Jefferies Not Risk-Takers, CEO 'One of the Best': Whitney

Reported by Brian Sullivan, Written by Jeff Cox
Friday, 4 Nov 2011 | 10:28 AM ET

Jefferies CEO Rich Handler has at least one prominent supporter — noted banking analyst Meredith Whitney, who said the company is run conservatively and unlikely to get hammered by exposure to European debt.

Meredith Whitney
Jin Lee | Bloomberg | Getty Images
Meredith Whitney

The investment bank's position on sovereign debt has come into questionafter ratings firm Egan-Jones downgraded the Jefferies credit rating to BBB- and an analyst said it could have as much as 77 percent of shareholder equity exposed to Europe.

But Whitney said the company is well-positioned under Handler, who has been Jefferies’ CEO since 2001.

"Rich Handler is one of the best CEOs no one's ever heard of," Whitney said in a brief telephone interview, adding that he has "managed the company so conservatively and has raised capital and done the largest debt deal ever just to play it safe and have cap buffers."

Questions over Jefferies' debt exposure to Greece and other troubled nations come just three days after MF Global filed for bankruptcy due directly to bad bets its CEO, Jon Corzine, made on European debt .

Jefferies executives, while acknowledging a gross $2.684 billion stake on European debt, said their positions are hedged well enough that the actual net exposure is close to zero. Jefferies says its total exposure to Greek debt is about $1 million.

Defending Jefferies: Fears Overblown?
Anton Schutz, Mendon Capital Advisors president, provides perspective on Jefferies downgrade, and hedges.

Sean Egan, president of Egan-Jones ratings, countered to CNBC that the company is using the wrong metric to measure its risk, and that Jefferies exposure is closer to 77 percent when taking into account corporations that have lending exposure to debt-laden nations.

Whitney, though, said she would be more inclined to believe that Jefferies did not take irresponsible risks.

"This is not their trading style, they are not huge risk-takers," she said. "MF Global legitimately scared a lot of people."


Correction: Due to an editing error, an earlier version of this story incorrectly stated that Jefferies has a gross $2.864 billion exposure to Greek debt. That earlier version also misidentified the name of the ratings agency that downgraded Jefferies this week.

  Price   Change %Change


  • Discussing loan growth in financials and the drag of litigation on Bank of America's earnings, with Gerard Cassidy, RBC Capital Markets lead banking analyst.

  • Ken Moelis, Moelis & Company founder and CEO, discusses the public debut of his company on the NYSE and explains his boutique investment banking model. "Clients will want the flexibility of an independent, unconflicted advisor," Moelis says.

  • Discussing how to buy in volatile market conditions and the investment banking market, David Katz, Matrix Asset Advisors CIO, and Charles Bobrinskoy, Ariel Investments vice chairman & portfolio manager.