Jefferies Financial Group's asset-management revenue shrank by more than half in the three months through August, dropping to $85.6 million from nearly $177 million a year earlier. The pressure stems from troubled bets on First Brands Group and Radiant World housed within Leucadia Asset Management's Point Bonita fund. Shares were down 2.4% to $46 at 4:57 p.m. in New York late trading.
Earnings per share landed at $1.08, topping the $1 average estimate in a Bloomberg survey. Jefferies was the first major US bank to release third-quarter numbers, giving an early read on how dealmaking and trading held up in choppy markets.
Even as asset management stumbled, Jefferies notched a record quarter for stock trading and investment banking. Equity-trading revenue rose 29% to $626 million, helped by cash and electronic trading and the firm's prime-brokerage unit serving hedge funds. Investment-banking revenue increased 17% to $1.3 billion, fueled by a 25% lift in advisory and a 69% surge in equity underwriting. Fixed-income trading was softer, with net revenue down 26% amid a sluggish market.
Radiant World has recently faced allegations of fraud, and Jefferies' exposure to it was under $300 million, according to prior Bloomberg reporting.
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Peers are signaling similar stock-trading momentum. According to Bank of America CEO Brian Moynihan, equity trading climbed during the quarter through mid-September, while Goldman Sachs' David Solomon said it has remained "very strong." On the flip side, Bank of America has cautioned that fixed-income trading revenue was down and bouncing around.
"We remain confident in the long-term outlook for the business as we continue to reposition the platform by reducing capital allocated to certain existing funds consistent with the strategy we outlined last fall when we announced our intent to acquire and fund a 50% interest in Hildene," Chief Executive Officer Richard Handler and President Brian Friedman said. Jefferies, in 2025, struck a deal to purchase a 50% interest in Hildene Holding Co., an asset manager focused on credit, with which it had maintained a longstanding strategic relationship.
Leadership also looked ahead: "We are very optimistic about the balance of 2026 and our momentum heading into 2027, supported by the breadth and strength of our current backlog and new business activity," Handler and Friedman said.
Think of Jefferies' results as a two-track story: a painful hit from specific asset bets, but standout stock trading and solid banking fees keeping the overall engine running. That combo hints at what you may hear from other banks in October - equity desks broadly had a good stretch, while fixed income was a tougher slog. For your money, the takeaway is that volatility did not shut the window for deals or stock trading, even as credit-related businesses felt slower.
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