“Epic Errors”

Shares of Jefferies ($JEF) took a major bath after rating firm Egan-Jones downgraded the stock (Leucadia owns a big slice of Jefferies). E-J said that Jefferies needed to raised $1 billion while Jefferies continually said that they were doing fine. Now an analyst at Oppenheimer said that Egan-Jones’ analysis contained (get this) “epic errors.”

The analysis contains “epic errors of fact,” Chris Kotowski, an analyst at Oppenheimer, said today in an interview with Stephanie Ruhle and Erik Schatzker on Bloomberg Television’s “InsideTrack.”

Jefferies “is a fine company,” he said. “It’s conservatively leveraged compared to any other fixed income trader historically.”

‘Deeply Flawed’

Jefferies climbed 36 cents, or 3.4 percent to $11.01, as of 12:57 p.m. New York time. The shares had declined 60 percent this year through Nov. 25, outpacing the 17 percent drop in the Standard & Poor’s Midcap Financials Index.

“The fact that this kind of deeply flawed work can get the media traction it has, just indicates to me that we’re living through something that is kind of like the inverse of the Internet bubble,” Kotowski said. “By 2000 it got to the point where people were just buying tech stocks no matter what the valuation or what the project. Now they’re shorting banks because shorting banks has worked for five years in a row, so people have this mentality of short a bank, get a check.”

Posted by on November 28th, 2011 at 1:30 pm


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