Jefferies Financial Group Inc
For the period ended Nov 30, 2024. Filed Jan 28, 2025.
View on SEC.govAbout this filing
A company's yearly report to the SEC, with audited financial statements. It is the fullest account a company gives of its business, its finances and the risks it sees.
FY2024 · Filed Jan 28, 2025
JEF$47.38-2.5%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-K
Period ended 2023-11-30; filed 2024-01-26.
0000096223-24-000006
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of OperationsConsolidated Results of OperationsExecutive SummaryRevenues by SourceNon-interest ExpensesAccounting DevelopmentsCritical Accounting EstimatesLiquidity, Financial Condition and Capital ResourcesRisk ManagementCurrent report: 10-K
Period ended 2024-11-30; filed 2025-01-28.
0001628280-25-002833
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of OperationsConsolidated Results of OperationsRevenues by SourceNon-interest ExpensesAccounting DevelopmentsCritical Accounting EstimatesLiquidity, Financial Condition and Capital ResourcesRisk ManagementThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
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92 unchanged; 244 reworded; 421 added; 53 removed; 0 previous and 1165 current paragraphs rearranged.
Tables are not compared: 28 previous and 43 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (421)
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Condition and Results of Operations
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of the Securities Act of 1933, Section 21E of the Securities
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Exchange Act of 1934 and/or the Private Securities Litigation
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these documents, including the following:
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the caption “Business”;
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Factors”;
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and Results of Operations” herein;
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reports and announcements.
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as compared to our 2022 results of operations, refer to
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•Net revenues were$7.03 billion for 2024, up 49.7% compared
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to$4.70 billion for 2023, reflecting strength across all lines of
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business primarily due to market share gains and a stronger
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•Earnings from continuing operations before income taxes were
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$1.01 billion for 2024, up 183.8% compared to$354.3 million
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•Our overall results were strong for 2024, driven by strength and
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continued momentum in Investment Banking and Equities.
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•Net earnings from discontinued operations (including gain on
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disposal), net of income taxes were$3.7 million and reflects
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the current year results of OpNet offset by a gain on the sale of
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•Investment banking net revenues were$3.44 billion for 2024,
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up 51.6% compared to$2.27 billion for 2023. Advisory net
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revenues were$1.81 billion, up 51.1% compared to$1.20
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billion for 2023, primarily attributable to market share gains
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and increased overall market opportunity. Total underwriting
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net revenues were$1.49 billion for 2024, up 53.4% compared
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to$970.5 million for 2023, due to increased equity and debt
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underwriting activity as a result of a more robust equity and
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general capital markets environment.
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•Equities net revenues were$1.59 billion for 2024, up 39.8%
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compared to$1.14 billion for 2023, attributable to market
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share gains, increased volumes and more favorable trading
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opportunities driving stronger results across most of our
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•Fixed income net revenues were$1.17 billion, up 6.8%
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compared to$1.09 billion for 2023, driven by stronger results
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from our distressed trading and securitized markets
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businesses, partially offset by reduced activity in our global
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Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
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The following table provides an overview of our consolidated results of operations (dollars in thousands):
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•Net revenues were $4.70 billion for 2023, down 21.4% compared with $5.98 billion for 2022, substantially as a result of reduced merchant banking net revenues within our asset management segment, which is largely attributable to divestitures made in 2022 and 2023. In addition, Investment banking net revenues were lower compared to the prior year, reflecting reduced industry-wide mergers and acquisitions, equity capital markets and leveraged finance activity. These decreases were partially offset by favorable net revenues from our equities and fixed income capital market businesses.
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•Earnings before income taxes of $354.3 million for 2023 were 66.4% lower than that of the prior year, with a large portion of the decline attributable to a reduction in investment banking activity as well as the reduction in merchant banking net revenues. Net earnings attributable to Jefferies Financial Group Inc. of $263.1 million for 2023 were lower than that of the prior year by a similar percentage.
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•Investment banking net revenues were $2.29 billion for 2023, compared to $2.89 billion for 2022. Advisory revenues were $1.20 billion, compared to $1.78 billion for 2022, driven by fewer mergers and acquisitions completed during the year and lower average fees per transaction. Industry-wide deal activity was reduced as compared to the prior year. Underwriting net revenues of $970.5 million were down 5.8% from the prior year of $1.03 billion, due to reduced industry-wide leveraged finance activity, while equity underwriting net revenues were slightly higher compared to the prior year period.
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•Equities net revenues were $1.12 billion for 2023, up 6.6% compared with $1.05 billion for 2022, on stronger results in our U.S. cash equity, convertibles and equity ETF businesses, partially offset by lower securities finance net revenues.
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•Fixed income net revenues were $1,092.7 million, up 36.5% compared with $800.5 million for 2022, reflecting strong results across a number of our businesses attributable to more stable market conditions. In addition, losses in our CMBS business were substantially reduced from the prior year primarily due to a more stable interest rate environment and overall lower risk profile.
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•Non-interest expenses were $4.35 billion for 2023, a decrease of $577.1 million, or 11.7%, compared with $4.92 billion for 2022. The decrease is primarily due to lower cost of sales and depreciation expense related to our significantly reduced merchant banking portfolio primarily as a result of divestitures made within the last two years including the sale of Idaho Timber in August 2022 and spin-off of Vitesse Energy in January 2023.
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•Non-compensation expenses for 2023 were $1.81 billion, a decrease of $523.4 million, or 22.4%, compared with $2.33 billion for 2022, as a result of decreases in costs of sales and depreciation expense primarily attributable to divestitures within our merchant banking portfolio made within the last two years. In addition, non-compensation expenses for 2022 included an $80.0 million combined regulatory settlement with the U.S. Securities and Exchange Commission and the U.S. Commodity Futures Trading Commission. These decreases were partially offset by higher technology, communications and business development expenses; professional fees, largely related to an increase in legal costs associated with capital markets transactions and litigation; bad debt expenses and loss reserves.
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The following provides a summary of “Net Revenues by Source” (dollars in thousands):
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The following table sets forth our investment banking revenues (dollars in thousands):
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The following table sets forth our investment banking activities (dollars in billions):
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Investment banking revenues were $2.29 billion for 2023, compared with $2.89 billion for 2022, reflecting the reduction in industry-wide mergers and acquisition, initial public offerings and leveraged finance activity while Other investment banking revenues increased on improved performance from Jefferies Finance partially offset by reduced revenues from Berkadia.
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Underwriting revenues were $970.5 million for 2023, a decrease of $59.3 million, or 5.8%, from 2022, reflecting slightly higher net revenues of $560.2 million in equity underwriting and lower net revenues of $410.2 million in debt underwriting. Equity underwriting revenues increased modestly as the equity markets have become more active in 2023. The decline in debt underwriting net revenues reflects a decline in new securitization issuance offset slightly by an improvement in other debt underwriting markets once inflationary and interest rate concerns somewhat stabilized.
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•interest rate derivatives and credit derivatives; and
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Fixed income net revenues of $1.09 billion for 2023 were up 36.5% compared to 2022, primarily reflecting strong results across our distressed trading, European corporates, loans, municipals, and U.S. rates businesses, partially offset by lower net revenues from our emerging markets and U.S. high yield trading businesses. In addition, losses in our CMBS business were substantially reduced from the prior year primarily due to a more stable interest rate environment and overall lower risk profile. The significant volatility of interest rates and inflation that existed in 2022 began to normalize as 2023 progressed leading to an overall improved operating environment.
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Investment return was $154.5 million for 2023, compared with $156.6 million for 2022, reflecting favorable returns generated from new fund strategies launched during 2023 with sizable notional assets under management and meaningfully improved performance across a large majority of our investment strategies and funds. In particular, our Asia-Pacific strategy funds generated significantly improved performance. Net revenues for the prior year include a gain of $175.1 million related to the sale of our interests in Oak Hill.
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Negative revenues from merchant banking assets managed within our Asset Management business were $(10.3) million for 2023, compared with net revenues of $1.05 billion for 2022, which include revenues of $570.2 million from Idaho Timber (sold in August 2022) and oil and gas revenues of $254.5 million from Vitesse Energy (spun-off in January 2023). Results from our merchant banking activities for 2023 were impacted by net losses of $52.2 million and $57.5 million attributed to our investments in OpNet and Golden Queen (sold in the fourth quarter of 2023), respectively, both legacy merchant banking investments. In addition, merchant banking revenues for the prior year included $122.0 million of gains associated with the sale of a completed HomeFed multi-family real estate project.
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Non-interest expenses were as follows (dollars in thousands):
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Non-interest expenses were $4.35 billion for 2023, a decrease of $577.1 million, or 11.7%, compared with $4.92 billion for 2022. The decrease is primarily due to lower cost of sales and depreciation expense related to our significantly reduced merchant banking portfolio primarily as a result of divestitures made in 2022 and 2023, including the sale of Idaho Timber in August 2022 and the spin-off of Vitesse Energy in January 2023.
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At November 30, 2023, we had 7,564 employees globally across all of our consolidated subsidiaries within our Investment Banking and Capital Markets and Asset Management reportable segments,, an increase of 2,183 employees from our headcount of 5,381 at November 30, 2022. Included within our global headcount, in addition to our broker-dealer subsidiaries through which we conduct our Investment Banking advisory and underwriting businesses and Fixed Income and Equities capital markets businesses, are 2,296 employees of our Stratos, OpNet, HomeFed, Foursight Capital LLC and M Science subsidiaries. Of the headcount increase, 1,903 relates to obtaining control of Stratos and OpNet as the employees of those subsidiaries are now included in our overall headcount. Our headcount was also impacted slightly as employees of Vitesse Energy are no longer part of our headcount upon the spin-off of our interests in Vitesse Energy in January 2023. During 2023, we have increased the number of our Investment Banking Managing Directors and related staff along with additional technology and corporate staff to support our growth and strategic priorities.
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•Business development expenses were higher as business travel, conferences and other events have returned to normal levels. Also, additions of investment banking professionals during 2023 lead to higher business development activity with a commensurate increase in expenses.
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•Other expenses were lower as non-compensation expenses for 2022 included an $80.0 million combined regulatory settlement with the U.S. Securities and Exchange Commission and the U.S. Commodity Futures Trading Commission. This decrease was partially offset by higher bad debt expense and loss reserves.
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The following table provides detail on selected balance sheet items (dollars in millions):
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Our Level 3 financial instruments owned as a percentage of total Financial instruments owned declined to 3.1% at November 30, 2023 from 4.2% at November 30, 2022, primarily due to decreases in investments at fair value and loans and other receivables as certain historical positions in those categories are now eliminated upon the consolidation of Stratos and OpNet. For additional details related to the consolidation of Stratos and OpNet refer to Note 4, Business Acquisitions in our consolidated financial statements included in this Annual Report on Form 10-K. Additionally, we sold a portion of CMBS during the fourth quarter of 2023 that previously were classified within Level 3 assets.
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The following table summarizes Level 3 assets by operating segment (in millions, except percentages):
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(1)At November 30, 2023 and November 30, 2022, $121.4 million and $218.7 million, respectively, are attributed to merchant banking investments within in our Asset Management operating segment.
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The following table presents our period end balance, average balance and maximum balance at any month end within the periods presented for Securities purchased under agreements to resell and Securities sold under agreements to repurchase (dollars in millions):
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The following table presents total assets, total equity, total Jefferies Financial Group Inc. shareholders’ equity and tangible Jefferies Financial Group Inc. shareholders’ equity with the resulting leverage ratios (dollars in millions):
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For additional details on our short-term borrowings, refer to Note 18, Short-Term Borrowings in our consolidated financial statements included in this Annual Report on Form 10-K.
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•$990.6 million from the issuance of our 5.875% Senior Notes with a principal amount of $1.0 billion, due 2028;
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•$290.2 million from additional issuances, net of repayments;
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•Addition of$75.4 million of Tessellis debt due to the OpNet consolidation; and
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•Partially offset by decreases of $393.0 million from the maturity of our 5.500% Senior Note as well as the reclassification of long-term debt to liabilities held for sale related to Foursight. For additional details related to Foursight and OpNet, refer to Note 5, Assets Held for Sale in our consolidated financial statements included in this Annual Report on Form 10-K.
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In addition, one of our subsidiaries has a Loan and Security Agreement with a bank for a term loan (“Secured Bank Loan”). At November 30, 2023, borrowings under the Secured Bank Loan amounted to$100.0 million and are also classified within Long-term debt in our Consolidated Statements of Financial Condition. The Secured Bank Loan matures on September 13, 2024, and is collateralized by certain trading securities with an interest rate of SOFR plus 1.25%. The agreement contains certain covenants that, among other things, restricts lien or encumbrance upon any of the pledged collateral. At November 30, 2023, we were in compliance with all covenants under the Secured Bank Loan.
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HomeFed funds certain of its real estate projects in part by raising funds under the Immigrant Investor Program administered by the U.S. Citizenship and Immigration Services pursuant to the Immigration and Nationality Act (“EB-5 Program”). This debt is secured by certain real estate of HomeFed. At November 30, 2023, HomeFed was in compliance with all debt covenants which include, among other requirements, limitations on incurrence of debt, collateral requirements and restricted use of proceeds. Primarily all of HomeFed’s EB-5 Program debt matures in 2024 through 2028.
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At November 30, 2023, HomeFed has a construction loan with an aggregate committed amount of $62.0 million. The proceeds are being used for construction at certain of its real estate projects. The outstanding principal amount of the loan bears interest based on the SOFR plus 2.75%, subject to adjustment on the first of each calendar month. At November 30, 2023, the weighted average interest rate on this loan was 8.07%. The loan matures in May 2024 and is collateralized by the property underlying the related project with a guarantee by HomeFed. At November 30, 2023 and November 30, 2022, $48.2 million and $57.0 million, respectively, was outstanding under the construction loan agreement.
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For further information, see Note 19, Long-Term Debt, in our consolidated financial statements included in this Annual Report on Form 10-K.
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(1) On December 11, 2023, Fitch Ratings revised our rating of BBB to BBB+ and revised our rating outlook from positive to stable.
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This report may contain or incorporate by reference certain “forward-looking statements” within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include statements about our future and statements that are not historical or current facts. These forward-looking statements are often preceded by the words “should,” “expect,” “believe,” “intend,” “may,” “will,” “would,” “could” or similar expressions. Forward-looking statements may contain expectations regarding revenues, earnings, operations and other results, and may include statements of future performance, plans and objectives. Forward-looking statements also include statements pertaining to our strategies for future development of our business and products. Forward-looking statements represent only our belief regarding future events, many of which by their nature are inherently uncertain. It is possible that the actual results may differ, possibly materially, from the anticipated results indicated in these forward-looking statements. Information regarding important factors that could cause actual results to differ, perhaps materially, from those in our forward-looking statements is contained in this report and other documents we file. You should read and interpret any forward-looking statement together with these documents, including the following:
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This report may contain or incorporate by reference certain
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•the description of our business contained in this report under the caption “Business”;
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•the description of our business contained in this report under
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•the risk factors contained in this report under the caption “Risk Factors”;
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•the risk factors contained in this report under the caption “Risk
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•the discussion of our analysis of financial condition and results of operations contained in this report under the caption “Management’s Discussion and Analysis of Financial Condition and Results of Operations” herein;
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•the discussion of our analysis of financial condition and results
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•the discussion of our risk management policies, procedures and methodologies contained in this report under the caption “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Risk Management” herein;
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•the discussion of our risk management policies, procedures
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•the consolidated financial statements and notes to the consolidated financial statements contained in this report; and
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•the consolidated financial statements and notes to the
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•cautionary statements we make in our public documents, reports and announcements.
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•cautionary statements we make in our public documents,
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Any forward-looking statement speaks only as of the date on which that statement is made. We undertake no obligation to update any forward-looking statement to reflect events or circumstances that occur after the date on which the statement is made, except as required by applicable law.
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Any forward-looking statement speaks only as of the date on
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Our business, by its nature, does not produce predictable or necessarily recurring earnings. Our results in any given period can be materially affected by conditions in global financial markets, economic conditions generally and our own activities and positions. For a further discussion of the factors that may affect our future operating results, see the risk factors contained in this report under the caption “Risk Factors”.
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Our business, by its nature, does not produce predictable or
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Our results of operations for the years ended November 30, 2023 (“2023”) and November 30, 2022 (“2022”) are discussed below. For a discussion of our results of operations for the year ended November 30, 2021 (“2021”) and our 2022 results of operations as compared with our 2021 results of operations, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of our Annual Report Form 10-K for the year ended November 30, 2022, which was filed with the SEC on January 27, 2023.
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Our results of operations for the years ended November 30, 2024
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•Asset management net revenues were $188.3 million, compared with $1.24 billion in 2022 with substantially all of the decline attributable to the decline in our merchant banking revenues due to divestitures made in 2022 and 2023. Investment return net revenues for 2023 were solid driven by improved performance across multiple investment strategies and funds, favorably comparing to net revenues for the prior year which include a gain of $175.1 million related to the sale of our interests in Oak Hill. In addition, merchant banking revenues for the prior year included a gain of $122.0 million associated with the sale of a completed HomeFed multi-family real estate project.
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•Asset management net revenues were$803.7 million for 2024,
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•Compensation and benefits expense was $2.54 billion for 2023, a decrease of $53.8 million, or 2.1%, compared with $2.59 billion for 2022. Compensation and benefits expense as a percentage of Net revenues was 53.9% for 2023, compared with 43.3% for 2022, reflecting a much higher proportion of merchant banking revenues during 2022 within our asset management segment, which have much lower compensation rates. Refer to Note 15, Compensation Plans included in this Annual Report on Form 10-K for further details.
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billion for 2023. Compensation and benefits expense as a
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•At November 30, 2023, we had 7,564 employees globally across all of our consolidated subsidiaries within our Investment Banking and Capital Markets and Asset Management reportable segments, an increase of 2,183 employees from our headcount of 5,381 at November 30, 2022. Included within our global headcount, in addition to our broker-dealer subsidiaries through which we conduct our Investment Banking advisory and underwriting businesses and Fixed Income and Equities capital markets businesses, are 2,296 employees of our Stratos, OpNet, HomeFed, Foursight Capital LLC and M Science subsidiaries.
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across all of our consolidated subsidiaries within our
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•Of the headcount increase, 1,903 relates to obtaining control of Stratos and OpNet as the employees of those subsidiaries are now included in our overall headcount. Our headcount was also impacted slightly as employees of Vitesse Energy are no longer part of our headcount upon the spin-off of Vitesse Energy in January 2023. During 2023, we have increased the number of our Investment Banking Managing Directors and related staff along with additional technology and corporate staff to support our growth and strategic priorities.
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During the past year, we have increased the number of our
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We present our results as two reportable business segments: Investment Banking and Capital Markets and Asset Management. Additionally, corporate activities are fully allocated to each of these reportable business segments. We believe this presentation aligns with the manner in which we manage our business activities and is consistent with our fundamental long-term strategy of continuing to build out our investment banking effort, enhancing our capital markets businesses and further developing our Leucadia Asset Management alternative asset management platform as we continue to divest significant portions of our legacy merchant banking portfolio.
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We present our results as two reportable business segments:
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Net revenues presented for our Investment Banking and Capital Markets reportable segment include allocations of interest income and interest expense as we assess the profitability of these businesses inclusive of the net interest revenue or expense associated with the respective activities, including the net interest cost of allocated long-term debt, which is a function of the mix of each business’s associated assets and liabilities and the related funding costs. During 2023, we refined our allocated net interest methodology to better reflect net interest expense across our business units based on use of capital. Historical periods have been recast to conform with the revised methodology.
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Net revenues presented for our Investment Banking and Capital
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The remainder of our “Consolidated Results of Operations” is presented on a detailed product and expense basis. Our “Revenues by Source” is reported along the following business lines: investment banking, equities, fixed income and asset management. Additionally, the results of the asset management business include the subcategory “merchant banking.”
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The remainder of our “Consolidated Results of Operations” is
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Foreign currency transaction gains or losses, debt valuation adjustments on derivative contracts, gains and losses on investments held in deferred compensation or certain other corporate income items are not considered by management in assessing the financial performance of our operating businesses and are, therefore, not reported as part of our business segment results.
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Foreign currency transaction gains or losses, debt valuation
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(1)Allocated net interest is not separately disaggregated for Investment Banking and Capital Markets. This presentation is aligned to our Investment Banking and Capital Markets internal performance measurement.
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(1)Allocated net interest is not separately disaggregated for Investment Banking
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(2)Allocated net interest represents an allocation to Asset Management of our long-term debt interest expense, net of interest income on our Cash and cash equivalents and other sources of liquidity. Allocated net interest has been disaggregated to increase transparency and to make clearer actual Investment return. We believe that aggregating Investment return and Allocated net interest would obscure the Investment return by including an amount that is unique to our credit spreads, debt maturity profile, capital structure, liquidity risks and allocation methods.
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(2)Allocated net interest represents an allocation to Asset Management of our
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•advisory services with respect to mergers and acquisitions, debt financing, restructurings and private capital transactions;
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•advisory services with respect to mergers and acquisitions,
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•underwriting services, which include underwriting and placement services related to corporate debt, municipal bonds, mortgage-backed and asset-backed securities and equity and equity-linked securities and loan syndication;
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•underwriting services, which include debt underwriting and
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•our 50% share of net earnings from our corporate lending joint venture, Jefferies Finance;
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•our 50% share of net earnings from our corporate lending joint
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•our 43.6% share of net earnings from our commercial real estate joint venture, Berkadia (which includes commercial mortgage origination and servicing);
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•our 45% share of net earnings from our commercial real estate
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•Foursight, our wholly-owned subsidiary engaged in the lending and servicing of automobile loans (agreement reached in November 2023 to sell our interests, with transaction expected close in the first quarter of 2024); and
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•Foursight, our wholly-owned subsidiary engaged in the lending
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•securities and loans received or acquired in connection with our investment banking activities.
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•securities and loans received or acquired in connection with
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We continue to make extensive investment in our investment banking franchise, including a significant number of professional hires, including at the managing director level, increasing our headcount in the industrial and energy sectors, additions of a municipal healthcare group and our private capital group as well as expansions in capabilities across Canada, South America, continental Europe, the Middle East and Asia-Pacific. We believe that these investments create significant momentum for strong investment banking results as our clients become more active.
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including a significant number of professional hires, particularly
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Advisory revenues were $1.20 billion for 2023, down $579.1 million, or 32.6%, from 2022, and we have continued to maintain market share though deal volume and deal value across most sectors in the global mergers and acquisitions markets have declined.
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sectors in the global mergers and acquisitions markets.
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Other investment banking revenues were $118.8 million for 2023, compared with $78.9 million for 2022. Results from our share of the net earnings of our Jefferies Finance joint venture increased driven by greater net interest income primarily due to rising reference rates and losses on certain syndicated transactions and commitments in 2022 that were not repeated in 2023 due to improving market conditions. Revenues from our share of the net earnings of our Berkadia joint venture were impacted by a decline in mortgage origination volumes, partially offset by higher interest income on the loan servicing portfolio. Revenues from our automobile lending and servicing business were relatively consistent as compared to the prior year.
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2024, compared to$102.9 million for 2023. Results from our
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Our investment banking backlog continues to strengthen from the levels at the end of the prior quarter. We have seen recent signs of a further pickup in underwriting and mergers and acquisitions activity, although execution is always uncertain and dependent on market conditions. Backlog snapshots are subject to limitations as the time frame for the realization of revenues from these expected transactions varies and is influenced by factors we do not control. Transactions not included in the estimate may occur, and expected transactions may also be modified or cancelled.
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signs that underwriting and mergers and acquisitions activity in
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•services provided to our clients from which we earn commissions or spread revenue by executing, settling and clearing transactions for clients;
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•services provided to our clients from which we earn
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•financing, securities lending and other prime brokerage services offered to clients, including capital introductions and outsourced trading; and
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services offered to clients, including capital introductions and
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Equities net revenues were $1.12 billion for 2023, an increase of 6.6%, compared with $1.05 billion in 2022, with strong results and momentum across many equities business lines. Results in our global convertible business improved year over year as more favorable market conditions for this asset class led to increased primary issuance and secondary trading. Additionally, net revenues from our U.S. cash equities and equity ETF businesses increased, which was partially offset by lower securities finance net revenues.
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business lines. Results in our cash and electronic trading
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•executing transactions for clients and making markets in securitized products, investment grade, high-yield, distressed, emerging markets, municipal and sovereign securities and bank loans;
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•executing transactions for clients and making markets in
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We operate a diversified alternative asset management platform offering institutional clients a range of investment strategies directly and through our affiliated asset managers. We provide certain of our affiliated asset managers access to our fully integrated global operational infrastructure and support. This may include strategy and product development, daily operations and finance-related activities, compliance, legal and human resources support, as well as marketing and business development.
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We operate a diversified alternative asset management platform
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•management and performance fees from funds and accounts managed by us;
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•management and performance fees from funds and accounts
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•revenue from affiliated asset managers where we are entitled to portions of their revenues and/or profits, as well as earnings on our ownership interests in our affiliated asset managers;
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•revenue from affiliated asset managers where we are entitled
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•investment income from our capital invested in and managed by us and our affiliated asset managers; and
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•investment income from our capital invested in and managed
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•revenues from investments held in our legacy merchant banking portfolio, including consolidated operations from real estate development activities, oil and gas activities and timber manufacturing (until the sale of Idaho Timber in August 2022 and our spin-off of our interest in Vitesse Energy in January 2023).
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•revenues from investments held in our other investments
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Asset management fees and revenues are impacted by the level of assets under management and the performance return of those assets, for the most part on an absolute basis, and, in certain cases, relative to a benchmark or hurdle. These components can be affected by financial markets, profits and losses in the applicable investment portfolios and client preferences for capital allocation. Further, asset management fees vary with the nature of investment management services. The terms under which clients may terminate our investment management authority, and the requisite notice period for such termination, varies depending on the nature of the investment vehicle and the liquidity of the portfolio assets. In some instances, performance fees and similar revenues are recognized once a year, when they become fixed and determinable and are not probable of being significantly reversed, typically in December. As a result, a significant portion of our performance fees and similar revenues generated from investment returns in a calendar year are recognized in our following fiscal year.
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Asset management fees and revenues are impacted by the level
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“forward-looking statements” within the meaning of Section 27A
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Reform Act of 1995. Forward-looking statements include
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statements about our future and statements that are not
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historical or current facts. These forward-looking statements are
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often preceded by the words “should,” “expect,” “believe,”
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“intend,” “may,” “will,” “would,” “could” or similar expressions.
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Forward-looking statements may contain expectations regarding
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revenues, earnings, operations and other results, and may include
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statements of future performance, plans and objectives. Forward-
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looking statements also include statements pertaining to our
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strategies for future development of our business and products.
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Forward-looking statements represent only our belief regarding
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future events, many of which by their nature are inherently
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uncertain. It is possible that the actual results may differ, possibly
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materially, from the anticipated results indicated in these
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forward-looking statements. Information regarding important
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factors that could cause actual results to differ, perhaps
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materially, from those in our forward-looking statements is
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contained in this report and other documents we file. You should
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read and interpret any forward-looking statement together with
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of operations contained in this report under the caption
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and methodologies contained in this report under the caption
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and Results of Operations—Risk Management” herein;
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consolidated financial statements contained in this report; and
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which that statement is made. We undertake no obligation to
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update any forward-looking statement to reflect events or
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circumstances that occur after the date on which the statement
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is made, except as required by applicable law.
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necessarily recurring earnings. Our results in any given period
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can be materially affected by conditions in global financial
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markets, economic conditions generally and our own activities
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and positions. For a further discussion of the factors that may
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affect our future operating results, refer to the risk factors
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contained in this report under the caption “Risk Factors”.
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(“2024”) and November 30, 2023 (“2023”) are discussed below.
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For a discussion of our results of operations for the year ended
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November 30, 2022 (“2022”) and our 2023 results of operations
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and Results of Operations” in Part II, Item 7 of our Annual Report
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Form 10-K for the year ended November 30, 2023, which was
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filed with the SEC on January 26, 2024.
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