Earnings Prove Jefferies Not MF Global: Analyst

Jefferies’ strong first-quarter earnings proves the bank is no MF Global, JMP Securities analyst David Trone told CNBC Tuesday.


“I could speak for an hour about why they were two different companies in two different situations,” said Trone, who has a “buy” rating on the stock.

“This is definitely a company that convinced people that it is back on solid footing,” he said, after it reported earnings of 33 cents a share, four cents over analyst expectations. Revenue, however, increased to $758 million from $699 million a year ago.

Jefferies was haunted by its exposure to European sovereign debt last year, prompting Sean Egan of Egan Jones to downgrade the company and to declare on CNBC that he wanted to see the company’s balance sheet .

Jefferies later defended itself, detailing and then reducing much of its European exposure.

MF Global , by contrast, went out of business in part because of its European bets.

“People were asking me, ‘Dave, is this MF Global?’ You know, the market is very smart over long-term periods, but can be very unknowledgeable sometimes. You know, if it looks like a duck and quacks like a duck it’s got to be MF Global,” he said. “I think there had to be an education process. I think the stock doubling says that, which is the risk assets got better.”

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David Trone does not own Jefferies shares, but his company has an investment banking relationship and has managed or co-managed a public offering for the company within the last 12 months.