – Leucadia National Corp. – slide 25
    Strategic Priorities FXCM today remains in a strong competitive and financial position, with new initiatives to enhance growth just getting underway Single share CFD launch Client surveys show the lack of the single share CFD…
  26. Investor Day 2015 – Leucadia National Corp. – slide 26
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  27. Investor Day 2015 – Leucadia National Corp. – slide 27
    Company Overview HomeFed is a public company (OTC:HOFD), 65% owned by Leucadia, that develops and owns residential and mixed-use real estate projects in California, Florida, Maine, New York, South Carolina and Virginia; after many…
  28. Investor Day 2015 – Leucadia National Corp. – slide 28
    Property Locations Northeast Point Renaissance Plaza Rampage Vineyard Ashville Park Pacho San Elijo Hills The Market Common Fanita Ranch Otay Ranch SweetBay 27
  29. Investor Day 2015 – Leucadia National Corp. – slide 29
    Market Outlook Burns Affordability Index Index ranges from 0 to 10 based on the relationship between the median household income and the annual housing Affordability Better than Average costs (mortgage plus taxes, insurance, and…
  30. Investor Day 2015 – Leucadia National Corp. – slide 30
    Project Status Property Development / Operating Phase Unentitled Planning / Land Active Lot Operating Land Entitlement Development Sales Asset Otay Ranch 4,450 acres of entitled land in Chula Vista, CA Renaissance Plaza Mixed…
  31. Investor Day 2015 – Leucadia National Corp. – slide 31
    2015 Developments In July 2015, HomeFed completed the acquisition of 1,600 acres of land in the Otay Ranch area of San Diego County, California for a cash purchase price of 150 million The acquired land is contiguous with 2,850…
  32. Investor Day 2015 – Leucadia National Corp. – slide 32
    Strategic Priorities Turn our land into cash Optimize Otay Ranch assets focus on expediting development programs and maximizing revenue over the coming years Increase lot and home sales throughout our other active projects,…
  33. Investor Day 2015 – Leucadia National Corp. – slide 33
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  34. Investor Day 2015 – Leucadia National Corp. – slide 34
    Company Overview Auto loan originator and servicer Successor to Franklin Capitals auto finance business Franklin was liquidated in early 2012 after pulling back during the credit crisis Funded and serviced 5.2 billion of…
  35. Investor Day 2015 – Leucadia National Corp. – slide 35
    Industry Update Auto financing industry has continued to experience growth supported by increases in annual auto sales every year since 2009(1) 2014 was the 4th consecutive year of growth, with below-prime portfolios growing by 12%…
  36. Investor Day 2015 – Leucadia National Corp. – slide 36
    2015 Developments & Portfolio Growth Surpassed 250 million in assets and currently pacing 20+ million of originations per month Medium term goal is to grow annual originations to 500 million (supported by an estimated 90 million in…
  37. Investor Day 2015 – Leucadia National Corp. – slide 37
    Strategic Priorities Continue to improve dealer customer service response times are critical Expand market penetration outside of several core states: Maintain credit discipline during growth and continue to develop scorecard…
  38. Investor Day 2015 – Leucadia National Corp. – slide 38
    Leucadia Asset Management 37
  39. Investor Day 2015 – Leucadia National Corp. – slide 39
    General Disclaimer Past performance is not indicative of future results. This presentation does not constitute an offer of any commodities, securities or investment advisory services and should not be used to form the basis of any…
  40. Investor Day 2015 – Leucadia National Corp. – slide 40
    Business Overview Diversified alternative asset management platform seeding and developing focused funds managed by distinct management teams Fee-generating assets, long-term stable cash flows, able to recycle capital Goal of…
  41. Investor Day 2015 – Leucadia National Corp. – slide 41
    Platforms and Strategies Strategic Investments Division (Quantitative Strategies) Proprietary Jefferies strategy since 2006; flagship external fund established in 2011; 1.1 billion AUM equivalent Systematic Macro Investment Division…
  42. Investor Day 2015 – Leucadia National Corp. – slide 42
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  43. Investor Day 2015 – Leucadia National Corp. – slide 43
    Overview Founded in mid-2014; Launched fund in March 2015 with Leucadia seed investment of 400 million; 1.1 billion AUM as of June 30, 2015 Multi-manager discretionary long/short equity hedge fund platform aiming to deliver strong…
  44. Investor Day 2015 – Leucadia National Corp. – slide 44
    Key Differentiators High-pedigree portfolio managers and analytical support PMs average 15 years of investment experience Sourced from best-in-class fundamental equity investment firms Large allocations: average PM buying power…
  45. Investor Day 2015 – Leucadia National Corp. – slide 45
    Talent Selection What We Look For Long/short equity PMs, primarily with a sector-specific focus Investment processes that utilize fundamental idea generation to identify a path that will drive prices over a specified time horizon…
  46. Investor Day 2015 – Leucadia National Corp. – slide 46
    Historic Returns & Strategic Priorities On track to achieve target of 20 PMs actively managing capital by end of 2015 at 16 as of September 30, 2015 Expand investor breadth: engage wealth management platforms, cultivate targeted…
  47. Investor Day 2015 – Leucadia National Corp. – slide 47
    Topwater Capital 46
  48. Investor Day 2015 – Leucadia National Corp. – slide 48
    Topwater Capital Overview Highly-scalable multi-manager and multi-strategy liquid securities fund targeting low volatility and positive returns in all market environments Continuous track record dating back to 2004 Initial Leucadia…
  49. Investor Day 2015 – Leucadia National Corp. – slide 49
    Topwater Capital Key Differentiators Proven track record of delivering consistent positive uncorrelated performance, with 100% positive annual performance dating back to 2004, including a 10% annual return in 2008 and positive returns…
  50. Investor Day 2015 – Leucadia National Corp. – slide 50
    Topwater Capital Historic Returns & Priorities Continue to grow manager count up to 23 as of September 30, 2015 Expand investor base Cumulative Topwater Returns vs. Benchmarks Since Leucadia Inception(1) 16% 12% 7% 3%…
  51. Investor Day 2015 – Leucadia National Corp. – slide 51
    Strategic Investments Division 50
  52. Investor Day 2015 – Leucadia National Corp. – slide 52
    Strategic Investments Division Overview Systematic asset management strategy Multi-quant approach across asset classes, geographies and time horizons 35 front office employees, including quants, software developers, portfolio/risk…
  53. Investor Day 2015 – Leucadia National Corp. – slide 53
    Strategic Investments Division Key Differentiators Systematic models to generate alpha via multi-horizon trading of global liquid exchange listed products Process driven methods for alpha research, portfolio construction, risk…
  54. Investor Day 2015 – Leucadia National Corp. – slide 54
    Strategic Investments Division Product Overview Structured Alpha Program 11.8% annualized net returns since the programs inception at Jefferies in 2006 Sharpe ratio above 2; typical turnover 5 - 10 days; Low correlation to major…
  55. Investor Day 2015 – Leucadia National Corp. – slide 55
    Strategic Investments Division Priorities & Historic Returns Pursuing strategy extensions and new fund vehicles Building out and enhancing infrastructure to support expanded research efforts and new product development…
  56. Investor Day 2015 – Leucadia National Corp. – slide 56
    Q&A IRQuestionsLeucadia.com
  57. Investor Day 2015 – Leucadia National Corp. – slide 57
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  58. Investor Day 2015 – Leucadia National Corp. – slide 58
    Note on Adjusted Financials Note on the Use of Non-GAAP Financial Measures to Show Results Exclusive of the Bache Futures Business: Jefferies announced during its fourth quarter 2014 that it would pursue strategic alternatives for…
  59. Investor Day 2015 – Leucadia National Corp. – slide 59
    Jefferies Overview 57
  60. Investor Day 2015 – Leucadia National Corp. – slide 60
    Jefferies Strategic Update We are building the leading, client-focused global investment banking firm, with our focus to provide clients with the best ideas, expertise and execution in global capital markets Investment Banking and…
  61. Investor Day 2015 – Leucadia National Corp. – slide 61
    Jefferies Operating Results 59
  62. Investor Day 2015 – Leucadia National Corp. – slide 62
    Jefferies Earnings Overview (GAAP) Predecessor Successor FYE Nov. 30, FYE Nov. 30, 11M LTM 9M ( Millions) 2010 2011 2012 2/28/2014 2014 8/31/2015 Equities 557 594 642 771 696 635 Fixed Income 728 743 1,253 790 748 261 Other - 74…
  63. Investor Day 2015 – Leucadia National Corp. – slide 63
    Jefferies Adjusted Earnings Overview (excluding Bache) Predecessor Successor FYE Nov. 30, FYE Nov. 30, 11M LTM 9M ( Millions) 2010 2011 2012 2/28/2014 2014 8/31/2015 Equities 557 594 642 771 696 635 Fixed Income (Adjusted) 728 625…
  64. Investor Day 2015 – Leucadia National Corp. – slide 64
    Revenue and Earnings Growth Post-Financial Crisis ( Millions) Adjusted Net Revenues (ex-Bache) (1)(2) Investment Banking Equities Fixed Income Asset Management 4,000 Pre-Financial Predecessor Successor Crisis 2,813 2,833 2,787…
  65. Investor Day 2015 – Leucadia National Corp. – slide 65
    Balance Sheet Overview Jefferies Group LLC Balance Sheet as of 8/31/2015 Assets Liabilities and Equity Cash & Cash Equivalents 3,442 Short-term Borrowings 12 Cash & Securities Segregated 904 Financial Instruments Sold, Not Yet…
  66. Investor Day 2015 – Leucadia National Corp. – slide 66
    Disciplined Approach to Risk Our firm is built on a disciplined and consistent approach to leverage, funding and asset-quality; these principles have served as our foundation for decades Historical Leverage (1) ( Millions)…
  67. Investor Day 2015 – Leucadia National Corp. – slide 67
    Consistent Tangible Common Equity Growth Jefferies has significantly and consistently grown tangible common equity Jefferies proactive equity capital raises helped the firm navigate the global financial crisis and capitalize on…
  68. Investor Day 2015 – Leucadia National Corp. – slide 68
    Jefferies Business Review 66
  69. Investor Day 2015 – Leucadia National Corp. – slide 69
    Investment Banking 67
  70. Investor Day 2015 – Leucadia National Corp. – slide 70
    Investment Banking Revenues Since 1990 ( Millions) Net Revenues (1) Predecessor Successor 1,750 1,480 1,500 1,250 1,000 890 750 495 500 250 72 91 9 0 (1) Excludes predecessor first quarter ending 2/28/13.…
  71. Investor Day 2015 – Leucadia National Corp. – slide 71
    Investment Banking Overview Jefferies Investment Banking is a leading advisor and underwriter to our clients globally Approximately 800 investment bankers with deep sector expertise and extensive experience across major industry…
  72. Investor Day 2015 – Leucadia National Corp. – slide 72
    Investment Banking Market Update M&A: Large Transactions Were Active, But Deals Under 5 Billion Accounted For 76% Of The Global M&A Fee Pool(1) In this 5 billion segment, Jefferies increased its market share globally We advised on 25%…
  73. Investor Day 2015 – Leucadia National Corp. – slide 73
    Investment Banking Financial Overview ( Millions) Revenues have grown at a compounded annual growth rate of 10%(1) since 2010 This compares to 3% for our major competitors Results for 9M 2015 were impacted by the significant…
  74. Investor Day 2015 – Leucadia National Corp. – slide 74
    Investment Banking Strategic Priorities Continue to Increase Managing Director Productivity Our revenue per sector MD has increased 5% per year since 2010 Further increases in revenue per MD are expected as senior hires over the last…
  75. Investor Day 2015 – Leucadia National Corp. – slide 75
    Jefferies Finance LLC 73
  76. Investor Day 2015 – Leucadia National Corp. – slide 76
    Jefferies Finance Overview ( Millions) Jefferies Finance LLC Jefferies Finance, our corporate lending joint venture with Massachusetts Mutual Life Insurance Company, continues to grow steadily and prudently Established in 2004,…
  77. Investor Day 2015 – Leucadia National Corp. – slide 77
    Jefferies Finance Dedicated Team Jefferies Finance LLC Jefferies Finance has a dedicated 89 person team consisting of experienced loan structuring, underwriting, portfolio management, legal, accounting and administrative…
  78. Investor Day 2015 – Leucadia National Corp. – slide 78
    Jefferies Finance Product Offerings Jefferies Finance LLC Full suite of committed and best efforts syndicated financing alternatives across all major industries Composition of 23.4 Billion Arranged Volume in FY 2014 Products and…
  79. Investor Day 2015 – Leucadia National Corp. – slide 79
    Jefferies Finance League Tables Jefferies Finance LLC ( Millions) Jefferies Finance has consistently grown market share despite overall market declines U.S. LBO Bookrunner U.S. Overall Sponsored Bookrunner 1H 2015 1H 2015 Lender…
  80. Investor Day 2015 – Leucadia National Corp. – slide 80
    Jefferies Finance Summary Financials ( Millions) Jefferies Finance LLC Jefferies Finance has significantly grown revenues and pre-tax earnings Net Revenues 250 205 200 168 181 166 150 121 94 100 50 0 Pre-tax Earnings 200…
  81. Investor Day 2015 – Leucadia National Corp. – slide 81
    Jefferies Finance Strategic Priorities Jefferies Finance LLC Continue to drive market share in our core U.S. Sponsor Finance business, leveraging the strength and momentum of Jefferies Investment Banking Expand in complementary…
  82. Investor Day 2015 – Leucadia National Corp. – slide 82
    Equities 80
  83. Investor Day 2015 – Leucadia National Corp. – slide 83
    Equities Overview Jefferies is a leading global institutional equities franchise Sales and trading across North America, EMEA and Asia Pacific, with major trading hubs in New York, London and Hong Kong 273 research professionals…
  84. Investor Day 2015 – Leucadia National Corp. – slide 84
    Equities Market Update 1H15 Wallet Growth versus Jefferies Market Share Growth (1) (1) (1) (1) Global Market Wallets Cash Equities (1) Global market wallet up 410 million from CY 2014 to annualized 1H 2015 (+2%) Americas market…
  85. Investor Day 2015 – Leucadia National Corp. – slide 85
    Equities Market Share and Rank Ranked 1 trading large cap stocks among U.S. full service in a broad transaction cost analysis published by Pensions & Investments (Aug 15), beating the average transaction cost by more than 43 basis…
  86. Investor Day 2015 – Leucadia National Corp. – slide 86
    Equities Financial Overview ( Millions) Jefferies has significantly grown revenues and market share post-financial crisis Growth largely driven by our client focus, enhanced global capabilities and the momentum of the overall…
  87. Investor Day 2015 – Leucadia National Corp. – slide 87
    Equities Global Strategic Priorities Global Electronic Trading Distribution Increase the breadth of clients, as well as expanding penetration with existing clients Grow the EMEA and Asia Electronic distribution platform and continue…
  88. Investor Day 2015 – Leucadia National Corp. – slide 88
    Fixed Income 86
  89. Investor Day 2015 – Leucadia National Corp. – slide 89
    Fixed Income Overview Jefferies serves clients across all major cash products in the U.S. and Europe Approximately 500 sales, trading, research and strategy professionals globally Primary Dealer or equivalent in U.S., U.K., Germany,…
  90. Investor Day 2015 – Leucadia National Corp. – slide 90
    Fixed Income Market Update Markets are currently being influenced by central bank intervention and global balance sheet deleveraging Over the last twelve months, uncertainty surrounding the global economy has increased, driven by…
  91. Investor Day 2015 – Leucadia National Corp. – slide 91
    Fixed Income Financial Overview ( Millions) Jefferies Fixed Income is focused on high margin, differentiated cash products, primarily in credit markets The period September 2014 through August 2015 has been characterized by…
  92. Investor Day 2015 – Leucadia National Corp. – slide 92
    Fixed Income Strategic Priorities Refocus Fixed Income by better utilizing our resources to be more efficient with capital, risk and balance sheet, and deliver better margins and returns Focus on further developing our core…
  93. Investor Day 2015 – Leucadia National Corp. – slide 93
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  94. Investor Day 2015 – Leucadia National Corp. – slide 94
    Jefferies LoanCore Overview ( Millions) Jefferies LoanCore, a joint venture between Jefferies and GIC Private Ltd (f.k.a. Government of Singapore Investment Corporation), is a finance company focused on originating and securitizing…
  95. Investor Day 2015 – Leucadia National Corp. – slide 95
    Jefferies LoanCore Origination Platform Jefferies LoanCores team is comprised of over 50 professionals, 35 of whom are dedicated to origination Long-standing strategic relationships with property owners, developers, mortgage brokers and…
  96. Investor Day 2015 – Leucadia National Corp. – slide 96
    Jefferies LoanCore Diversified Loan Origination Jefferies LoanCore has diverse origination capabilities with loans (primarily consisting of first mortgages) spanning multiple geographies and property types Asset Type (1) Property…
  97. Investor Day 2015 – Leucadia National Corp. – slide 97
    Jefferies LoanCore Financial Overview ( Millions) Following a challenging market environment in 2014, Jefferies LoanCores profitability has recovered in 2015 driven by improved volume and market execution Opportunities for significant…
  98. Investor Day 2015 – Leucadia National Corp. – slide 98
    Jefferies LoanCore Strategic Priorities Grow loan originations, capitalizing on the upcoming wall of CMBS maturities in 2016 and 2017 Establish a complementary REIT platform Capitalize on growth in dislocated but well-established…
  99. Investor Day 2015 – Leucadia National Corp. – slide 99
    Risk Management 97
  100. Investor Day 2015 – Leucadia National Corp. – slide 100
    Risk Principles Jefferies' comprehensive risk management framework has been a foundation for our success across market cycles Culture We are all Partners at our firm, collectively building for the long-term on a foundation…

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