Jefferies Financial Group Inc. (JEF)

Jefferies reported third-quarter 2026 net revenues of $2.22 billion on 28 September, up from $2.05 billion a year earlier 1.

Net earnings attributable to common shareholders were $261 million, or $1.08 per diluted share 1.

Investment banking, the work of advising on deals and underwriting stock and bond sales, set a record at $1.33 billion, up 17 percent 1. Equities trading also set a record at $626 million, up 29 percent 1.

Fixed income trading fell 26 percent to $176 million, which the company put down to ongoing slowness in market activity 1. Asset management fees and investment return revenues were $34 million against $84 million a year earlier, on weaker performance across several fund strategies 1.

The open question is Point Bonita, a trade-finance fund it manages that bought receivables from the bankrupt auto-parts maker First Brands 2. The company says recovery of those assets is highly uncertain 2.

Sumitomo Mitsui Banking Corporation (SMBC) has raised its stake to about 20 percent, which the company calls the largest shareholding 1. A joint venture in Japan is expected to begin serving clients in January 2027 1.

Jefferies Financial Group is a U.S.-headquartered global investment banking and capital markets firm, formerly named Leucadia National Corporation 3. Its largest subsidiary, Jefferies LLC, a U.S. broker-dealer, was founded in 1962, and its first international operating subsidiary, Jefferies International Limited, was established in the U.K. in 1986 3.

In July 2021 it entered a strategic alliance with Sumitomo Mitsui Financial Group, SMBC and SMBC Nikko Securities to work together on corporate and investment banking 3. The alliance has since spread beyond the United States to Europe and the Middle East, Canada, Asia and Australia 3.

The firm also owned a legacy merchant banking portfolio, a set of businesses held for their own sake rather than for clients 3. On 14 September 2023 it completed a foreclosure that gave it 100 percent of Stratos, an online foreign exchange business in which it had held a 49.9 percent voting interest 3.

In the second quarter of 2024 it closed the sale of Foursight, an automobile lender, and recognized a gain of $24.2 million 3.

In July 2024 it invested $25.0 million in Hildene Insurance Holdings, an investment fund with insurance exposures 2. A further $75.0 million on 1 March 2025 lifted its effective ownership from 8.8 percent to 23.5 percent 2.

In fiscal 2025, investment banking net revenues were $3.79 billion, up 10.0 percent, and advisory reached a record $2.15 billion, up 18.4 percent 3. The company credited market share gains and a larger overall market opportunity 3.

Equities set a record at $1.91 billion, up 19.8 percent 3. Fixed income fell 22.0 percent to $909.9 million, as lower global activity and volatility in credit spreads weighed on trading in the first half 3.

The year's shock came on 24 September 2025, when First Brands filed for Chapter 11 bankruptcy protection 3. Point Bonita Capital, a division of Leucadia Asset Management, managed an approximately $3 billion trade-finance portfolio for outside investors, of which Leucadia Asset Management owned $113 million, or 5.9 percent 3.

A pre-tax loss of $30.0 million on its Point Bonita investment weighed on the asset management result that year 3.

Investment banking

Investment banking advises companies on mergers and acquisitions, debt and restructurings, and underwrites their stock and bond sales 3. In the third quarter, advisory net revenues were $818 million, up 25 percent, and underwriting was $483 million, up 12 percent 1.

Equity underwriting was up 69 percent, while debt underwriting decreased on lower industry volumes 1.

Capital markets

Capital markets is trading for clients across equities and fixed income, plus prime brokerage, which serves hedge funds 1. Capital markets net revenues were $802 million in the quarter, up 11 percent 1.

The company says fixed income was held back by lower industry volumes, while equities gained from higher global trading volumes in cash and electronic trading, equity options and corporate derivatives 1.

Asset management and legacy holdings

Asset management offers alternative investment funds, often seeded with the company's own capital, and holds investments in public securities and private companies 3. Its legacy merchant banking portfolio includes Stratos, an online foreign exchange business, Tessellis, an Italian listed telecommunications company, and HomeFed, a real estate business 3. The company has accepted a binding offer from a third party for Tessellis 2.

People and places

At 30 November 2025 the company had 7,787 employees: 50 percent in the Americas, 36 percent in Europe and the Middle East and 14 percent in Asia-Pacific 3. Richard Handler is chief executive and Brian Friedman is president 1.

Its global headquarters is at 520 Madison Avenue in New York, with regional headquarters in London and Hong Kong 3. It leases all of its office space 3.

It competes mainly with large global bank holding companies that have greater capital and resources, as well as other broker-dealers, asset managers and boutique firms 3.

Current problems

The bankruptcy proceedings of First Brands uncovered what is alleged to be a massive fraud 2. The company values its investment tied to First Brands exposure at zero and calls recovery highly uncertain 2.

Receivables bought from two other sellers, Radiant and Sapphire, began to default in January 2026 2. A Point Bonita entity has started proceedings in the English High Court and obtained a worldwide freezing order 2.

Bloomberg Law reported that investors in one of its funds sued the firm over losses tied to First Brands 5. The company's quarterly report says that, on current information, it does not expect any legal matter to have a material adverse effect on its financial statements 2.

The umbrella, in words

The main operating subsidiaries named in the annual report's subsidiary exhibit include Jefferies LLC, Jefferies International Limited, Jefferies GmbH and Leucadia Asset Management 4. The exhibit also names HomeFed LLC and Stratos Global LLC 4.

Stakes, by kind of tie: it owns 50 percent of Jefferies Finance, a corporate lending joint venture, and has a commercial real estate finance joint venture, Berkadia 3. It owns a 37.9 percent economic interest in ApiJect at 31 August 2026 2.

It invested in Hildene Insurance and holds a 23.5 percent effective ownership, as above 2. It has agreed to buy half of Hildene's parent company, described under Future 2.

On control, SMBC increased its equity ownership to approximately 20 percent and is the largest shareholder, in the company's words 1. The company had 189.1 million voting common shares outstanding at 31 August 2026 1.

SMBC converted preferred shares into 27.6 million shares of non-voting common stock on 30 June 2026 2.

On 9 December 2025 the company agreed to acquire a 50 percent interest in Hildene Holding Company, parent of the credit-focused asset manager Hildene Capital Management 2. It will contribute $340.0 million in cash plus an existing revenue share and part of a fund interest 2. Closing is targeted for the first quarter of 2027, subject to customary approvals 2.

The company expects the sale of Tessellis to close in the first quarter of 2027 2.

The planned Japan joint venture with SMBC is expected to begin serving clients in January 2027 1. The company expects it to become a template for other ways to work together globally with SMBC 1.

The board declared a quarterly cash dividend of $0.40 per common share, payable on 25 November 2026 to holders of record on 16 November 2026 1. It also raised its buyback authorization back to $250 million 1.

Richard Handler and Brian Friedman said they are very optimistic about the balance of 2026 and momentum into 2027 1. The company says its investment banking backlog remains strong, though the timing of revenue is always subject to change 2.

Management also said it expects meaningfully higher operating margins and earnings as it completes the Tessellis sale and winds down the remaining legacy merchant banking investments 1.