Ticonderoga Maintains a 'Buy' on Jefferies Group (JEF); 10-Q Highlights - Repo Usage Trends Improving, Always Watching Comp. Model

Ticonderoga maintains a 'Buy' on Jefferies Group (NYSE: JEF), PT $30.

Ticonderoga analyst says, "We estimate repo as a percent of total financing (short, long term, and equity) was 70% in Q1 2011, down from 73% last year. Usage increased (not surprising considering Q1) from 69% last quarter. Note JEF continues to gradually decrease the usage of repo as it migrates into longer-term debt. JEF may be actually seeing a slight benefit from the near-term challenges in the repo market. Post April 1st, repo rates have actually declined as supply of collateral actually decreases with larger banks scaling back given new taxes put in place on wholesale liabilities."

"AUM Gets Lift From Convertibles - Total AUM increased 24% seq., driven by strong flows and performance in convertibles. Convertible AUM is now $2.376 billion, up from $1.86 billion last quarter."

"Growing Share in Capital-Intense Business Is Not Easy - We do believe JEF has a real opportunity to gain share given favorable capital markets and secular challenges of larger competitors. However, maintaining capital and controlling compensation are critical elements to the share story."

For more ratings news on Jefferies Group click here and for the rating history of Jefferies Group click here.

Shares of Jefferies Group closed at $25.12 yesterday.

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