Leucadia Shares Receive Much-Needed Support From Oppenheimer

  • Jefferies owner receives outperform rating in new coverage
  • Only one other firm covers the stock; its rating is sell

Leucadia National Inc. has the attention of a Wall Street stock analyst for a change, and it can’t come too soon.

Oppenheimer & Co. started coverage two days ago with an outperform rating on Leucadia, which owns the Jefferies Group LLC securities firm and is invested in energy, real estate, beef processing, auto dealerships and other industries.

Analyst Chris Kotowski’s call shows he expects the stock to beat the Standard & Poor’s 500 Index in the next 12 to 18 months. That kind of performance would be at odds with recent history, as the chart below illustrates.

Leucadia ended November at its lowest price since April 2009. Shares of the New York-based company fell 21 percent through the first 11 months of this year, matching its loss for all of last year. The stock is headed for its first back-to-back annual decline since the 1990s.

Fewer analysts have ratings on Leucadia than on any other S&P 500 company, according to data compiled by Bloomberg. The only other recommendation is from EVA Dimensions, a research firm based in Locust Valley, NY, whose calls are driven mainly by data analysis. EVA says sell, and its rating has been no higher than hold during the past two years.

“Leucadia is not a simple story,”’ Kotowski wrote in his first report. Yet the company has transformed itself into a merchant bank “with the power of being able to write a large equity check at a moment’s notice” from a conglomerate, as it was before the Jefferies takeover in March 2013, he wrote.

The company has been able to invest at prices that “are now well below market costs,” Kotowski wrote. The New York-based analyst cited investments in the securities firm KCG Holdings Inc., the foreign-exchange dealer FXCM Inc. and the holding company HRG Group Inc. as examples.

Since the current U.S. bull market started in March 2009, Leucadia was the S&P 500 Financials Index’s third-worst performer among stocks that traded for the entire period, according to data compiled by Bloomberg. Only Northern Trust Corp. and People’s United Financial Inc. trailed the company’s 67 percent advance through yesterday.

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