Jefferies Financial Group Stock

Okay. Good morning, everybody. Welcome to our Investor Day, Jefferies. My name is Rich Handler, the CEO. I'm going to give you a very brief overview of our company today and how we see the future, followed up by Brian, who's going to put a little more detail on it, but the lion's share of the specifics will be driven by our leadership team, which we're very proud of, and then we'll all be available for a question-and-answer afterwards.

The thing I'm hoping -- the 2 things I'm hoping that people will take away from the meeting today is something that our whole leadership team is very well aware of. First, the strength and scale and scope and capabilities of Jefferies today is something we think is incredibly unique and perhaps not fully understood. We hope to flesh that out a little bit more. And more importantly, the opportunity in the future going forward allows us with the scale and the scope, we believe, to continue to grow and invest, but also bring even more profits to the bottom line. And I think we'll talk a little bit today about how we're going to do that.

Having been at Jefferies since 1990, it's a long time, we've been very consistent in both our strategy and our objectives. Our objective has always been to build the best world-class full-service global investment bank. And our strategy has always been incredibly consistent as well. There's a handful of things that we have prioritized and we continue to prioritize. First and foremost is our clients. This is true and a lot of firms say this, but a lot of firms don't have the DNA wrapped throughout the entire organization to really be there for clients, both in good times and bad times.

The second thing that we've been consistent with doing in terms of strategy is to invest in our human capital and our people and create an environment where people are empowered, they lead with honesty and integrity, and they have a long-term time horizon and a team focus is prevalent throughout our entire organization and it's enabled us to get to where we are today. We are incredibly flat. Even with our growth that we are today, we're still relatively incredibly flat and we're entrepreneurial. And those 2 factors are really a secret weapon that allows us to compete against the largest companies and competitors in the world.

You'll see today through some of our slides, we have and always will lead through ideas and content and the ability to have truly unique execution. We have always had a focus on the long term. You've heard that through prior Investor Days with a keen sense of urgency. And that balance has allowed us to navigate some very complicated markets and complicated situations, but it's always done well by us. We also are a firm that has consistently made sure we protected all stakeholders throughout the organization. We -- shareholders, bondholders, everyone who touches Jefferies, it's important for us to know that they have our commitment to protect them throughout the various market cycles.

And finally, in our strategy of being consistent, we've always wanted to build a company that had purpose that was important and it was bigger than just the pure nuts and bolts of operating an investment bank. I'd like to remind everyone in this room, both fellow shareholders and the analysts that cover us and the people on the phone -- we're not just a management team at Jefferies, we are also your partners in ownership. If you look at the senior leadership, the rest of the employees, our joint venture partners, you add that up in aggregate in our Board, you add that up in aggregate of the 250 million fully diluted shares at Jefferies, we own 100 million shares of that stock. So as a result, we are incredibly aligned both for the good and for sometimes the not so good.

There's a couple of things when you have that kind of ownership and that alignment that really are important. And I always tell our people, when your stock is high, you're not as smart as you think you are. And when your stock is low, you're not as dumb as you think you are. It doesn't feel that way on both extremes, but that's the reality of the truth. We care deeply about our shareholders. When our stock is at attractive prices, we will buy our stock back in. It was on an 8-K this morning. In the last couple of weeks, we bought in 2.725 million shares, roughly another -- a little bit over another 1% at very attractive prices.

In the last 9 months -- I guess, 10 months of calendar 2026, we've either given dividends or purchased back stock approaching 11% of our tangible book value. If you go back historically, the last 5 years, it's close to $4 billion. In the last 7 years, it's over $5 billion or 44% or 70% historically. So we have been able to take advantage in targeted situations where we think the market is not understanding basically our story. I hope from today's presentation, you also get -- it's going to be slightly different. The tone is going to be slightly different. And there's 2 points I want to make in there -- or actually a few points I want to make in regard to that.

And I say this without any arrogance and recognizing how fragile everything in the world is. But everyone of our shareholders should understand what we all understand today. Jefferies has reached critical mass as a world-class institution. And I shudder saying that because it jinxes you. But the fact of the matter is the scale and scope and capabilities and the geographical footprint are basically second to only a handful of the largest banks on the planet in our industry. It's a remarkable accomplishment that I couldn't thank our team more to actually -- for actually getting us at this point.

The quality and breadth of our human capital, the people that are touching our clients and the people who are supporting our people to touch our clients, I would put them on par against anyone in the industry. The client base that we have today, and this is someone who's been here for a very long time and watch the clients -- the type of clients evolve over the decades. We are in an incredibly envious position. These are the most sophisticated, most important, largest, middle, small across the board, all geographies. We are their partners. We are their trusted partners. And that is an advantage that we have never really had throughout our organization in our history.

And I would also just say that despite the fact that we're constantly building, constantly building, and I'm not going to declare victory, our brand as an organization is actually becoming a major advantage for our company for the first time since I've been here. So what does this mean for our future? We're always going to invest in our people and our company the way we have historically. That's not going to change. However, we think we're in a position to actually be able to start bringing even more profits to the bottom line. And a lot of what you're going to hear today is how we're going to do it.

I'll just give you a little bit of an overview. First off, we think we're at the tail end. We've been saying this for a while, but we are very selective. We want to optimize all value. We're at the tail end of approaching cleaning up the remainder of the merchant bank and cleaning up is not the right word, just monetizing and actually simplifying the story and redeploying that capital. I think you'll see that in the foreseeable future. I think our heavy investment in human capital, while we'll keep investing, we made the lion's share when the market was really tough. And I think you'll see the beginning of the peak of the hiring and the expensing of the stock to get us to this position. I think that point has passed.

We still have targeted hiring and specific ideas. We will always be opportunistic when the right thing comes along. But the lion's share of the group hires, I think when you say you're at critical mass, it goes with the fact that you don't have to do the mass hires that we've had before. Matt will talk a little bit about it, but I think you'll see comp leverage and operating leverage come move in the right direction. I think Brian will talk a little bit about our asset management in terms of how we're basically going to hopefully close Point Bonita. It looks like the first quarter of next year, dealing with the regulatory process.

But once we do that and the capital we've redeployed from asset management into Hildene. That was a bad one. In Hildene, once we redeploy that capital, we'll wind up having a more consistent and more predictable EBITDA from our asset management business in addition to the other assets that we have in that group. I'll also add in terms of bringing more consistent earnings and profitability, it will basically be the SMBC joint venture, you'll hear more about that as well. We are extremely excited with the progress that we're making there.

Our joint venture in Japanese equities will basically be started in early January. And I think that will contribute and show the template of what we're able to do with SMBC and take it to a different level. There are so many levers that you're going to see in terms of our ability to bring more to the bottom line and take advantage of our position that I think you'll understand why our whole organization is incredibly excited about where Jefferies is today. And as you go through and listen to the slides of our various people, just step back for a second and think of where Jefferies came from and where we are in each of our relative businesses. And I think if you see that, you'll understand why we're so excited today to be at our firm. With that, I'll hand it over to Brian.

Well, I'll start and see where we get to. I'll take what Rich said a little further, which is that there is no firm like Jefferies. Often, we'll meet with people and they'll talk about, I'm looking for a firm like Jefferies. In the old days, I used to take them on and say, name 2. Today, you couldn't name one. The firm that's been built here is distinct in that it is the Wall Street ideas firm. It is, as Rich said, the content firm. We're the firm that gets up in the morning to make a difference for our clients in the way they think, in the actions that they will take, in the way they look at their business in the way they look at their investment opportunities.

We're in a position today where we really believe we have the best research team. We believe we have the best sales and trading team, particularly with focus on what we're trying to accomplish as a firm. We believe we have the best sector investment bankers, the best M&A and corporate finance professionals. We believe that across the board, we've evolved from a firm that was built to be a leader in the middle market to a firm that is a leader broadly. We've shown versions of this before, which is to step back from the moment. And we're not going to -- as Rich said, we're not going to shirk the moment. We're going to deliver better and better results in the near term.

But if you step back, you see the scale of what we're accomplishing. That last column takes our most recent 12 months and simply says, let's assume that continues for the rest of the decade. We like to believe we're going to do better than that, and it shows it on the bottom line. And about the only question in my mind is, will we be able to do this again in the 2030s? And I'm not sure there's any reason we can't. There is still a lot of opportunity that we are yet going to pursue. This was a slide that we used 2 years ago, and we thought it was worthwhile to go back and look at what we said and compare it to what has actually happened.

So this goes back to, give or take, 2 years ago today, when a $6 billion business was #6 in M&A and ECM. The ROTE was at 10%. The earnings was a little over $0.5 billion on a trailing 12 basis. And we suggested that we could continue. We suggested that we would be able to broaden and deepen our business, we would be able to grow our market position and that we also saw a healthier market developing. Today, trailing 12 months, you can see that our net revenue is up by over 1/3. You can see our net earnings are up by almost 2/3. You can see that the ROTE is up by over 300 basis points, and we'll talk in a little bit about the upside that we see in return and in earnings per share.

We're now #5 in M&A and ECM. Very noteworthy is that the number of MDs in investment banking has moved only modestly from 364 to 376. So apropos what Rich said before, about the largest part of our gaining this next position in the market and in the world is significantly achieved. It doesn't mean that someday we won't have 500 MDs in investment banking. It doesn't mean this business can't grow to be $12 billion, $15 billion and even $20 billion. But we've accomplished a lot. And as we're going to go into some detail, it's now about seeing the opportunity to deliver leverage to our bottom line.

Last year, we again talked about our ability to drive our position, realize the maturation, continue the market share gains and expand our margin. And again, in fact, our investment banking, and this is 1 year of progress, went from $3.6 billion of total revenues to $4.7 billion, advisory from $2.1 billion to $2.7 billion, our equities business from $1.8 billion to $2.3 billion and our equities market share from 5% to 5.3%. This is real progress. And what I would note to you because you read articles about Jefferies, and I sometimes wonder what firm they're talking about. We made the claim 2 years ago, 1 year ago and arguably 5 and 10 years ago that we would drive Jefferies through the growth of our investment banking as the leading business.

Over the last couple of years, we've been clear that the opportunity to grow our equities business at a meaningful pace had developed. We didn't highlight here our fixed income or our asset management, not that we don't believe, but we know that it's going to take a bit of time. And we knew it was going to take 2026 and probably 2027 for our fixed income business, in particular, to pick up the opportunity of real interest rates, pick up the opportunity of greater complexity and begin to develop and grow again very much similar to our equities business, aligned with our strategy across the firm and particularly in investment banking.

And that partnership across equities and fixed income on the one hand and investment banking on the other is a critical part of our strategy, a critical part of our opportunity. We bring the best ideas. We bring outstanding execution, and we bring all of Jefferies to our clients, and we try to leverage across the firm. You're going to hear from our business leaders, and I'm not going to get into the detail here, but there are drivers across each element of our business. There is nothing more exciting than to see the breadth and depth of what is happening, what will happen and the results that can come from it. I'm going to talk about that in just a moment.

But we see opportunity continuing in investment banking and equities. We see ourselves having modestly bottomed and the difference between this year and last year is very slight in fixed income. And in Asset Management, we see whatever has hobbled us as being all but in the rearview mirror, not to say that we have absorbed every element of it, but it remains meaningfully absorbable. It's not going to get in the way of our progress. It's not going to get in the way of opportunity. And as Rich mentioned, with our moving forward, as we said a year ago, to reduce the capital that's otherwise deployed in historic strategies and move it into Hildene, we will enter 2027 when we closed the Hildene transaction in the first quarter with a meaningfully better mix of asset management business and a more consistent and more durable result.

All of this is going to translate as it has in 2026 in better return and better earnings per share. That will continue, we believe, into 2027 and beyond. As you saw with the headcount of MDs and investment banking, the headcount growth has largely subsided, and this will lead to the comp leverage that we've all waited for. Similarly, and Matt will go into some of the detail and some of the math, we are already seeing leverage in our noncomp expense base, and we see that continuing. As Matt will also review, tech and AI, both offensively and from a cost control and cost reduction perspective, are operating everywhere in Jefferies from the front office to the support side, and this will help further drive our productivity in compensation and in operating expense as well as in our revenue.

Finally, as Rich mentioned, we recently completed or in the process actually of completing, we signed up the sale of 2 residual businesses in the merchant bank where historically, there was meaningful upside. More recently, it's been about reducing the cost of operating these 2 businesses that have dragged our earnings for the last year or 2. That drag is going to go away, and there will just be an absolute uptick coming from that, and Matt will get into the detail. Overall, this all comes together with optimism in our view as to the return that we can deliver in 2027, 2028 and beyond as we see the upside growth across the platform very much still ahead of us. And at the same time, we see efficiency and changes in circumstance accelerating the result on the bottom line just as it has accelerated in the last 2 years. We see that continuing. I will turn it over to our Chief Financial Officer, Matt Larson.

Okay. Thank you, Brian. As Rich and Brian have discussed, Jefferies has meaningfully invested in our people, our global capabilities and our technology to achieve the momentum in our business. Today, I'll focus on how those investments are translating into strengthening financial results and what they tell us about our earnings power going forward. Our financial results over the last 12 months have been strong with net revenues of $8.5 billion, net earnings over $935 million and a return on tangible equity of 13.1%, each representing a materially stronger level of performance.

Investment Banking and Capital Markets now represent over 90% of our current revenues, consistent with our strategy to grow our core businesses and exit legacy merchant banking assets. Our revenue base has expanded. The quality of our earnings has improved the greater contribution from client-driven investment banking fees and equities commissions. Importantly, our investment banking and capital markets businesses are beginning to realize meaningful margin expansion as revenues at these levels and beyond can increasingly be supported by our existing platform. Underpinning all of this is a strong financial capital position with a simple and liquid balance sheet, and it allows us to support our clients, invest in further growth and return excess capital to shareholders.

You can see here how the composition of our revenues has changed as Jefferies has grown. Since 2019, approximately 87% of our net revenue growth has come from investment banking fees and equities commissions, which now account for over 70% of our overall firm revenues. Investment banking fees have increased as we've expanded the breadth, quality and productivity of our global team. Equities commissions' revenues have grown as we've meaningfully expanded our cash and electronic trading businesses through deepened client relationships, best-in-class execution and in the expansion of our global presence. Principal transaction revenues have also grown as we prudently grow our prime services and corporate derivative solutions businesses, which you'll hear more about from Peter Forlenza shortly, and which are comparatively lower risk due to the liquidity of the underlying assets.

There remains meaningful opportunity ahead. Our investment banking business has great momentum and continues to gain market share. Our equities platform continues to scale globally. And as the revenue base grows, we're seeing the benefits of that scale translate into expanded profitability. For the next couple of slides, I'll focus on our Investment Banking and Capital Markets segment as that's been our primary strategic focus, and as I mentioned earlier, makes up over 90% of our net revenues. Our benchmark here is 2023 because it's the first year for which publicly disclosed segment information is available under our current reporting framework.

Since March of 2023 or since 2023, revenues in our Investment Banking and Capital Markets segment have increased 74% from $4.5 billion to $7.8 billion. Over the same period, pretax profit has increased over 150% from $500 million to approximately $1.3 billion, increasing the segment's pretax margin from 11% to over 16%, representing an almost 50% improvement. Put differently, profit growth since 2023 has outpaced revenue growth by a factor of 2x, producing a pretax margin of 23% on incremental revenues. This demonstrates the earnings power of our core business when a world-class team, market opportunity, great strategic partnerships and focused investment in our underlying infrastructure come together.

Last year, I discussed how we'd invested in our infrastructure, technology and operating platforms to support growth and how we believe the investment would pay future dividends with respect to margin expansion through noncompensation expense operating leverage. We began to see the benefits over the last 12 months, and we expect more ahead. We believe our underlying noncompensation expense base is best assessed using an adjusted non-compensation ratio, which excludes brokerage and clearing expenses as they're substantially variable with the related revenues. By netting down both revenues and expenses by these costs, it provides a clearer view of our fixed and less variable operating expense base and the incremental margins generated by growth.

Since 2023, adjusted net revenues in Investment Banking and Capital Markets segment has increased by 75% from $4.2 billion to $7.3 billion, while adjusted noncomp expenses have increased only 37% from $1.3 billion to $1.7 billion. As a result, our adjusted noncomp ratio has declined from 30% to 24% with an incremental noncompensation ratio on incremental revenues of only 15%. Importantly, this isn't a story about reducing investment. We continue to invest where we see opportunities to strengthen our business, support our clients and improve our capabilities. Rather, it's a reflection that much, not all of the technology, infrastructure and operating costs required to support a significantly larger business are already embedded in our noncompensation expense base, and we believe there's opportunity to continue to achieve meaningful margin expansion as our opportunity grows.

Our momentum, client opportunity and resulting global business growth have resulted in our balance sheet growing modestly. While it has grown, we've maintained the same risk discipline we've always had and our tangible gross leverage remains within a range we consider appropriate for our business. Additionally, Level 3 assets remain approximately 3% of financial instruments owned, which is a level we've maintained for many years. Using our balance sheet to support clients is important, but we understand is a limited resource and something we watch closely. As we grow the firm, our principles remain the same: support clients, capture opportunities where they make sense for us and maintain the risk discipline that's characterized Jefferies for many years.

Our approach to capital allocation remains disciplined and consistent, balancing meaningful return to shareholders with maintaining the strong capital position needed to invest in and grow our business. Since November of 2018, we've returned approximately $6.4 billion of capital to shareholders, representing approximately 79% of our tangible book value at the beginning of that period. And as Rich mentioned, over $925 million will have been returned in the current year. We've done that through a balanced approach of opportunistic share repurchases and recurring dividends. Since late 2018, we've increased our annual dividend 5x and have returned $11.23 per share through cumulative dividends and special dividends. Our share repurchases have contributed to a net reduction in fully diluted shares outstanding of approximately 24%. Importantly, we've achieved that while continuing to invest in talent, technology and global expansion, demonstrating our ability to simultaneously invest for growth and return capital to shareholders.

And finally, AI. Our approach to AI is measured, practical and business-led. We're focused on use cases that improve our ability to serve clients through new ideas, execution and overall engagement. We're also focused on employees and process productivity supported by the same governance and financial discipline we apply to other significant investments. The objective isn't simply broad AI usage, but rather delivering measurable value creation, and we're beginning to see it now. Over the past 12 months, our efforts have accelerated, and we've begun to deliver real solutions that are increasingly driving meaningful outcomes. I'll briefly highlight some select examples so you can get a sense for the breadth of our efforts, but not, it's an area where we're accelerating and believe an increasingly meaningful driver of operating leverage.

Likely the most impactful area for AI progress is in our technology teams and how they approach development. Tools like Claude Code and others are meaningfully improving the speed and quality of delivery of new products that support our teams and clients globally. Our cybersecurity team is using AI in a variety of ways to help with faster and more sophisticated defenses against an always-changing cyber threat landscape. We're now able to analyze incidents with help from AI agents, which has reduced the mean time to resolution by over 30% -- in investment banking, we've now equipped 100% of our approximately 1,900 investment banking professionals with an AI operating system and are seeing benefits in productivity, helping to support our global growth.

In ECM, we've developed an AI-based framework called [ JeffView ] that helps our teams ensure we've considered and captured the best opportunities for our clients by evaluating vast volumes of data and having AI tools look for things our teams might alone have missed. In our trading businesses, we have agents evaluating trade market trends and trade ideas as well as AI tools ensuring accurate trade capture and minimizing downstream breaks. In operations, our AI tools evaluate trades in real time, predicting funding requirements for things like DTC and NSCC margin as well as automatically identifying and proposing necessary corrections for trade breaks.

Our research teams are using AI-enabled tools to synthesize expert insights and to help produce in-depth analysis. Agents track market shifts, validate investment thesis and develop predictive signals based on management commentary. Overall, the use of AI improved the speed of production and quality of content. And in risk, our teams have gained meaningful insights and productivity gains by querying data in natural language, helping them to understand changes in various risk metrics and overall P&L drivers. These are just a few in a growing list of opportunities, and I expect 2027 will be another significant step forward. There's a lot to be excited about with the insights, productivity gains and future opportunities to better support our clients. We've built a broader and more capable Jefferies, improve the quality and durability of our revenues and have begun to meaningfully drive operating leverage in our core business. We have the capital, liquidity and balance sheet to support further growth and drive future profitability. And with that, I'll turn it over to my partners in investment banking, starting with Andrea Lee.

Thank you, Matt. Over the years, we've shared with you the journey of building Jefferies into one of a small handful of leading global investment banks through relentless investment in our people, our capabilities and our global platform. Today, we are in an exceptional position with significant opportunities still ahead of us. The slide behind me puts some numbers around both the scale of the franchise we have built and the consistency of our progress. Today, we have 376 investment banking managing directors doing business in over 60 countries from offices across 24 countries. We ranked #6 globally in overall investment banking with only the 5 largest U.S. banks ahead of us.

In global M&A and ECM, we ranked #5 and #6, respectively. What's particularly important is how we got here. Our rise to this position is not the result of one sector, one product, one exceptional year or favorable market environment. It reflects a focused strategy pursued consistently over decades, expanding our relevance with clients, building greater scale across our franchise and earning a larger role with the world's most important companies, sponsors and investors. And that progression is significant because it demonstrates the durability of our strategy and the strength of the franchise we have built.

We have the reach, capabilities and market relevance of a truly leading global investment bank while preserving the intensity, agility and entrepreneurial mindset that have always distinguished Jefferies. And that combination gives us tremendous confidence in what comes next. We are operating from the strongest foundation in our history, and we believe our current momentum should propel us firmly into the top 5 in the near future. And with that, I'll turn the presentation over to my partner, Raphael Bejarano, to discuss in more detail our strategy, how we achieve this transformation and the metrics that demonstrate our relative industry standing.

As many of you and our clients have observed, over the past 6 years, our investment bank has gone through a rapid transformation from a predominantly middle market, domestic U.S.-focused firm to a global Tier 1 full-service investment bank. That transformation has been affected through 3 primary pillars. First, a concerted effort to attract a much larger team of truly preeminent talent across every sector and every product and indeed, extending into sales, trading and research so that we have the complete team for our clients across the board.

Second, building this out across every country or economic region that matters. From Milan to Abu Dhabi to Mumbai to Jakarta to Sydney and beyond, we have arguably the #1 team in any given region. Third, through our partnerships with SMBC and MassMutual, we have transformed our firm into effectively a bulge bracket offering that extends from the best talent to the large-scale balance sheet and capital support that many of our clients need.

Establishing Jefferies as a Tier 1 investment bank has transformed our firm. As the following pages will show, we today rank fifth globally in advisory and ECM ahead of traditionally leading competitors such as Bank of America and Citigroup. Overall, we are the world's sixth largest investment bank. And we have achieved that through advising the world's largest companies and investors on their largest, most complex and most important assignments. Critically, we are conscious that Jefferies as a Tier 1 firm is still a young franchise. That means that each day, our team is in front of another CEO or Board who has not known us historically or who still thinks of us as a U.S. mid-market firm. Typically, we wow and surprise them with our talent, breadth and capability, winning more hearts and minds. These repetitions create a virtuous circle for our firm, where each day, whether we win or lose, we show another important person what we can do, further enhancing our brand and our probability of long-term success.

The manifestation of our investment is growth in market share. As you can see here, our market share this decade across M&A, ECM and LevFin is approximately 3x greater than any of our major competitors. As you can see on this slide, ranked by publicly reported GAAP revenue, we are fifth, both in Global Advisory and in Global ECM. As you can see on the right-hand side, our business is now bigger than both Bank of America and Citigroup's despite each of them being 2x our size or greater prior to our recent investment cycle. It's further worth noting that we have shrunk the gap or extended our lead relative to every competitor in the top 10 globally.

As John will touch on momentarily, our primary foundations are the depth of our talent and the breadth of our capabilities and global reach. We have built those over decades. In recent years, a further important pillar has become our partnership with SMBC. Establishing ourselves as a Tier 1 franchise has been built on achieving leading market share in large-cap private equity M&A, corporate M&A and active bookrunner ECM. In each of these areas, our partnership with SMBC has played a valuable role as capital support remains an important component in serving large-cap clients. In this slide, for competitive reasons, we aren't disclosing actual dollar values. That said, to provide relative context, please note that the 2026 annualized column equates to many hundreds of millions of dollars.

Our momentum with SMBC is accelerating, and we expect it to do so further as our firms continue to come together, including with the launch of our Japan joint venture in January 2027, a market where SMBC has leading ECM market share, which will further augment the strength of Global Jefferies. Pete will touch on that further in his review of our equity franchise. I'll now hand it over to John to discuss in more detail the pillars on which our franchise is built.

Thank you, Ralph. Prior to 2019, our investment banking franchise was built around providing superior advice and execution primarily to mid-market sell-side M&A and ECM transactions with a focus on sponsors that was disproportionate to their share of the addressable market. This decade, we've expanded our focus and broadened our offering, positioning Jefferies as a truly global best-in-class investment banking and capital markets firm.

Our most recent significant growth has been driven by keen focus and investment on our 4 key pillars, the first of which is mid-market sell-sides for private equity. Today, we cover over 900 sponsors globally, representing collectively 85% of the total PE M&A TAM. And within that sponsor sell-side activity for transactions less than $1 billion in enterprise value represents about 1/5 of the total sponsor sell-side M&A TAM.

Believing that there was more for us to do, our team doubled down on our efforts in the middle market and set goals to broaden and deepen our coverage to drive an accretion in share. Results have been encouraging from a seventh ranked position back in 2019, we've nearly doubled our share to 7.5% of all sponsor sell-side assignments for less than $1 billion. And today, we rank second in this important part of the market, a result that we are indeed very proud of. With the continued evolution of our franchise, a natural pillar for us to focus on has been large-cap private equity M&A, which we define as advisory transactions that are in excess of $1 billion in enterprise value.

Having been the largest and fastest-growing swath of the sponsor M&A TAM, this segment of the market is up 2.4x since 2019 and today comprises 55% or thereabouts of the total sponsor M&A TAM with immense client targeting and focus, Jefferies has grown share and rank here from an eighth ranked position in 2019 to a third ranked position today. Having gained 340 basis points in share during that time, we currently enjoy a 7.4% share. As Dealogic substantiates, share accretion and TAM growth have driven a 4.5x revenue growth for us with this opportunity set since 2019. And though we're pleased and proud of our progress to date across the sponsor M&A TAM, material upside remains.

Thematic to these first 2 pillars is the immense investment that we've made to build out our private capital advisory business, where today, we have over 150 bankers globally and are a clear market leader in advising on and delivering best-in-class execution for continuation vehicles or CVs. So too, our PCA team raises primary funds for PE and is a leader in placing secondary LP interest to provide liquidity for investors in these funds. We stood up our CV business formally in 2022 and today enjoy a market share in excess of 20% and are a very clear top 2 player in this critically strategic space globally, where we expect transaction value to hit a record $250 billion for the industry this year. Today, it's very common for us to evaluate alternatives for our clients, inclusive of a prospective IPO, an M&A sell-side assignment or a CV and the inclusion of this strategic arrow in our quiver affords true differentiation relative to many, if not most of our competitors.

Over the past decade, the M&A TAM for our industry has generally evidenced a 70-30 split, whereby corporates drive 70% of the activity with private equity accounting for the balance. It's noteworthy that the corporate M&A opportunity set skews generally more aggressively towards larger transactions with higher associated fees, and it should therefore come as no surprise that our focus on corporate client targeting and accountability has been an area of intense interest for us. Though tremendous upside remains, we're pleased by the progress we've achieved in this critical accomplishable in recent years. Large-cap corporate M&A, again, defined to include transactions greater than $1 billion in enterprise value comprises about 65% of the total corporate M&A TAM and has grown about 85% since 2019. Here, we've picked up 240 basis points in share and migrated our league table standing from 18th to eighth since 2019.

Progress in lifting our corporate M&A presence reflects a multiyear strategy driven by methodical client targeting and account planning augmented most recently by scaled lending afforded by our SMBC partnership. Steadfast investment in best-in-class talent that we've showcased at this very meeting in recent years has enhanced our human capital to create a more relevant and impactful value proposition for our clients and provided foundational strength as we've honed our collective client coverage plans across every product, industry and region on a truly global basis. So too, we've been methodical in our focus on our fourth pillar, which is our global ECM franchise, where we've evidenced material share accretion across every region of our business. In 2019, Jefferies ranked eighth with a 2.6% share of all global ECM activity and held a top 5 position in only the biopharma space where we ranked third with an 8% share.

In the year since, we've lifted our game materially in ECM and on a year-to-date basis, are up in share and rank in about 70% of the ECM TAM globally. Today, we rank sixth globally with a 5.3% share, having gained 270 basis points and 2 notches in ranking. And within that, our biopharma position has moved from third to first. Today, we enjoy a 14.4% share of biopharma ECM having gained 640 basis points in share. More broadly, beyond our commanding leadership position in biopharma, we hold comfortably a top 5 or better ECM share position in 3 of our industry groups in addition to biopharma, again, up from only one, which was the biopharma space in 2019. Consistent with our success in driving large-cap M&A origination, we're very proud of our progress in playing bookrunning roles in 12 out of 17 IPOs greater than $1 billion that have occurred in the U.S. year-to-date.

As has been the case broadly, demonstrated progress in growing our ECM franchise reflects the manifestation of our targeted headcount investment in recent years, coupled with the implementation of intense global client targeting and planning and close coordination and collaboration with our partners at SMBC. Since 2019, we've invested methodically in the expansion of our global product offering. We've attracted truly best-in-class talent and then synthesize and mobilize a team against a disciplined client strategy that has evidenced results across every product, every industry and every region in which we compete. We're up in share, we're up in rank, and we're inspired to deliver for our clients, for our shareholders and for each other.

These results have been driven by leveraging and furthering strength in our mid-market private equity sell-side business, playing up in the attainment of a greater share of larger cap sponsor M&A. Growing our corporate M&A, where we have historically underpunched our capabilities and driving our ECM presence across each region and industry group. Notwithstanding a 2026 global TAM about 15% lower than the industry's high watermark in 2021, we've delivered a comparable revenue outcome delivered by share accretion and associated rank improvement. Though we've accomplished much in recent years. We've got much more to play for, and we very much look forward to posting you in coming years on our continued progress. And with that, I'm going to turn it over to Pete to review our incredible and growing Equities business. Pete, over to you.

Thank you, John. Institutional equities, like the broader investment banking industry has seen significant consolidation over the last few decades. This has afforded Jefferies the opportunity to achieve a market-leading position with global scale across equity research and sales and trading. 2026 has indeed been a breakout year for us, confirming that our multiyear investment has paid off.

You'll see highlighted here record annual results and profitability. Underpinning these results are continued momentum in our core cash and electronic businesses, diversified growth and strategic growth opportunities that we've seen, particularly in prime services and equity derivative solutions. We've also seen margin expansion and progress throughout these businesses.

Let's look at driving this execution. Over the last 4 years, we've communicated a consistent strategy to drive growth. We've executed on that strategy with measurable impact. Firstly, we've grown our existing businesses and continued to globalize the franchise. We've expanded our TAM by building client encouraged higher value and margin businesses. And we've continued our market share gains in our core sales and trading businesses around the globe. Let's see how we've done. One, continue to grow and globalize. Our international revenue is now 44% of our sales and trading revenue, up from 34% in 2019. This has enabled us to deepen and broaden our client footprint. You can see across our top 250 clients, we are a truly global partner.

The last few years, I've stood at this podium and discussed that Jefferies had a growing TAM that we were going to play for, particularly in prime services and derivatives. If you see our prime services balances have grown by more than fourfold over the last 4 years. And our derivatives business has grown by fivefold. This is a banking aligned strategic equity solutions business. We are very selective on what fits us. Continued share gains. Brian has talked about it. Rich has talked about it. We continue to gain share in virtually every market around the globe. Rich and Brian talked about step changes. And you can see that we've had these step changes and that we're excited that we have further growth ahead of us across all of these long-standing initiatives.

You've heard a bit about our opportunity in prime services. And what I would tell you is the pure scale of what I would describe platform hedge funds and their need for more financing counterparties has aligned with our increased importance across advisory, particularly research and sales and trading. We have an opportunity to evaluate the clients that fit us in this business. Derivatives, another step you'll see going forward, will grow in tandem with our investment banking footprint. And I'm excited to say that we'll be launching our Asian derivatives equity strategic solutions business in 2027. Cash and electronic trading. This is a business, particularly on the electronics side, that is one of scale and sophistication. And there are truly, I would say, only 6 or 7 firms that can play this at the highest level, and we're one of them. Clients need this global scale. They need advanced and robust trading technologies, and this is driving that consolidation across the business and into these 6 or 7 brokers.

Finally, let me speak a bit about the joint venture we're going to be launching or what I would really call a new business for us, a combination of business in Japan. We will be combining the Jefferies Japanese equity business with the equity business of SMBC Nikko into a new business, SMBC Nikko Jefferies. The creation of this business comes at a time of increasing interest in Japanese equities from global fund managers. SMBC Nikko brings a leading ECM franchise that Ralph and John mentioned that will be enhanced by Jefferies' global sector expertise and significant distribution channels into global fund managers. SMBC Nikko's top-ranked equity -- Japanese equity research teams will collaborate with Jefferies global research analysts driving further value to investors in Japanese equities and solidify Jefferies standing as one of the industry's most valued research providers.

Jefferies industry-leading trading technologies will be embedded into this business, aligning with SMBC Nikko's leading market share amongst Japanese domestic investors and Jefferies penetration with global investors. Jefferies will bring derivative solution capabilities to both issuer and investor clients in Japanese equities. Our goal is simply to be the #1 Japanese equity business in the industry. And I would say just back -- I'm just back from a week in Japan, and I can tell you, there is great excitement amongst both issuer and investor clients for this joint venture. And with that, I will turn it over to Fred Jallot.

Thank you, Pete. Good morning, everybody. We have spent more than 10 years operating a stable, durable and consistent fixed income business. We serve our clients specifically on our asset class of expertise. We are disciplined on risk, on capital and on liquidity.

This has helped us deliver relatively stable revenues over the years. As Brian mentioned, we expect to grow as we build on our current product strengths, but also maximize our synergy with our investment banking partners. The last 2 years have been more subdued for our business. However, financing has become more competitive for corporates, for governments and for municipalities.

After a year of a more benign environment, borrowers now need more sophisticated and more multidimensional financing strategies. And this plays to our strengths. Our teams are senior, they're experienced, they're creative and they are incredibly well connected. Jefferies' top management understand our business in detail. And together, this give us practical market insight, world-class distribution, which allows us to drive actionable solutions for our clients. At the center of our franchise is our expertise in sub-investment-grade credit. These are exactly the company that needs solution as financing markets become more and more competitive. We cover the full spectrum, leveraged loan, high-yield bond, private credit, CLO, special situation, structured solution and distressed debt.

In this space, we focus on the full range of capital market solution, primary underwriting, secondary trading and of course, all this supported by a differentiated research franchise. We use the same model focused on content and relationship for our other key businesses, U.S. municipal, asset-based finance, consumer securitization, emerging markets and our growing investment-grade trading and private placement business. At the other end of the spectrum, our quantitative research team works very closely with our electronic trading team to continuously improve our systematic trading capabilities and reduce execution costs. Finally, we are also rapidly deploying AI across the whole platform, as Matt was mentioning, using both internally developed solution but also externally bought tools. We're having early successes in risk management, in efficiency, in market insight and quality of client service.

The strength of our franchise is reflected in independent client surveys. For the last 7 consecutive year, Jefferies Fixed Income has been ranked top 3 dealer for best net positive business momentum in global G10 credit. This measures where clients expect to do more business with the dealer going forward. We rank strongly in key specific areas that the client care about, and this across our businesses. In primary leverage finance, fixed income and investment banking work closely together to deliver financing solution primarily to our financing sponsor clients. In U.S. leveraged loan trading, Jefferies ranked between #2 and #4 and #5, sorry, for sales coverage intensity, most helpful traders, understanding and anticipating client needs, market share and market penetration. In U.S. high-yield algorithmic and portfolio trading, we ranked #5 year-to-date in market share.

CLOs are also a critical part of the leveraged finance franchise. They account for approximately 60% to 70% of leveraged loan demand, which is financing the private equity industry. In EMEA CLO, we have ranked #1 for the last 5 years for market share. And in each of the year, we have been named EMEA CLO Bank of the Year. In U.S. CLO, we ranked #1 for overall quality of service and #6 by deal count year-to-date. Finally, distressed debt and special situations are core to our leveraged finance franchise. We help company and investors navigate restructuring, liquidity needs and complex or time-sensitive situations. Again, we do this through structuring, underwriting, exceptional market access and secondary trading. In the current environment, we expect demand for these capabilities to increase. In U.S. distressed, clients ranked Jefferies between #1 and #4 for best sales representative, most helpful traders anticipating and understanding client need, first call for confidential trade, best trade idea and best research and strategy.

Together with investment banking, we continue to invest in our global leveraged finance franchise. Over the last 2 years, we have made key hires in debt capital markets, in trading, in sales, in research, including multiple hire at the senior management level, both in the U.S. and in EMEA. And now turning to emerging markets. Emerging market trading requires strong local relationships, on-the-ground intelligence and differentiated insight. It also required the ability to provide liquidity in real time across many geographies and across many markets. We ranked #1 in Latin America for best trade ideas. We also ranked #2 for most intense sales coverage and again, understanding and anticipating client needs. Globally, we ranked #2 in emerging markets for most helpful research analysts.

Turning to asset-based finance and consumer securitization. These give company alternative source of funding. Structured finance can often be more efficient than traditional financing and also give investor access to differentiated credit exposure. This financing tool can be used across many industries. For example, we are involved in ranging and in distributing financing in energy, in tech infrastructure, intellectual property, home services, education, consumer financing or restaurant chains. In this area, fixed income and investment banking are already working closely together to provide clients with a full suite of services.

And finally, U.S. municipal. U.S. municipal is a distinct and increasingly important part of our franchise. We cover public sector entities who serve our communities across the U.S. and institutional clients. A year ago, we hired our new Head of Sales and Trading with the goal of increasing our relevance and revenues in this space. During the recent week of heightened market volatilities, we've reached secondary trading market share above 10% on multiple days with high profitability. In primary DCM market and in close collaboration with our investment banking municipal team, we ranked #4 year-to-date with 201 transactions. Example of this transaction includes serving as left lead on the $2.7 billion financing of LAX Airport and the $2.3 billion financing of New York City.

In conclusion and to summarize, clients increasingly need financing solutions that span public and private markets. They need more certainty, they need more speed and they need more creativity. That plays directly to our strengths. Deep relationships, market insight, agility, sound judgment and a collaborative mindset are becoming more and more valuable. These qualities are central to the way Jefferies operate. Our fixed income franchise has the foundation to perform today. But more importantly, and as Brian was mentioning earlier, it has the foundation to grow in relevance and in revenues. We will do this through organic growth of our current product through improved synergy within fixed income and more importantly, a deeper strategic alignment with our investment banking partners. When we help clients solve their complex challenges, we often become their long-term partners. We will remain disciplined, and we will stay focused on our areas of expertise. Thank you all. And now I will leave you with Nick Daraviras, who will speak about our Asset Management division. Thank you.

Thank you, Fred. I will be providing an overview of the asset management activities at Jefferies. Over the past 12 months, we have greatly simplified the organization, allowing us to focus on our core strengths and alignment with the greater firm. We'll go deeper into each of the silos I have outlined here on the coming pages. But with a -- to give you a brief description, with the pending completion of the acquisition of 50% of Hildene and its acquisition of SILAC, we are adding a well-established structured and asset-backed credit manager and an affiliated fixed index annuities underwriter.

In the second column, you see Jefferies Credit Partners, which rolls up into Jefferies Finance, our 50-50 joint venture with MassMutual. This is a private credit manager with expertise in sponsor-backed direct lending, and it offers us through a range of investment vehicles. And lastly, we have our predominantly revenue share interests in a number of alternative asset managers with the majority of the capital in multi-manager, multi-strat platforms and alternative credit managers.

We recently announced the formation of Jefferies Asset Management as a consolidated marketing effort. This brings together the business development efforts from Jefferies Credit Partners and Leucadia Asset Management to create one enhanced team. This team has roughly 55 people and has united and aligned goals and clear direction in its priorities. This is consistent with what I described earlier.

And we believe it enhances our reach into institutional and high net worth investors across hedge funds, private credit and insurance solutions. And clearly, credit will be a particular focus. This creates a single touch point for delivering investment solutions to our global customer base, and it allows for a rationalization and cost benefits and puts all of our products under one global brand. I'd also mention that this allows for centralized oversight on a risk management perspective and overall greater coordination.

I mentioned earlier the pending acquisition of 50% of Hildene and its acquisition via certain vehicles that it manages of SILAC. Hildene is a structured credit manager with extensive experience in asset-backed products. We initially entered into a strategic relationship with Hildene in 2022. Given the success of that relationship and the trust that we developed with the management team, we were well positioned to consider the acquisition of a larger interest and to support the acquisition of SILAC.

To give a little more background, we initially backed Hildene in its launch of certain asset-backed private credit offerings as well as its reinsurance platform. Today, Hildene manages over $18 billion across numerous vehicles, and it's got expertise in trust preferreds, CDOs, ABS, MBS and has a real focus on reinsurance solutions and including a managed reinsurance -- excuse me, insurance solutions with a managed reinsurance vehicle. It also holds a preferred in SILAC that afforded a board seat and positioned it well to consider the acquisition of SILAC when that company was put up for sale.

A little more background on SILAC, it is an originator of fixed indexed annuities with core distribution strength in the RIA channel. We believe with additional access to capital and enhancements to its management team that SILAC can continue to grow and serve its policyholders. We will be investing $340 million of new capital into this transaction, all of which has been funded through reductions in the LAM portfolio. Given the scale, and this is a point that Rich and Brian and Matt all mentioned earlier, given the scale and nature of the Hildene and SILAC business, we expect more consistent and predictable earnings that will increase overall firm ROTE.

On this slide, I give a few highlights on Jefferies Credit Partners, the asset management offering of Jefferies Finance. It has a truly unique sourcing advantage given its relationship with the investment bank. The group has a particular focus on sponsor-backed loans, which are managed through traditional commingled funds, SMAs, CLOs and a BDC. JCP has a 20-year history in this market. It's delivered consistent positive results with low losses and today manages roughly $20 billion across its various vehicles.

And lastly, on this slide, I just wanted to show the fundraising momentum that we've had across the platform despite market and other challenges. In private credit, via the team that is now part of Jefferies Asset Management, JCP raised $3.5 billion of new capital. That does not include another $5 billion that was raised through other sources into the JCP product.

And that really shows the strength of that platform and its investor relations. We also assisted the other alternative asset managers on our platform to raise $3.5 billion in new capital. And again, this is the portion raised just by our team. Those -- that new capital was really driven by gains at some of our larger managers, affiliate managers such as Schonfeld, Dymon Asia and 463. We continue to see interest in these strategies and believe that the formation of Jefferies Asset Management will only aid in our ability to help them grow at the appropriate pace. And with that, I'll turn it back.

We're all open for questions anybody on the team as well as Brian and myself. And please just identify yourself first and where you work.

Yes. Sure. You got it, Rich. Brennan Hawken from BMO Capital Markets. Thanks again. It's always great to touch base. You made a comment about FIC needing through 2027 to get sorted out fully before you're confident to get the revenues growing again. Could you maybe give us a better understanding about what is driving that extended time frame and what drives the confidence in getting the revenues going again?

Yes. I'd like to spend a minute on how we look at our capital markets businesses in the context of investment banking. First of all, if you look at the numbers that were put up, I think we showed $910 million in revenue last year, and I think something like $801 million or so in trailing 12.

In that trailing 12, I would add back, and you can actually get this out of the last 3 10-Qs, but you have to read them all. You would add back approximately $60 million, which was the negative revenue, the losses associated with MFS. So first of all, our secondary business, and that's the next point, which is that our publicly disclosed accounting, fixed income and equities businesses is not the way we look at our business. It is only the secondary business.

So what you're seeing in the trailing 12 of '26 versus the '25 is effectively a decline from a hair over $900 million to about $840 million or about a 6% decline, 6%, 7%, which to me is not material. What's not present in those numbers is all of our leveraged finance, CLO, ABS origination revenue that gets and municipal revenue, all of which are effectively part of our fixed income activity and get captured in investment banking, the same way that our ECM primary numbers are captured 100% in the reported investment banking when if you looked at our businesses internally, you would see a very different approach. We allocate these fairly between the 2.

So first of all, we don't see 2027 as a necessary transitional year in fixed income. We see a likelihood that if all else is systems reasonable in 2027, we will see an increase in our leveraged finance origination business. We will see an increase in our ABS business. We hope to continue to strengthen our municipal business. And overall, we see upside. We're hedging a little bit not to make great promises because, frankly, we don't need great promises from fixed income to move greater Jefferies. We're moving greater Jefferies off of the larger numbers that are present in the overall investment banking, which again includes equity and fixed income origination-related businesses and the growth in our equities business, particularly off of derivatives and prime brokerage.

So we're not trying to signal any issue at all. In fact, to the contrary, if you add back the MFS, there's not a whole lot to talk about on the downside in our fixed income. It's gotten way, way too much attention. People garbled into that earlier this year when we went out of the business of outsourced trading of fixed income, a mighty 6-figure business that had one person in it. It was an effort where we have a closer to 9-figure business in equity outsourced trading. There was an effort to see if we can originate some on the fixed income, turned out we couldn't and we moved on. So much too much to do about nothing on fixed income from our point of view.

The only thing I would add is one of the reasons why this firm has grown so well is our diversified and integrated platform, equity, fixed income, research. All of those are big reasons why this bank has grown so well. And to have that full service capability to be able to service clients across the spectrum of products and services and geographies, this really is one firm. And it's all integrated, and that's why you see us gaining market share.

Madeleine Hines from Millennium. In the presentation, you guys gave incremental disclosure on segment pretax income. So I think the stats for the last 12 months for investment banking and Capital Markets was 16% pretax operating margin versus the firm at 13%. So it seems like the asset management business has been a drag. So my question is, what is the return target for the asset management business? And why is this a good use of firm capital?

The drag there was in Point Bonita and one-offs, it's not in the go-forward business, particularly as we move the capital to Hildene, that will come the other way. Secondly, the Tessellis and Stratos are a not insignificant portion of that difference. We're not giving you narrow numbers on it, but you can guesstimate something not insignificant for Stratos and Tessellis, a little something for Point Bonita and odds and ends, and that explains most of that.

So we do not see a negative ROTCE in asset management, and we see a meaningful increment coming from the flip of the capital toward Hildene. So when you look at 2027, we would see a dramatic move in that number.

I think it's important to note that we're building a company. And if you look at all of our various businesses over the course of the decades, everything takes a little bit longer. There's always some missteps along the way. There's always challenges of getting critical mass, and we're not immune from any of those. And if you look at -- we had it in investment banking, we had it in equity, we've had it in fixed income, and we clearly have had it in asset management.

I think the thing to do is to focus on what Nick went through, the simplified, straightforward 3 buckets that we have right now, all of which are very positive, more predictable. We are more focused. We learn from our mistakes, and we are pretty bullish on the business going forward. We're not going to overpromise as we always do, we never overpromise. We're basically going to let the business speak for itself.

And I think you'll see, especially once we bring Hildene into the full picture of it with the valuable stakes that we have and the third-party partners that we have as well as the fact the MassMutual, that whole business is a very strong business. All 3 of those are in solid shape right now, and it has been a year of transition. As we said earlier in the year, we will absorb this transition, but we're pretty bullish on what we have going forward.

Chris Kotowski from Oppenheimer. Just you've always had kind of a very compact balance sheet relative to the bulge-bracket peers. And I'm wondering, as you drive more into prime brokerage and derivatives, what's your tolerance for expanding the balance sheet? And how do you view -- how do you measure risk management in prime brokerage? Because I mean, it's a relatively small universe of prime customers and what -- how would you give us confidence around like concentration limits for exposure, things like that?

So Chris, let's talk about the prime brokerage business here. You talked about a small amount of customers. But what you actually see is those customers run very diversified portfolios. So I don't think the risk is really what you're implying. I don't want to quote it, but we do actually every day, look at how long it would take to liquidate the entire book. And I can tell you that we're very comfortable with where that is.

But I will also say this, if you look at the journey of the Jefferies Prime Services business, we started a decade ago and we were servicing very small accounts. Kind of as a mini prime. We then went after and we were the second or third prime for what I would call emerging managers.

Today, we're a great prime brokerage partner for emerging managers, but now we're being invited in by larger clients who run more diversified portfolios where we get netting. So the risk is not really kind of what I think you're implying. That's our prime brokerage business. And I said in my remarks, we go after what fits us.

And meaning what fits us is highly liquid portfolios with names that we know that we -- there's true liquidity and not putting excess leverage on it.

I would also note that we do not intend to have open-ended growth in our balance sheet. We will have modest growth in our balance sheet. The overriding single commitment there will be to this prime brokerage opportunity, and we are exploring ways to potentially work with others so that we can grow this business a bit faster, but not on just our own bottom. So we're very conscious of the growth in the balance sheet, and we're not looking to see our leverage ratios change meaningfully.

Steve Fullerton, Millennium. Congrats on the Hildene-SILAC transaction. Can you just flesh out for SILAC, how you can catalyze greater fixed index annuity sales? And then in the top-down strategy, is this to replicate something like Apollo-Athene? Or what's the overarching strategy here?

I don't think we'd be so bold as to say we're replicating anything on remotely that scale. The answer is that we are expecting to complete the regulatory process soon and close the transaction. We always intended that there would be a period of time where we would take actions inside of SILAC to strengthen the company before we see it grow. So growth is a year or 2 away, and it will be also in reasonable scale to what's there today, not some dramatic growth. So we're starting with about a $10 billion base.

And I think in the most recent 12 months, I'm looking at Nick, the new policies was about $2 billion. Yes, $2 billion to $2.5 billion. So you're not going to see that rocketing even to '20 very rapidly. It will be a very slow trajectory that we will get comfortable with the business, and we will both get comfortable with the systems and some improvements that we intend to make. We also hope to see the rating on the company improve as the new management takes over. So as all of that comes together, the growth will accelerate, but it's a couple of years out.

James Yaro, Goldman Sachs. Could you just help us think about what the durable equities revenue run rate is? Do you think that the roughly $600 million quarterly run rate is sustainable? Or were there any onetime type items this year that may have impacted the profile of the business?

There's no onetime items in there. There's been -- if you look at the numbers we showed, there has been particularly growth over these last 5 years in our cash and electronics business outside the United States. We've grown in the U.S., but we've grown even more dramatically outside of the U.S. On top of that, our corporate derivatives business, while it's had a good couple of periods, we think it is still relatively early and small to what it can be. And for sure, as we've been talking about, prime brokerage has upside.

I'm also going to come back and mention the Japanese joint venture, we will be seeing our share of the bottom line. We won't be seeing the revenue directly coming into our P&Ls. But over several years, that should become a meaningful contributor.

All that being said, it's been a relatively good period for equities, except for the last few weeks or so. So there is some market dependency in aggregate for everyone in the business.

Brennan Hawken again. A couple of questions on expenses and leverage. So you spoke to the comp leverage -- and so it would be great to get a sense for timing and magnitude, understanding that it's, of course, revenue dependent. And for noncomp leverage, why focus on excluding volume-driven costs? It feels a little like me saying ex my male pattern baldness that I have an amazing airline. Is that sort of part of the deal?

Yes. The problem is you can't affect it. Like your baldness, you can't affect that. It's all based on volume.

Brennan, I think the intention was to -- when you look at the structure of our business and the size and scale of our equities business, particularly around cash and electronic flow, it's just that proportion of BC&E-related costs is such a meaningful portion of our overall noncomp that it sort of distorts ratios when you're comparing -- if you're looking to compare to other industry participants, et cetera, it's just that that's such a large scale of that overall number.

I think -- so it's just my view, our view of -- it gives a better sense of what kind of noncomp expenses are driving our sort of overall baseline, if you will. I would love to see those costs increase dramatically on BC&E because it would be related to the corresponding revenue. So that's the intent.

I think for comp leverage, I mean, again, and I'll let Rich and Brian chime in. I think the -- we've never committed to a specific ratio at any point in time. What we have said and what I've mentioned over the course of time is that the really intense period of hiring that John and others spoke about in terms of investment banking that came with a pretty steep investment cost.

The way that, that translates in terms of our numbers really kind of hits on an amortization period over a number of years, which 2026 is really that kind of peak point. And so if you were to compare -- if you had the exact same profile of revenues next year as you do this year, everything else was the same, you would be getting comp leverage. Now I can't predict what next year will be in terms of revenues, et cetera. But on a like-for-like basis, we should be making that turn.

James Yaro with Goldman Sachs. Could you just update us on the moving pieces of the investment banking outlook? And then specifically, if you could just focus on the impact of higher rates on the sponsor franchise and whether -- and in what parts of the franchise there could be an effect?

On the sponsor side, I think it's important to note that we were predominantly a sponsor-driven investment bank. And our growth has come despite the fact that the sponsor community has generally been relatively inactive for a lot of reasons. I think one of the reasons that will hopefully make them more active is there's a lot of pressure right now on valuations in terms of what the equities are worth, what private debt are worth. And that clarity of valuations should force more activity despite higher interest rates. So I think it'll be more -- we're more optimistic on activity in the sponsor group going forward, but we'll see if that plays out.

From the investment banking climate right now, clearly, there's a lot of noise. There's wars, there's elections, there's oil. There's just a lot of noise in the marketplace right now. I would say our banking backlogs are extremely high, extremely high and very robust and broad across the board -- and obviously, there's backlog and there's execution. Thus far, there have been a couple of things that have been pulled here and there on the margin, but it feels like there's still a lot of momentum. And it's a combination of market share growth, our global footprint, the fact that the quality of the deals that we're working on are deals that should get done. So we're still relatively optimistic about it. There's no doubt there's a lot of noise right now.

Third times the charm. So we talked a bit about the resilience in the equities business. James asked about it a couple of minutes ago. I was curious about when you think about financing and like what portion of the revenue there that has gone from and gotten to?

Because I'm with you, the risk, given what you're doing, I think, is very well understood and contained. But there's a sort of component of resilience to those financing revenues that I think might be underappreciated and an expansion in the relationships when you grow those financing businesses. So could you speak to maybe some of those trends?

Brian, you can add to this. What I see in our equity business is because of the breadth of the scope of the business geographically, the quality of our research, our quality of execution and electronics, people want to have their balances with us because they want a more strategic partnership globally.

And you see that both on the largest multi-managers, you see it on the largest long-only accounts on rebalancing days. There's only a handful of firms on the planet who can actually handle that kind of execution on a quality manner. So I think the prime brokerage, yes, it can come and go in terms of balances. There's a strategic reason why people are coming to us. There are other large banks, and we're actually offering something that's very unique and very positive. Pete, do you want to add to it?

There's a halo effect to when you're [indiscernible]. So obviously, that's a very good percentage of our revenues that are financing right now. It is obviously going up, very stable revenue at this point, right? They're liquid and highly collateralized assets with which should give us a base of stable recurring revenues and equities. I'll rely on our Chief Financial Officer to discuss that.

In the future, it will be disclosed. I think the one thing that's worth saying is that as we indicated on the slides, we have a -- I think we're saying a 5.3% market share -- and we don't have 2% of the financing market. So -- and I'm overstating if by using 2. So there's lots of upside for us on the financing staying within the box that we want to stay in, which is that the financing revenue that's coming our way is not necessarily narrowly financing reward, but rather reward for our overall relationship, leading research, access, everything else that we provide. We see this almost as a catch-up.

Again, a catch-up that's going to happen over time. It's not going to be rapid or necessarily unduly out of sync, but we see a lot of opportunity for growth there. And yes, it's very stable.

But ping-ponging back and forth here. Could you just walk through your Radiant World exposure at this point in terms of risk and the collateral against that? And then maybe if you could contextualize the -- I guess, the risk of potential charges and legal risk.

I think that there's been disclosures to the effect that the total exposure approaches $500 million that a relatively modest portion of that is for the account of Jefferies. The rest is for the account of the other investors in the fund. We have not reserved for it because we believe that we're going to be successful in collecting it. And we are pursuing it, as you've seen, aggressively, including getting a worldwide freeze on their assets. And there's been suggestion in the court that there's reason to believe that Radiant World and Sapphire as well as the 1 or 2 parties that have been intricately involved with them will be good for the funds. We'll see.

Connell Schmitz from Morgan Stanley. You spoke to the ramp in the Hildene-related earnings profile looking out into next year. Can you just give us a sense of what type of durable normalized revenue base do you expect from that business on the go forward looking out over the next couple of years?

We're thinking of how to say this without saying it. So the answer is that, as Nick indicated, we're going to be investing a further $340 million. We would expect to see on that a return that is more than competitive with our overall return.

That's exactly what I was going to say. We think it will be accretive to our -- the rest of our businesses.

Got it. I guess just relatedly, like thanks for having everyone here today. Given all of your market share gains discussed today and you've grown to a $10 billion market cap, have you reconsidered doing a quarterly earnings call to keep this conversation going on a more regular basis?

I'll just say we're always available to keep every conversation going. And I don't think you'll find a management team that's more responsive to any questions from any of our shareholders or potential shareholders or analysts or rating agencies. Quite honestly, we have had -- speaking for myself, I've had 48 quarterly earnings calls from 2000 to 2012. They weren't super productive, to be honest with you.

We are very transparent. I think the analysts who cover us, you can tell by the closeness to earnings estimates that they all seem to hit. I think they pretty much have a good picture because we're so transparent. And never say never, but we tend to want to focus on our business and build, and we're always available and transparent for anybody who wants to talk to us as long as the window is open for us to talk to you.

Kurt Feuerman, AllianceBernstein. Don't do the quarterly conference calls.

He calls me every day, by the way.

Sorry to focus on the short term instead of the long term, but your stock is down 3% today. And the scuttlebutt is because Brian said that the asset management issues are mostly behind us. Everything I heard today sounds really positive. Do you have any -- do you want to offer some qualitative comments on the market fixation on your asset management issues, right?

I think the best way to answer that question is in the last 2.5 weeks, we bought 2.275 million shares in, okay? If we thought we weren't much closer to the end and more optimistic about our asset management platform, I think we would have waited.

It might be helpful to put how many shares are outstanding in your 8-K or maybe.

Fully diluted, there's 250 million shares outstanding. And to return $925 million worth of dividends and capital on a $10 billion company in the year where, quite frankly, we've been in the press more than we'd want it to be and had a reasonable but not outstanding IRR in terms of return on tangible equity and create a business that's now $8.5 billion with the best revenues. Our stock says we're idiots, okay? And the only thing we can do is not promote it, but if it's attractive, we'll buy it.

We're not going to end up on us being idiots. Are we?

Only one online question right now. And it's -- given that there has been increased scrutiny and risk concerns on AI and data center financing through infrastructure funds and CLOs, how significant is the firm's exposure to this space?

We are strong proponents of it all, but we do not have meaningful exposure anywhere.

No other questions here. Last chance in the room.

Here we go. Last question for the day.

On the investment banking managing directors, can you just give an update on the percent of those MDs that are ramping? And then within private capital advisory, you mentioned 150 professionals and you're #2 in the space. Can you just give a mark-to-market as to how that's grown over the past year?

John or Ralph?

Yes I can take the PCA question. So the comment I made specifically was that we stood the business up formally in 2022. And that today, we have somewhere in excess of 20% market share in that business. By our measure, it's more like 24%. The reality is that we've essentially made no material senior hiring in that business since 2023 or '24. We've added a few managing directors, but we literally stood that business up in '22, and everything we've done for the most part has been organic since the there. And we have, I would say, an extraordinary business there. And I am biased for sure, but we compete very aggressively and win more often than not.

In regards to the first part of your question, you would [indiscernible].

In regards to the first part of your question, in prior years, we've shown a slide at this Investor Day, which bridges the beginning of the period number of investment banking managing directors. We show the number of hires. We show the number of net internal promotes net of anybody who's left. And that gave a very clear picture to a period of accelerated growth following the COVID boom. This was in the period, especially in '22 and '23 and then leading into 2024. There's a bunch in the public around this over the past couple of years.

In 2025 and 2026, the number of new MD investment banking recruits has been very small. It's really been rifle shot, oftentimes very impactful people. But as Rich and Brian described earlier, we leaned in and took advantage of a period of dislocation, which is frankly the period when really talented people are available, not buried in doing deals for clients and typically more minded to make a change. The net of that is that the vast bulk of our managing directors have been at Jefferies working as MDs for a couple of years plus. And therefore, are meaningfully ramped.

Now within that, clearly, there are certain segments and sectors and parts of the world that have a high degree of activity. And within that, as is always the case, there are sectors and segments that are going through comparative periods, comparatively slow periods. But the vast preponderance of the team have been with us and at the firm and fully integrating now over a year or several years.

I would just add that the quality of the bankers that we have, their revenue capability keeps growing as they stay with us longer. Their client base gets to know us a successful transaction begets more successful transactions. They get to understand the whole firm. And so it's a very positive trajectory. The hard part is getting them in and then integrating them and then it takes time and then they wind up contributing to the success that you're seeing.

A few other online questions just popped in. One is from Akhil Bhatia at Cinctive Capital. Want to thank you for your time. And you mentioned that the IB pipelines are very strong. What level of interest rates do things start to slow down? We don't think it's in the current range. But as you break through here, if you break through here, then it could absolutely have an impact on the business. But within bounds, where we are now is not narrowly standing in the way of our activity levels.

Next question is from Steven Towns, a long-term shareholder at Uguisu Research. He appreciates you continuing to repurchase shares. Can you comment on HomeFed's progress or outlook?

HomeFed continues to make progress. The limitation is that the sales of homesites and particularly the maturation of the developed multifamily is a little bit lumpy. So we can go some number of quarters without having a meaningful contribution and then have an outsized contribution. For now, that is what it is. Next question is from David Jiang at PGIM. Can you reiterate your balance sheet leverage you intend to run with the business going forward? It used to be about 10x.

We have not changed our desire to go anywhere even close to where the rating agencies have a -- feel incredibly well comfortable with us. So we don't push the bounds. We're not looking to push the bounds. We don't need to push the bounds, and we work very closely with the rating agencies.

No further questions.

So you're saying that double-digit ROTCE is achievable. Your proxy states that 10% is now the target. Does double digits assume an above-trend environment? Or has something changed in the business since February that makes you think double digits is achievable through the cycle?

I think we've said we're already at 13%, and we are in our minds with no promises heading to mid-teens return on tangible equity. I don't think we -- I think that's what we said to people. Chris?

Yes. You said last year, you think in terms of decades, and you guys are kind of in my age group now and...

Chris, you're a young guy. What are you talking about?

And I guess I'm thinking like if you think a decade ahead, what should Jefferies look like? Should it be part of a bigger entity? Should it be on its own? Are there -- how should we think about the decade ahead?

I think you should think about it the way we think about it. We are building our company to be the best independent full-service global investment bank. That's not going to change today or 10 years from today. We picked remarkably good strategic partners who have helped us along the way, punch above our weight and use a lot of their capabilities to complement our strategic unique abilities to serve clients.

We're a public company. You can never say anything that's the way the public companies work, but we have someone who owns 20% of us that we're very happy with. MassMutual owns a good chunk of us. As I said, I think you'll see us continue to work together, particularly with SMBC going forward.

The joint venture is just the early stages of what could be a template for much more work together. And we're just going to be committed to building the best company we can build. We've exhausted everybody. Maybe in closing, if -- we are really excited about this company. We're excited about our market position. We're excited about our clients. We're excited about our people. We've never been this close to what we deem a real, real success. And we also understand that it's just still the beginning of a long process for us. We're committed to it.

The management team that you saw today is working hand in glove with 6,500 people around the globe. I believe we are going to continue to gain market share. We'll grow. No one is perfect. We'll have mistakes, but the fact is we learned from our mistakes. We're committed to fixing them. And if you look across banking, equities, fixed income and asset management, we're proud of all of them. They're all part of this unified structure, and I think we're going to build all 4 of those businesses going forward. So Brian, do you want to add anything? With that, thank you all. Really appreciate it.

Good morning, everybody. Welcome to our 2025 Jefferies Investor Day. My name is Rich Handler, the CEO of Jefferies, and I'm happy to be here.

The first thing I'd like to say is give a little perspective on where we're coming from. Between myself; my partner, Brian; our Chairman, Joe Steinberg; the senior management team and leadership at Jefferies, the Board; and our joint venture partners, we basically collectively own roughly 35% of the company. And it's a big deal to us.

But more importantly than that, so everyone understands, and those of you who know me know pretty well, I've been here for 36 years, my partner has been here for 26 years, our leadership team has been here for a long time, this is personal. We care and we own this company with you. And everything we do is beyond money, it's personal. And I can speak for the other 6,000 people in this company, we all feel the same way.

I've also been through times of diversity, as all of us, in our career and challenges. And I'll tell you, every time we have, it's been -- we've come out stronger on the other side. And there's a reason for that with our people and our company. Our people, our culture, our Board, the bond we have with our clients, the tenacity and the experience, we've come through many, many, many things, always better. And I can always reflect on the people and they are the ones who get us there internally.

Now I'm going to keep my intro short, our presentation relatively brief. The main point I'm going to get to in a second is going to be exactly where we are as an organization, which is absolutely a spectacular spot. And you'll hear it from a lot of people today and you'll understand exactly why we're so excited about this organization.

But before I get to that, I think I have to talk about First Brands just for a moment. Stating the obvious, we are incredibly disappointed that we have to bring this up at this meeting today. We try to do our best on Sunday to address the specifics of what we knew as is our way in a direct and transparent manner, and we put that out for everyone to see. We framed our direct exposure and we gave the details of our relationship with the company.

But it's very clear, and we're as frustrated as anybody else, we don't know exactly what happened with First Brands, and the details will come out as the bankruptcy process unfolds. What I will tell you is we're going to work around the clock to get the money that we believe we are owed based on purchasing good receivables, paying for them and owning them on behalf of our stakeholders. And we're going to work around the clock to do that.

As Brian said on -- as Brian and I said on the weekend, we basically said that these losses are absorbable. That word is a word that doesn't give us comfort because we take this very seriously. And even though it's absorbable, it doesn't negate the fact that we're going to be relentless in our pursuit of what we know is our money.

We're going to allow everybody to ask questions at the end of this presentation regarding anything they want to ask. We'll do our best to answer them. The reality is a lot of those answers, we can't -- we don't know the answers to. So it might be frustrating, but please understand there's not one question you all can't ask -- not one question you all want to ask that we're not asking ourselves, in terms of getting our money back.

Okay. So that might have been the worst segue in the history of segues. Let me tell you what's really going on at our firm, okay?

Our company is operating spectacularly well. You saw our recent results. The fact is record revenues last quarter. Our banking business, our trading businesses, our research, our technology, our global footprint, our relationship with clients, the brand that we've built, the global footprint that is this organization, it's palpable how exciting it is. We have critical mass finally after 36 years in literally every single thing we try to touch. We're incredibly tied to the most prestigious clients in all aspects: on the corporate side, on the private equity side, on the hedge fund side, on the asset management side, our electronics, our prime brokerage, our research. I can go on and on, and you're going to hear it in detail today.

And the fact of the matter is with the consolidation in this industry and what's happened throughout the course of the last couple of decades, we find ourselves at Jefferies right at the forefront of being a critical partner to just about every client we would want on a global basis.

We're also doing it at a time where you can feel it, and you can see it from recent results yesterday, but you can see it from our results and you can see how we've been performing, the environment is really, really conducive to us monetizing these relationships and monetize these capabilities. And you can see it across the board and you can see it from all the rest of the team as we go through it today.

Our joint venture partnerships are really important, historically with Berkshire Hathaway, with MassMutual. But quite honestly, our partnership with SMBC, we believe, will be a game changer for our organization. Brian and I just came from a meeting 8:00 this morning with senior leadership of SMBC Nikko, we are working, there are hundreds of people right now working globally to figure out how we can actually partner together formally, informally to really deliver the best of both organizations to our clients.

Our clients are incredibly receptive, and our capabilities together are complementary. And the fact of the matter is I think it will be a game changer for our company going forward as we go and do increasingly broader and better business on a global basis.

Before I turn it over to Brian, I just want to comment on one last thing, the culture of our company. I don't think anyone should ever -- it's hard for me to convey the depth of how much people at this company care for each other, for our clients, for our brand, for our reputation and for who we are. And quite frankly, I've never been in a position where I was part of a company that had as much potential as we have to unleash with our team on a global basis. We own 35%, soon to go to 40% with SMBC's next 5% purchase, you all own 60%. Together, I think we're going to have a great opportunity ahead of us, and I really could not be more excited about it. And I can't wait for you to hear the rest of the team because the team has a lot of great stuff to say. So thank you.

I'm Brian Friedman, President of Jefferies. I'll just add one thought to everything Rich said, which I more than agree with, which is that after writing the note and sharing the note that we sent out on Sunday, I'm really happy we're here today. The opportunity to give perspective and, hopefully, for all who are interested in Jefferies, which is I assume why you're here, to understand exactly what's going on at Jefferies, the scale of Jefferies, the breadth and the depth of Jefferies, the momentum we have, the opportunity that's ahead, the current trajectory of the environment, when you put all of that together, the disappointment we feel to be in the headlines the last week or 2 and all of this is it's at a time where this firm is in an incredible position. And we don't believe, and that was -- again, we have to choose our words carefully in the world that we live in, and there are things we can't say until facts are known and the facts that we don't know are known to us, but the bottom line is this has to be put in perspective. And we're going to try to give you the perspective to put it in.

This is the sum of what we're going to share with you today. We have a truly global, deeply integrated investment banking and capital markets firm, that is unique where our overriding competition are complex, multifaceted organizations where what we do, which is incredibly important to our clients, is only a small part or a part of what they do. Or in the cases of some of the smaller competitors we face, they can only address a portion of what our clients need.

So we think of ourselves as occupying a very distinct position where truly around the world, we can provide our clients with the breadth and depth of what they seek and what they deserve. We can do it on a comprehensive and integrated basis, and that distinguishes us and it's what's propelling us.

After a lot of years of investment, and I'll come back to this with some numbers in a few minutes, we are very much in a realization mode. I'm sure we're going to get a question about how many MDs you're going to hire in investment banking. For me, personally, I'll tell you, it's not something I'm thinking about. Is it something we thought about for a bunch of years? Yes. Are we thinking about it today? No.

And take that as the priority. The priority today is to execute and realize, okay? I'm not going to say we may not someday open another office in another country. Right now, I couldn't think of what that country is and no one has raised it for a long time, okay? We are moving ahead with a breadth and depth of capability that is more than what we need to serve our clients as we want to do it, to broaden and deepen our business and to grow considerably.

If we're fortunate, and we believe we may be, the wind has shifted to our backs. It's been in our face at different times, it's been in our sides at different points. In the history of investment banking, and we showed a slide last year at this event, which I almost wish we had updated and shown again, which was the entire history of Dealogic market size since -- I think it goes back to 1996, this industry pre-'08 enjoyed typically multiple year runs of growth and opportunity. We'll see where we are, but we believe that we are in a favorable environment that will enlarge the market opportunity while, at the same time, we continue to gain share.

Lastly, there are a number of specific initiatives that are already in the ground at Jefferies, much of the cost of which has already been borne, that are going to drive our growth for years to come. And we'll go through those. Hopefully, you'll appreciate it. And you'll see what the potential for Jefferies over the next 1 year, 3 years, 5 years, 10 years truly is.

I'll summarize the greater number of words on this page by saying what Rich says: culture matters. Culture distinguishes. We have a differentiated approach, and it comes from our culture.

We have a depth and a breadth that very, very few can truly compete with. As I mentioned before, we are truly global. We are doing business in over 60 countries from today, 23. And we reach everyone, we can reach everyone, we can deliver for our clients wherever, whenever. And most importantly, we can deliver to them the knowledge and experience that they deserve.

Some time ago, we started running our numbers on a 10-year basis. Just take the decades and look at them. And Rich mentioned that we think long term, we've always tried to get people to realize we are the people with the greatest sense of urgency and the greatest ability to have patience and perseverance. And when you look at Jefferies on a 10-year basis, what do you see? And I remember actually, we were discussing this at the beginning of 2020, and I looked around at our group and I said, we can't be happy if the number at the end of 10 years, at the end of the 2020s, begins with a 4, okay? Based on where we are now, you could guess what I might not be happy with, that is more than 4, okay? We have really an epic opportunity. And it didn't start last week, it didn't start a year ago or 5 years ago. It's been running for a long time. We think and we deliver in decades.

Interesting little math, which I actually just did last night, this is the mathematical adding up of our reported numbers. If you look at the bars on the right and you look at the slope, it's kind of a slow starter in the 2000s, and then it's pretty sharp. And what's interesting is just taking the right bars and dividing them by the left bars, okay? And what I think it tells us is that the 2000s, because of '01 and '02 and because of '08, wasn't actually one of the greatest decades ever, and '09 was somewhat held back by '08. And we were in the early stage of investing in our growth. And so when you're investing against a smaller base, you're going to have a bigger impact.

So the math is that if you take the black bar on the right by the black bar on the left, it's 9.8%. The next one goes down to 5.6%, the next one goes up to 8.8%, and the next one goes up to 13.2%. So if you think about it, that is our net income margin decade by decade. The direction, I think, is pretty clear.

As I said before, the focus now is on bringing it home. And the tale of 2025 is going to be most likely -- it's not over yet, although we're whatever we are, we're 2.5 -- 1.5 months from the end of our fiscal year, this is going to be a year of 2 halves, one that was marked by pause, concern, whatever you want to say, whether it was right or wrong, and one that was the year we expected, which materialized in the second half, which was a period of real momentum and a period of opening up and people embracing opportunity.

We're going to keep driving our opportunity and our position. We have a maturation that still has years to go. We're going to continue, in our view, to gain market share. And as a result of both the gain in market share and potentially enhanced by a greater market opportunity, what I showed on that last slide about continually enhancing margins, you're going to see that. Matt is going to go into a little more detail on how that happens from the non-comp side. We'll take your questions later about comp. It's all going to come our way if we are right.

I mentioned before what I think of as sort of a latent opportunity, like what didn't happen in the third quarter. The third quarter was incredibly solid. Multiply it by 4, it's a very solid annual performance. We see momentum for that to continue. Proof will be in the pudding. We have and will continue to have the opportunity to add great talent. Jefferies platform is incredibly attractive to people coming out of school, to people that are unnecessarily displaced, to people who are simply questioning whether there's a better, bigger opportunity for them and a place that they will enjoy more. And that part, as much as I said, I don't think about recruiting, we are always recruiting and we always will be recruiting.

The second thing, and I'm probably -- oh, I didn't pick the slide. I'm going counterclockwise. We have a lot of adjacencies. We have a lot of opportunity to cross-sell. We have a lot of opportunity to add half step and full step, next products, next opportunities. Some of it is already in process, some of it will come. And you'll hear about it from our business leaders and how it's playing out in each of our businesses.

Particularly with technology broadly, particularly with AI, we have the ability to run our business moment to moment with ever better intelligence, ever better speed, ever better harnessing of all of our resources.

Secondly, and maybe equally, we're going to have the opportunity to drive our operating margins. We're going to be able to build technology faster and better. We're going to be able to change processes that they run ever more smoothly and ever more readily. We are absolutely focused on that. We're not going to make it a unique part of what we're doing; it is part of what we're doing. It is an everyday exercise at Jefferies. It's been going on for years. Somewhere in the last 1 to 2 years, we've crossed the line on AI where it's coming of age and coming of scale, and we're very much focused.

As far as expanding who we do business with, we're growing into our global platform, we're growing into the breadth of the coverage we have, we're growing into what we can offer our clients. We'll talk in a minute about what we're going to be doing in Japan. There is so much more that Jefferies can provide, and there are so many more clients that we can provide more to.

Rich mentioned our partnerships, and whether it's Berkadia with Berkshire Hathaway, Jefferies Finance with MassMutual or our broad and deep relationship with SMBC, we are, in each case, working on initiatives to grow together, to leverage each other's strengths and to continue to build the opportunity from our perspective that is Jefferies.

Although the alliance with SMBC began officially in 2021, that was us barely getting on the field. In 2023, we started to come out of the dugout. I hope actually a baseball metaphor is going to carry here across the world, wherever people are listening, but if not, check your dictionary. With the latest announcement, we're starting to play in the first inning. And I say that with a strong belief that what we will accomplish together is immense. The opportunity it opens up for Jefferies, but also opens up for SMBC is broad, deep, endless. And we're going to talk about this more when we review what we're doing in equities, what we're doing in investment banking. We'll elaborate on some of the deal examples and exactly what happened and why they were opportunities and they were realizations that we wouldn't have otherwise.

The important thing about the little graphs on the right is the slope. It is upward, and it's upward with real momentum. Pete Forlenza on the equity side is going to go into detail on what we're doing with the Japanese joint venture, but it's a hand-in-glove fit of one of the 2 largest banks, securities and investment banking operations, SMBC Nikko, and some of you may have seen in Bloomberg yesterday, the CEO of SMBC Nikko talking about our partnership, the likely potential and trajectory of the partnership, we agree emphatically.

When you combine the strength of 1 of the 2 leaders in Japan with one of the leaders globally, when you bring together their depth, their brand, their relationships, our depth, our brand, our relationships, our joint technology, bringing it into a global network, on every level, we will see growth and expansion. We've seen it with a group of sponsors that for the last 2 years, we designated as joint sponsors. Again, you'll hear specifics on the investment banking presentation.

But this began over somewhere between 5 and 15 years and the, sadly, late CEO of SMBC, Jun Ota, he would speak about our opportunity always with the word incremental. How can the 2 companies come together and do what they're not doing apart? This isn't about, how can I have your business or you can have our business? This was always about how the 2 becomes 3 and becomes 4 and does more. And Nakashima-san, the CEO of Jefferies -- of SMBC today, of SMFG today, is deeply committed to our strategy, deeply committed to the expansion.

If you think about the significance of SMBC, taking its domestic equities and ECM business and putting it in a joint venture with us, for me, the 15% to 20%, what we're doing in Europe, the credit, all the other things are interesting, and it shows the depth of relationship, but that joint venture shows the depth of trust and the depth of commitment to each other because of what effort we're going to make and what we think we're going to add and we think we're going to build.

Our asset management business is, for better or worse, a little bit in the spotlight. In the presentation today, we're not going to talk about the spotlight. The spotlight, if anyone wants to ask a question, we'll take it later, but we will talk about the fact that in platform strategies and multi-manager strategies and other broad strategies, we've built a meaningful business. And despite the recent news in the broad credit space, we continue to build.

I'll end where we began. There is incredibly low likelihood that someone is going to build another meaningful Wall Street organization, okay? It hasn't happened in a long time, what it takes for it to happen is epic. We've been fortunate that in the past 63 years, for Rich, 35-plus years, for the 2 of us together, 25-plus years, we were given the opportunity, partly by the strength of Jefferies as it was built over the years, partly by the environment which cleared out opportunity and allowed us to seize it, that we were able to get to where Jefferies is today. That is a position we will build on. I don't think it's a position that will be lightly threatened. And our ability to take this firm much, much further is right in front of us.

We know what we can do. We're going to be clear and show everyone day by day, month by month, and we'll be reporting it by quarters or 6 monthlies, whatever people require. And for guys who think in 10 years, 6 months will be nothing. We know what we're going to do. You will see it. You've seen it in recent times. You've seen it even from what we said last year. The environment, as much as there's concerns, as much as there are issues, as much as there are divides, there's pretty clear momentum. There's a pretty clear willingness to take risk. There's a willingness to lean into strategy and to lean into growth. And when all of that is happening, a leading firm that intermediates in the capital markets and investment banking has a growing opportunity.

We have the initiatives, we have the adjacencies, we have the synergies, we have the partners. Beyond our current momentum, there should be increased opportunity. So I look at the current momentum, I look at our opportunity to increase that momentum, and I look at an environment that potentially favors us. With all of that, that's the big story of Jefferies. That's the optimism we have. And increasingly, it's like the reveal, we will give you more and more of the facts.

So I'm going to turn it over to Matt Larson, who will give you a small chapter and small verse on the numbers and what they're showing us.

Okay. Thank you, Brian. At the close of last year's Investor Day, and of course, in Rich and Brian's introductions today, our theme has been around execution and realization, having heavily invested in our business, particularly in the last few years. With that in mind, it's easy to see that we're very well on our way based on our growth in net revenues of 86% since fiscal 2019.

For those of you that know us well, you'll know that we operate with a daily sense of urgency. But as Rich and Brian both mentioned today, certainly with the long term in mind. As such, we think it's good to use 2019 as an anchor year of what normal looked like before we undertook our large push forward in our growth initiatives, and also excluding all of the noise of the pandemic in 2020 and '21.

Revenues in 2019 were $3.9 billion, compared to $7.2 billion on an LTM basis for 2025. And as mentioned before, we're aware that that includes a slower-than-expected market opportunity for the first half of this year. We're happy with our top line revenue growth. I think that there's much more that we can do, and you'll hear about all of that from our business leaders about our plans to do so.

Our 86% revenue growth compares to noncompensation expense growth of just 42% during the same period, resulting in meaningful noncompensation expense related operating margin even in light of significant investments we've made and continue to make in our business and in the face of fairly steep inflationary pressures.

That's translated to 440 basis points increase in RoTE over the period of 5.9% to 10.3%. And as you saw just a few weeks ago, our standalone RoTE for the third quarter of '25 was 13.6%.

If you look closer at that net revenue growth I just mentioned, 82% of it comes from investment banking fees, from commissions, largely stemming from the significant growth of our global equities business, and from growth in our asset management fees. The mix of our businesses and momentum across all of them translate into a firm that generates a substantial and increasing operating income and free cash flow.

I was looking back at some of our disclosed metrics for Jefferies Group in 2019 Q3, I thought was interesting. At that time, we had pretax operating margin of 10.7%, versus 16.2% and growing today. Our VAR in Q3 of 2019 was $9.7 million, versus $10.4 million today on a much larger business. And our tangible leverage at that time was 9.4x, versus 8x today. I mention these few metrics to further highlight that our growth is coming from scalable, lower-risk activities in which we have strong momentum.

While our balance sheet has grown, and we expect it may continue to grow in line with the overall growth of our business aspirations, it's largely due to the slow and steady expansion of our prime brokerage business, which you'll hear more about from Pete in just a few minutes. And facilitation of client business has become an ever more meaningful and growing number of -- ever more meaningful to a growing number of clients who rely on Jefferies as a market maker and liquidity provider. Our growth is global and is spread across a diversified set of businesses, geographies and products. As demonstrated here though, our relentless focus on ensuring our balance sheet is liquid and easy to understand, albeit larger, still results in Level 3 assets at comparatively low levels at just 3.1% of inventory.

At this time last year, I discussed how we had invested meaningfully in technology modernization to support growth and resiliency, that we were investing for longer-term efficiencies from emerging workflows and AI capabilities, and that industry consolidation in tech and data sectors had put pressure on costs. We've experienced that over the last couple of years and feel that we're turning a corner and expect to realize -- that we'll realize widening operating margins as our revenue base grows. That's beginning to play out now, with overall non-comp costs continuing to grow, the largest component being a direct function of our equities growth. You see our brokerage and clearing costs up 111%, compared to revenue growth in equities of 137%. We're reaching more normalized levels across most of the other areas of non-compensation costs as we focus on the execution and realization phase of our business.

While continued investments will always be required, today we're built for scale and we're beginning to realize the efficiency and benefits of today's technology such as IT coding accelerators, embedded AI capabilities throughout our firm and a cloud-hosted infrastructure adding to our resiliency.

To conclude, I would just reemphasize our capital and liquidity position is strong. We're well positioned to support the next leg of growth and opportunity and to gain market share and grow our global capabilities. Now I'll turn it over to my partners from Investment Banking. First, Raph Bejarano, Co-Head of Investment Banking.

Thank you, Matt. As Matt mentioned, I'm Raphael Bejarano. I lead the Investment Bank with my partners, John Miller and Andrea Lee, who will follow me on screen on [ this ] in a few minutes.

As you can see on the screen, our competitive position today has really never been better, as Rich and Brian both alluded to earlier. This is after several decades of relentless investment, some of which you can see on the screen in front of you, where Jefferies has established itself as a leader globally in investment banking.

Why is that? We have a unique offering for clients: best-in-class talent, global reach across every market that matters and deep expertise across all products. Uniquely, and again, this is something that Rich and Brian alluded to earlier, I think it will be a consistent theme throughout this morning, uniquely, this is delivered in the client-centric, nimble, entrepreneurial manner that defines our culture. These ingredients are what make Jefferies so special for our team and for our clients. What truly excites us is what's possible over the next decade, building from our foundation today where we have increasingly become a magnet for both the best talent and for the world's most significant clients, which I'll touch on further in a moment.

We've deployed the same strategy consistently over decades. This has driven long-term growth in market share and revenues. And as you can see here, market share tends not to grow in a linear fashion, but tends to build over time and then grow in an exponential fashion as we leap further in our competitive position. Near-term growth will, in some measure, be driven by the ongoing maturation of our team and franchise, which have, of course, grown rapidly again over the last several years, as well as the potential expansion in the global fee pool. Longer term, as Brian alluded to earlier, we have continued to sow the seeds of growth through further investment, elevation and expansion that should drive ongoing market share growth.

John will momentarily touch on our ranking relative to our various competitors and how that continues to evolve. Before we turn to that, we also want to contextualize our franchise relative to the clients that we serve. Over the last several years, we have had a deliberate strategy of elevating our franchise to serve the world's most sophisticated, oftentimes highest-profile clients on their most important transactions. While the mid-market continues to be the cornerstone of our business, opportunity and strategy, a leading position in large global corporate M&A, lead book runner IPOs and large-scale financings has been both a critical source of growth as well as a source of franchise enhancement and elevation.

That strategy has worked as positions as adviser to AT&T on their $22 billion EchoStar deal on, or Monte Paschi de Siena on their EUR 13.5 billion, if I got that right, acquisition of Mediobanca, or as joint lead book runner on the eToro, Bullish and Figure IPOs Indicate. Each of those is an example of massive elevation of our firm, and there are many, many more both on this page and, of course, many that did not make this page today.

We believe that this successful strategy has further solidified the foundation on which we're building, underlining the quality of our offering to clients and to talented prospective new joiners worldwide.

Now I'll pass it on to John, who will touch on what's happening on the people and our relative standing in the industry.

Good morning. Good morning, everyone. As Rich and Brian like to say to all of us inside, as much as we've accomplished together as a team, and it's truly inspiring what we've accomplished as a team, in many ways, it feels like we're just getting started. So I'm going to spend just a minute or 2 talking about the market, as Rob said, and our relative place in it.

It's hard to believe it's been a year that we stood here where, at the time, we believed that 2025 would evidence a sustained recovery in the global IB TAM, where fiscal 2024 annualized fee pools were trending to be up 14% year-over-year. That's for the market. We entered 2025 fiscal year feeling confident that our vision was in hand. 2024 wallet concluded up 29% year-over-year, with the month of December up 42% alone. Continued strength in the IB activity for the industry drove a Q1 lift in the wallet of 25%, that was followed, unfortunately, by tariff-induced softness that actually resulted in a 3% drop or a pullback in the Q2 wallet, all of which amalgamated into the delivery of a first half wallet performance for the industry that was up only 10%.

As Brian highlighted in his slide earlier, the 33% market lift that we experienced in our fiscal third quarter is a leading indicator, we believe, for the resilience that we expect to ensue and is masked by the overall year-to-date annualized wallet lift of 11% that's showcased on this slide.

Noteworthy is the activity that underpins this resilience, which has been driven disproportionately by a 15% annualized lift in corporate activity, while sponsor fees are up only modestly year-to-date. Jefferies' historic outperformance, we believe, with the PE asset class inevitably will drive further accretion in our share performance as sponsor activity resumes.

Next slide. There we go. Our methodical investment in best-in-class talent that's been referenced thus far, coupled with intense strategic client planning that we've been focused on as a team, has continued to drive our outsized performance. On a GAAP basis -- thank you. On a GAAP basis, our reported advisory ECM -- if I got that right. It sounds like there's some magic going on in the room. Yes. I think we're on the right slide. On a GAAP basis, our reported advisory ECM and DCM results evidenced relative outperformance through our fiscal third quarter. As examples, looking at BofA and Citi, in 2019, our benchmark year, BofA was 3.8x our size. Today, they're 1.7x. Similarly, Citi was 3.4x our size in 2019. Today they're 1.2x as we approach parity with them.

Okay. In the back. Please don't touch the slide. Narrowing the lens and looking specifically at our advisory franchise alone, Jefferies ranks fifth in global publicly reported advisory revenues, having moved the ball materially down the field where, in 2019, Morgan Stanley garnered advisory revenues that were 2.8x our size. Today, on an LTM basis, as of yesterday, they're 1.1x our size. Similarly, both BofA and Citi were ahead of Jefferies 5 years ago at 1.9 and 1.6x our reported advisory revenues and scale, respectively. Noteworthy, today, they're both behind us at about 80% of our LTM revenue performance.

As we continue to deliver truly best-in-class advice and execution to our advisory clients and set our sights on overtaking our global competitors, as a team, we're inspired to have narrowed the gap so materially, where today, Morgan Stanley is only 10% larger than Jefferies in reported advisory revenues, where they sit in a fourth ranked global position, compared to having been almost 3x our size back in 2019. Noteworthy where they ranked third, again, relative to the fourth ranked position they have today. I think of note also, we've tightened our spread to Morgan Stanley by over 0.5 turn, 0.6 of a turn to be precise, from where we stood at the time of this meeting last year.

So too through the lens of Dealogic fee share, our performance in M&A has been noteworthy as we've gained in rank and share globally and in each of our core markets of the Americas, EMEA and Asia Pac. Today, per Dealogic, Jefferies holds a sixth ranked position in global M&A and sits fifth in the Americas; seventh in EMEA, up 2 notches and 140 basis points in share year-over-year; and eighth in APAC, up 3 notches and 210 basis points in share year-over-year.

Very importantly, coupled with our historic strength and outperformance in the sponsor M&A business, where we ranked second year-to-date, we've gained material ground in accreting share in our corporate advisory activity, which has been an intense area of focus for our strategic client planning exercise given that corporates garner 74% of today's M&A wallet. Today, we rank seventh in corporate activity, up from a 12th ranked position 2 years ago, having gained 130 basis points in corporate advisory share during that time.

Though it's clear that much remains to be done as a team to further our advisory position across the GDP of the banking opportunity set, we're proud as a team and we're inspired by what we've accomplished to date, and we have a very clear vision for our path ahead.

Now I'm going to turn it over to Andrea, who's going to share perspective on our SMBC partnership and our vision for continued outsized growth.

Thank you, John. As you just heard from Raph and John, Jefferies now has a truly distinct offering as the world's leading pure-play investment banking firm. Our growing partnership with SMBC is solidifying that position and unlocking new opportunities for us and our clients. Through SMBC, we're complementing Jefferies offering with corporate lending to investment-grade clients, balance sheet capacity to underwrite the largest acquisition financings globally, pre-IPO, and fund financings. And we now also have access to one of the largest corporate and investment banking footprints in Japan.

This enables us to really offer the best of both worlds to our clients. Jefferies Global Investment Banking Services delivered seamlessly and immediately combined with SMBC's best-in-class global lending capabilities.

We are still really in the very early stages of our partnership. As Brian Friedman said, it's really still in the first inning, but we are already beginning to unlock opportunities to serve clients alongside SMBC that previously were less easily in reach for Jefferies. A few recent examples include Jefferies serving as a lead book runner on the eToro, [ Flowco ] and Aspen Insurance IPOs. Those roles, as is common in the IPO ecosystem, included credit commitments from the book runners that we partnered with SMBC on.

Similarly, SMBC has had a longstanding relationship as a core lender to Brookfield. In combination with Jefferies' market-leading energy and infrastructure advisory practices, this has created a greater opportunity for us to serve as an adviser to Brookfield, including in large-scale transactions such as the acquisition of Colonial Enterprises or the recent Alterra disposals.

Lastly, SMBC's position as a top-tier corporate lender has been a meaningful complement to our corporate advisory practice. As you can see in examples for transactions that we completed for AT&T and Virgin Media O2. Over time, as we have more and more experience working together and clients increasingly see us in action together, we expect these benefits to compound.

Next slide. Jefferies has spent decades building a flat entrepreneurial culture that attracts the very best talent. Now this differentiated approach operating at scale offers the potential for outsized growth. Over the past decade, we have significantly taken market share across each region globally, and our momentum has accelerated even more over the last 3 years. To cite just a few examples. Our corporate M&A share is up 110 basis points. Share among top 25 sponsors is up 440 basis points. And our share in EMEA and APAC ECM is up over 200 basis points across both regions.

Our momentum and positioning have never been stronger, yet plenty of upside still exists. As we serve larger companies and bigger sponsors, this will strengthen the appeal of our platform to clients and to top-tier talent. This virtuous cycle combined with our unique culture should continue to drive long-term growth. Thank you.

And now I'd like to hand the presentation over to Pete Forlenza, our Global Head of Equities.

Good morning, everyone. As Andrea said, I run the Equity division globally. I just want to say I'm proud to state that I've been a part of this team and this company for 12 years running the Equity business.

Before I begin to the slides, I just wanted to talk a little bit about the Equity division's philosophy here. One, the first thing I would say, I want you to know, is that the Equity division is deeply aligned with the firm's overall investment banking and capital markets strategy. That's the first thing.

The second thing, and you'll see the evidence of this as we go forward through the slides, there's 3 basic pillars of our Equity division. The first one is we believe in advisory. And you'll see the investment we have made in research over the last decade and the results we have in that. The second thing is we believe in having both broad and deep sales teams globally to service both our investor and our issuer clients. And thirdly, on the execution side, you'll see that we philosophically believe in both high touch and high tech.

A couple of points to make on this page. You'll see, and Brian had mentioned it, that we're on pace to achieve record results in equities for the second consecutive year. Revenues have more than doubled over the last 6 years and have grown by 71% since 2022. But what I find most interesting on this page, I'd like to highlight the growth of our international revenues. If you look at the left side, you'll see that our overall equity revenues in 2019 were $774 million. The last 12 months, our international or non-Americas revenues have been $772 million.

Now interestingly, a few years ago, when I was on this day talking about the opportunity that we had globally, I was asked the question if I ever foresaw that we would exceed 30% of revenues in equities would come from outside the U.S. And you can see we've exceeded that and are heading towards 50%.

I'm not going to go through an entire commercial on this page, but I do want to take you a couple of things that highlight how this strategy is working. I'd highlight that our global cash market shares are at an all-time high, hopefully not for all time, but they're at a record high at 5%. But as I was talking about our international growth, I would highlight that our market shares are actually higher in both India and the U.K. than they are in the U.S. We've become quite meaningful in these markets and continue to be meaningful across all global markets.

The middle of the page, I talked earlier about our strategy of having both broad and deep relationships. We continue to expand the number of clients we touch every day in equities, which is important when you're thinking about it from an issuer standpoint. We touch many potential investors. But we've also been deepening our relationships with the largest clients, which is evidenced by the growth of our revenues with our top 25 clients. So think both broad and both deep, and we're doing it globally.

On the right side, you'll see that I'm highlighting our equity research. Again, importantly, we believe we now cover more stocks than anyone else in the industry. So a very broad footprint. And we're doing it with quality. You can see our II rankings, it's now called Excel, how those have progressed over the years. You can see we're #5 in the U.S. last year, 5 in Europe, 6 in Asia. And those results in the U.S. will be published shortly, and we're hopeful that we'll continue our ranking increase.

So how are we going to continue to grow? Because we've been on this trajectory. The first thing we're going to do is continue to grow and globalize our business. And you'll see that there are businesses that we're significant players on here in the U.S. that we're now becoming a meaningful player globally. So continue on that path.

The second thing we're going to do, and I think this is probably the most important piece to go through, is we're now expanding the total addressable market that we're getting into. So if you look at the kind of lower -- the lighter shade blue, that's kind of the current significant Jefferies TAM, particularly in the cash markets, both high and low touch, and we've got very large market shares there. The larger blue TAM shows the opportunity that we have globally across prime services, derivatives and program trading. And I'm going to speak to each one of these briefly and why it fits us.

So on the prime services side, Jefferies has been a prime broker for many years. But if I think back to 5 or 6 years ago, our focus was primarily on emerging hedge funds, and we were quite good at it. And some of the larger prime brokers would naturally go after the larger hedge funds. Over the last 5 years, we have made significant investments in technology to service the more complex clients. And we are now at a point where things are kind of coinciding, if you will, where when our technology is now amongst the leaders in this is at a time that Jefferies has grown to be a more significant partner across advisory and across sales and trading for many of the larger hedge funds, they're now, and I'm going to use this phrase, inviting us in to be a financing partner for them. And it's something we're just scratching. And we're doing it where it fits us with the clients that align for us.

In derivatives, going back to my initial comment that we are aligned with our overall investment banking and capital market strategy, we have continued to grow our investment banking footprint, we've gone up in market cap and who we're servicing. Providing derivative solutions to our investment banking clients has been a big opportunity for us, and it's a business we have continued to build. We started one 18 months ago in Europe. That's been quite successful for us. There is a big opportunity for us there.

In program trading, passive investing continues to grow throughout the global markets, be it through index funds or ETFs. Rebalancing these portfolios in a real-time global basis is very complex. It's very technologically difficult. There are 6 or 7 players that can do it globally, Jefferies is one of them. So that continues to be a big opportunity for us.

And then I would just highlight this. You'll see our market share momentum. We still have market share to gain. It is in front of us. That is what we're going to continue to do.

Brian mentioned, and others, our exciting announcement that we made a couple of weeks ago to integrate our equity business in Japan with the equity business of SMBC Nikko. And I want to take you through what you would call the industrial logic of this and the opportunity that we have. So start with the fact that SMBC Nikko is one of the 2 largest financial institutions in Japan, point one. The second thing, and if you look at this slide, SMBC Nikko's equity business naturally has a very strong domestic client footprint, right?

Jefferies has a very strong global client footprint. There is some overlap, but not as much as you may think. When you put the 2 of us together, we will immediately move to a top 3 market share potential. So think domestic clients, international clients. Jefferies has a very strong global client base.

SMBC is highly ranked, I believe, top 2 over the last few years in Japanese equity capital markets, and is 1 or 2 in research. Jefferies, and you saw it from our global footprint and our rankings, has a very strong global research footprint and expertise. We will bring these teams together and have more collaborative research to provide even more in-depth research to our local Japanese clients.

Jefferies, as is evidenced by our investment in technology on the trading side, has very sophisticated trading technology globally that we will be bringing to this market and bring to the domestic equity flow that SMBC Nikko has today.

SMBC Nikko has very strong domestic corporate relationships. Jefferies will be bringing advisory solutions, but, within equities, also derivative solutions to that. So you can see bringing these 2 businesses together, the logic behind it and the excitement that we have.

So in conclusion, I would say this. Jefferies is one of the few remaining truly global equity businesses that can serve clients in everything they need to do in equities. We continue to see the opportunity in front of us to gain market share, and we are right now in the execution and realization phase.

With that, I'll turn it over to my partner, Fred Orlan.

Thanks, Pete, and good morning, everyone. For those of you who are long-term veterans of the Jefferies Investor Days, will remember the commitment that we made 10 years ago to increase the stability and the consistency of -- the green button here, consistency of the revenues and returns of our fixed income franchise across varying market conditions. We set out then and continue today to stay true to our core strategy that starts with a relentless commitment to deliver value to our clients every day.

And we do this by prioritizing quality share over simple market share, delivering idea-driven, solution-oriented strategies that add value and cement long-term client partnerships. And we leverage our daily flow trading relevance to zero in on the trades that matter most to our clients, helping them achieve their performance goals. And we do this with insights from 65 global desk strategists, collaboration across our fixed income business and with our investment banking partners with top-tier voice and e-trading capabilities and discipline around risk management and resource utilization. So this combination enables us to deliver seamless execution and liquidity across both primary and secondary markets, driving higher-margin repeat business.

So looking at the numbers for 2025, it's been a softer year on the secondary trading side with revenues down 19%, driven by historically tight spreads and low volatility across the credit markets, which compressed trading margins in generic day-to-day flow trading. Q2 was particularly slow, but you can see we rebounded nicely in Q3, up 33% quarter-over-quarter.

So now I'm going to focus on the 3 themes that support the consistency of our performance and the key drivers of further growth in our business, which are noted here on the bottom right-hand side of the slide: geographic diversification, higher-margin solution-oriented trades and products, and our alignment with investment banking.

So in the first theme, the growth in our international business, both from a revenue perspective and the distribution of global products, continues to add diversity to our business. And you can see because of our investments abroad, our international business continues to become a larger percentage of our overall revenues, which is diversifying our business and is now 27% of our fixed income trading revenues. And leveraging the growth of our European business, where we've more than doubled our revenues over the time period, we're adding to our global distribution capabilities in the Middle East where our client revenues have grown significantly since we opened an office there in that region 2 years ago; and also in Asia, where our client revenues have grown by 72% as we've added talent and leadership in the region also over the past 2 years. And our incremental fixed income presence in Asia is synergistic with our investment banking build-out across the region as we've leveraged this to originate debt transactions with our investment banking partners, which is also adding relevance to our investing clients as well.

So turning to Slide 42 and getting to the second theme, a core principle of our business is leveraging our day-to-day trading relevance to build inner circle relationships that enable us to provide our clients with more solution-oriented trades that either optimize their portfolios or help them source unique assets that enhance their returns. So this strategy directly aligns with our clients, many of whom are focused on expanding their alternatives platforms. And because of this, they're broadening their strategies to include more off-the-run assets, and our ability to deliver this is a result of our flat structure, our focus on collaboration, which enables us to source and execute more unique trades for our clients. And some of these opportunities are sourced with the help of our investment banking partners, which gives us access to a broader opportunity set, and I'll talk a little bit more about that later on.

But the key point here is that because of this capability, more clients turn to us for help in sourcing these opportunities to drive better returns for their funds. And this is a big part of why we are a partner of choice across the credit markets.

And you can really see the impact here on Slide 43 with the results from the Greenwich -- Coalition Greenwich survey, which really speaks to how strongly our approach resonates in the market. So first, more and more clients rank Jefferies as a top 3 relationship, as you can see in the top left box. And these inner circle relationships are built on trust. And on the bottom right, you can see an example of this. We are recognized as a first call for confidential trades.

And as for insight, we're noted by our clients as a top provider of trade ideas, which is also a good measure of how we're adding value. And our clients consistently cite Jefferies as having some of the most helpful traders in the market. So our trading, sales, strategy and capital markets teams work in close partnership, delivering ideas, market intelligence and tailored solutions that help our clients realize their performance goals.

And bringing this all together, you can see the stat at the bottom -- you can see the stat at the bottom, which speaks to our momentum. Hang on just one sec. Which in the Greenwich survey, our clients have ranked us as the firm that they are most likely to do more business with over the next 6 months than any other firm across global credit for 5 out of the past 6 years.

So on Slide 43, we can really see how the growth in our client rankings has implemented -- has impacted our client revenues. First, we've increased the breadth of our market penetration. And you can see here on the left, the growth in revenues across all cohorts of our client size, ranging from 81% for the largest 70 clients to 60%, roughly 60% for the smallest. And this diversity of penetration provides us more liquidity and differentiated flow as we're trading across a broader spectrum of clients with different needs and strategies. And it's also reflected in the depth of our penetration as we've grown the number of clients that we generate over $1 million of sales revenue with by 1.6x since 2019.

Now if you look at the last column, it's clear how our strategy really sets us apart. Over the past 6 years, our client revenues have grown by 72%, more than 5x the 14% growth experienced by our competitors. And I think this is a true reflection of the momentum that we've built and the trust that our clients continue to place in us.

Now you've all heard Rich and Brian consistently emphasize that our people and our culture are the foundation of Jefferies' success. And what really sets our culture apart is the way we collaborate, not just within fixed income, but also across equities and investment banking. And this cross-divisional teamwork gives us real commercial leverage. It enables us to operate in the white spaces and helps us to deliver timely solutions for our clients when they need it the most. So here are some examples of that.

An important focus of our international build-out is to better align our business with the global setup of our clients. The realized benefit is being able to deliver more insight and better execution across our businesses. And you can see that 40% of our revenues are now derived from businesses where we have global integrated leadership. And also sharing information and insight across businesses is an important driver of revenues as well. And we've doubled the volume of cross-selling or trades that occur outside of a specific sales team that are dedicated to a particular business.

And as I mentioned before, leveraging our day-to-day flow is key to identifying opportunities in the market and executing the trades that matter most to our clients. So seamless integration between our low-touch electronic trading and our high-touch voice desks is essential to making this happen. Growth in our e-trading volumes is having a big impact on our high-yield business, not only driving increased flow and market share, but it's also enabled us to streamline workflows across our voice and e-platforms. In high yield, we're now ranked #2 in portfolio trading and #2 for integration across electronic, portfolio and voice trading. And you can see we've increased our high-yield volumes by 5x over the time period, driven, of course, by our e-build, which has in turn helped us double our voice volumes over the same period, demonstrating that this collaborative strategy really drives growth in the business.

And the third pillar of our fixed income strategy is the strong synergy that we've built with our investment banking partners. A more robust new issue pipeline naturally drives increased secondary trading volumes and gives us an edge in trading these credits. And the benefit is evident in the volume growth in 2 of our most important new issue markets, leveraged loans and municipal bonds, where our secondary trading activity continues to expand on the back of our investment banking growth in these areas.

So this alignment between origination and trading is increasing our relevance to a wider set of opportunities. And here, we've listed examples where this collaboration has translated into top-tier rankings across several key new issue markets. And a great example of this is in our consumer ABS business, where we currently hold the #1 league table position and have transacted 22 deals over the last 12 months. And this is the direct result of a coordinated coverage model that brings together our ABS Capital Markets team in fixed income with our specialty finance sector team in Investment Banking, which is run by Andrea Lee, who you just heard from. And this partnership has enabled us to leverage our ABS success to win both equity capital markets and M&A assignments from these companies.

We've also built the #1 CLO underwriter. We've been the #1 CLO underwriter in Europe since 2022, thanks to the strong partnerships that we have built with leading global issuers there. And by extending these trusted relationships to the U.S., we've significantly approved our global ranking, now #6 year-to-date. And this is also important because increased CLO issuance drive secondary loan trading activity and many of the top CLO issuers are also investment banking clients. So we talked about municipals and leveraged finance on the last slide and the growth that that's having on our secondary volumes as well.

So just to sum it all up, 10 years ago, we made a clear commitment to increase the stability and consistency of our fixed income revenues and returns. And that journey grounded in being relentlessly focused on adding value to our clients continues to be the foundation of our strategy. We built a franchise that leverages market share to deliver quality share, executing differentiated, solution-oriented trades that cement long-term partnerships by helping our clients drive excess returns.

And we've expanded our global reach. We've deepened our alignment with investment banking and enhanced our execution capabilities across both primary and secondary markets, driven by collaboration and the seamless integration of voice and electronic trading. So as a result -- and our progress has also -- the trust that we've earned is also reflected in the Coalition Greenwich survey where clients consistently recognize us as the firm that they expect to do more business with in the future. So as a result, I'm confident that as market conditions normalize, we'll continue to drive growth in revenues and profitability in our fixed income business.

So now I'll turn it over to [ Nick and Sol ] in Asset Management.

All right. So I'm going to give you just a quick overview of our business today. We currently have 19 partnerships across a variety of strategies. We're typically looking to do seed or accelerator capital type deals with either new firms or seeding a new product at an existing firm. We make multiyear commitments and provide marketing and distribution for our economic share in the business. Sometimes we own the entire business and the portfolio manager has a direct payout. Sometimes it's a joint venture that we own 50-50 with the manager. And in most cases, it's a revenue share that we take off the top.

We're looking for quality managers and resilient business models, unique strategies that can generate returns over different market cycles. We look for managers that can build businesses over time and have the potential to scale. We focus on growing our fee revenue while being efficient with our capital. The 2 buckets that we spend most of our time focused on are the multi-manager and platform bucket and then the alternative credit bucket. We can provide managers with operational support, legal and compliance support as well as bringing our 27-person marketing team around the globe to help them raise capital.

As Solomon mentioned, we provide these different types of capital, seeded acceleration and other strategic in exchange for participation in the in the fees generated by these asset managers. While the form is typically a revenue share, and that's the majority of our partnerships, we also have these other structures as Solomon mentioned.

The key point here is that as we have added these relationships over time and help them grow AUM, we've seen an increase in our revenue. This slide highlights that dynamic. Sorry, this actually shows how we focused our platforms into the alternative credit or multi-manager and multi-strat categories. From a fairly opportunistic program early on to this more coordinated effort to have strategies that we believe have both stability and capacity to grow over time.

This is a slide that shows the growth in our business. On the left, you see the overall returns on investment. And on the right, the total asset management revenue, we break the total asset management revenue down to also show our management fee and performance fee. You can see over the last few years, this has grown pretty dramatically.

And the key here with the next slide is that we've been able to achieve this growth disproportion to the capital that we've been using from the firm.

So on the capital raising side, we continue to add to our team. We're up to 27 people today, which has doubled in the last 5 years. We made 3 important adds this year, one in the U.S., one in Asia and then someone on the ground in the Middle East. We've raised just now close to $5 billion of fresh capital this year. And what's been nice to see is it's been spread out between many of the funds. The pipeline here remains strong. Schonfeld and Diamond are 2, in particular, that have had very good pipelines and have really started to raise some capital. Most of our credit businesses have raised some substantial capital this year and we're excited to get on our way with Pacific Way, which I'll talk about in a second.

The other thing that's worth adding on this slide is just how closely we work with the Jefferies Finance platform, and we've been successful raising capital with them together. So this is just a snapshot of all of our strategies. And as I mentioned before, we break them down into platforms, alternative credit and other.

On the platform side, it's worth highlighting Diamond Asia, which has had excellent performance for the last 3 years and has started to raise a lot of capital has a pipeline to basically double their capital base over the next 12 months. They've been really smart about taking it in slowly and efficiently.

Schonfeld, again, as I mentioned, an important partner to us continues to grow their business. And the last one here is Pacific Way. This is a multi-manager business that sits within partners' capital that we've just partnered with them. It's our most recent partnership and they've not raised institutional capital in the past. So we are excited about getting them going, and we'll be taking them on the road starting in the next few weeks.

On the credit side, a few worth highlighting. 463 Capital has gone from basically $1 billion to $2 billion over the last year. Also very good performance and a really good pipeline. And then Hildene Capital has been another great partnership with us, and we've been looking for ways to continue that partnership.

The last one to highlight here is in the other category, which is [ Greathike ], which is a European private equity real estate funds that we partnered with last year. They're getting close to closing Fund 1. They built a really interesting diversified portfolio and have raised capital from a really blue-chip group. We're excited about their prospects going forward.

Thank you very much for your time.

Thank you for listening to that. With that, we're going to open up the room and the calls for Q&A.

Can we get a microphone over here, please?

James Yaro, Goldman Sachs. Thanks for doing this, Rich and Brian. I want to start first with the growth of the MD headcount. It was quoted a bit consolidated after some rapid growth in the past few years. Maybe you could just talk about your aspirations for hiring and investment banking headcount, specifically, but maybe also just broader in senior talent?

On the investment banking side, the focus right now is really pinpoint fills to sectors, products and probably even less so geography in terms of regional coverage. I'll use as an example, in the less than 2 years, we brought in a new Head of Global Real Estate Investment Banking based in New York. We've hired on several additional managing directors to support. In the last literally about 14 days, we hired a first-time pan-Asian Head of Real Estate and we've strengthened ourselves with a new head of real estate in Europe. So it's an example where this has been a relatively modest subsector for Jefferies and the potency of the team will have as we enter 2026 will be substantial. So I use it just as an anecdote to appreciate that we're down to that level of fine-tuning.

If you want to turn it into numbers, if we sit today somewhere in the 370 or so you could see that number between promotions that will come at year-end and promotions in the last couple of years have been, call it, in the low 20s. So think about just simple math, add on to that some continual onesies, 1 or 2 departures, we probably grow our MD count in the next year readily by 10%. Do we grow it by a lot more of that? It will just depend.

I will emphasize that is no longer a top 2 or 3 defining theme for us for now. I would have said the same thing 5 years...

Let me clarify this a little bit. He says that, I've said that, the fact of the matter is our platform has never been more attractive to super high-quality bankers. And so our phone rings a lot. And you'd be surprised how many incremental pieces of white space you actually find -- when you talk to more and more high-quality bankers from very prestigious firms who really don't want to work there anymore, I want to work at a company as entrepreneurial as Jefferies.

And the fact that so many of their friends have come here and have done so well so quickly, that creates a lot of excitement and the phone rings a lot and great bankers, we still want to hear from you. The door is not closed, but Brian is right, we have so much to execute. If we just execute, the team that we have right now, the scale of what we have and the margin capabilities is really right in front of us.

And our capacity. Again, if you take the third quarter, multiply it by 4, that shows that last year with a modestly smaller team, our revenue was $3 billion in investment banking. And the third quarter ran at closer to -- excuse me, the third quarter ran well north of 4%. That shows you the elasticity and the opportunity that we have.

And also -- I sit back [indiscernible]. It's hard for me to really fathom. We're approaching Morgan Stanley, and we're a huge chunk of Goldman Sachs, okay? And they're both great companies with $1 trillion balance sheets and we now have a joint venture partnership with a $2 trillion bank. Not that our market share gain is going to come necessarily from those people. There's a lot of other places to gain market share.

But if you step back and look at the power of the platform on a global basis, on an industry basis, on a product basis, on a service basis and how it leverages off of each other, we have to just execute, but we have a hard time saying no to great bankers. So please keep sending your resumes in.

And just in the recently reported this week numbers, if you take the 5 large U.S. bank holding companies and our advisory revenue for both the 3 months and for the 9 months, if you stack them up, we're #4.

Do you want to do one last one, then Kurt has hand up over there?

Yes. Sorry. Just quickly, I think I've asked you this -- almost every one of the past 5 years, but how are you thinking about the return profile? Obviously, the business has changed [indiscernible] you're a lot stronger in investment banking. You've built a lot of new things. So I think in the past, you've talked about low teens ROTCEs is something that you could achieve, but how should we think about that going forward?

I think there's couple of things we've said that are relevant. One is the focus on realization, okay? Even if we get lucky and there's 70 bankers, MDs added in the next year. That's no longer as relatively material. And the second point is -- well, 2 real sub points, one for Matt, which is the leverage on our noncomp expense is getting meaningful; and secondly, the overall sort of marginal profitability. The third quarter is not a fluke in ROTE. And I'll keep saying this, and I won't be able to maybe prove it for 10 more years, but 2008 to 2023, I think someday will be viewed as an incredibly aberrational period. And we showed it last year in that slide of 2 years up, 1 year down, 1 year up, 1 year down to addressable market issue. That's a real compounder.

If you go back before '08 and you go back from 2000 to '08, we were hitting really good ROEs. And that is, to me, what this third quarter, the fourth quarter of last year, now it kind of sinks have to pick a quarter in a quarter, but we had a little 6 months in between that went a little sideways. But if we're right, you will see it. And you'll see it not at low double digits.

Yes. I guess what I'll elaborate on this because it's an important point and Brian mentioned, we think in decades, the fact of the matter is we spent from 2011 to the rest of that decade, effectively integrating in 2012 with Leucadia, cleaning up a lot of mess, not generating good ROE, but having the opportunity to buy back 175 million shares of our stock and reposition the company and reinvest in it. Then we basically had COVID, okay? And we basically dealt with COVID and came out of it as a stronger organization. interest rates go up and then all of a sudden, capital markets activity go down. So we wind up playing offense and really make the big investment in the head count.

And we were [indiscernible] from an ROE perspective, literally in December, January of last year and then this thing called tariffs hit. This is not a sad story of what we always have an excuse, this is just the reality of the world. We spent the next 6 months powering through it having a modest but not stellar ROE. And the third quarter was the first quarter you got a taste of the scale of our company the breadth of our company, the beginning of operating [indiscernible] these revenues go up, money pours down to the bottom line.

And I feel like we're finally at a point after a lot of investment and lots of challenges. We see a huge opportunity ahead of us just to execute, and we have all the pieces in place right now, plus SMBC plus our technology plus the brand awareness. I mean that's what I see right now.

Kurt? Try it again?

Kurt [indiscernible], Alliance Bernstein. I'm a happy shareholder and very impressed with the presentation today. I look forward to earnings per share starting with a 5 or 6 or 7 in coming years. But I want to talk about the elephant in the room. Your stock today is down 7%, and it's obviously been -- I think the trigger today might be Zion Bank -- brought up a new credit issue. So the banks are weak. Your stock is down 33% this year. Admittedly, it was an amazing year last year. Thank you. And Goldman Sachs is up 33%. The big banks are having a great year. You made a fantastic decision years ago to not become a bank, but the banks now because of [indiscernible] have this -- I think, are the most aggressive share repurchasers in the S&P. So they're getting improvements in capital.

I guess my question is, I know you don't want -- you've been aggressive in all aspects of running the company to the benefit of shareholders, including share repurchase. But now with your stock about 1.5x tangible book, JPMorgan around 3x, it's probably never -- you probably never had a wider spread. I know you have a lot of uses for capital.

But could you talk about the value you see in the shares now and what we might expect on the share repurchase capital return front?

Okay. So first off, I think I might have mentioned to you at one point. You probably don't have a management team that's more engage in terms of ownership of their company than the people here at Jefferies. So we are aligned, as I say, at the earlier part of my comments. And we've also not been shy about buying our shares. We tend to not advertise it to the world. We tend to just do it and then tell people what we've done. We clearly do have a buyback program. We've clearly had quiet periods or restrictions because there's a lot that's been going on with ourselves regarding SMBC and other things. So you can assume that there are issues on that side as well.

I think the best thing for me to say is, I think there's a dichotomy -- a big dichotomy in terms of what you see before you in terms of the value of this company and where the shares are trading right now. And our job as managers to try to help figure that out. I'm not saying we're going to do something dramatic and launch something. I'm going to tell you, we are keenly aware of it. We're focused on it. We're incented to do it -- to do what's right by shareholders. And we also do it for the long term, and we also pay attention to the rating agencies, and we are very prudent.

But I agree with you, our stock -- and I guess everyone at the Investor Day says the stock is cheap. You've never heard me say that before, but kind of cheap.

I would just amplify one point because it's probably the first time in a long time, I can even say this, particularly because of the alliance with SMBC and the activity around creating the joint venture and announcing it and the other announcements that we made a few weeks ago, we, over the last several years, have had disproportionately long blackout periods. You're not aware of them. We can't tell you about it. But it's one of those toughest things where people say, they only bought 7 shares in the quarter. And those were typically surrenders from one of our insiders. So frankly, that's a good thing for us because we can actually do that in a blackout. But that's really an explanation of a lot of the absence of buyback over the last frankly, 2 to 4 years after a massive period of buyback.

The second thing I would say is implicit in what you're saying is sort of how we get valued. And I think in fits and starts this last 1.5 years, 2 years, I don't know what the right starting point would be, I think people are starting to appreciate our earning power, as you alluded to it, and I think a multiple on that earning power is becoming a more available way to measure our performance. And I think the truth will be in the next quarters. Today's action, the recent action, we've been very clear, we think it's overdone.

And look, you can't really be more specific. But when we finished the third quarter, if we didn't -- if we weren't in the news right now for something that we clearly are in the news for, I think our stock would be at a very different price. And I think investors have to look at is that -- is the magnitude of that makes sense relative to where the rest of the company is actually were today. And that's for the investors to decide. We have our own opinions. Hopefully, you'll come to the similar conclusions.

Ian Lapey, Gabelli Funds, also a long-term shareholder. Some questions on risk management. I guess a surprise to me was that 24% of Point Bonita's assets were invested with one issuer. That would seem to be a risk management 101 failure. Just first, how did that happen? Second question, do any of Leucadia Asset Management, other managers have similar outsized exposures? And third question is, are you doing anything differently or you plan to on the risk management side for the asset management business?

Last year, I think you talked about George Wise and the Water Station 352 is sort of idiosyncratic, I think it's getting harder to say that today.

To separate those and as you might expect, there's only so much we're going to be able to say today. But on the question of concentration, I think the most significant point is that we purchased Point Bonita on behalf of the fund purchased receivables that had investment-grade obligors. And I'm going to get there. I'm going to get there. That aspect is a meaningful risk mitigant. Ultimately, it is with one issuer. You can go into other aspects of this. With hindsight, obviously, it's a different view than with foresight.

I'm not going to be able to say a lot more than that other than to also say, and then I'm going to come to your question of what's the coincidence and what isn't, fraud is fraud, if this was fraud, and we don't know, there's been suggestions, there's going to be a knockdown process of a bankruptcy court, and we're going to see what's learned and we're going to see what the resolution is going to be. I wish -- for my taste, I wish it could happen in 3 days and we can move on and not talk about this and know what the outcome is.

But fraud is conventionally not detectable in the real world. I've detected fraud or thought I saw fraud. I've had people cry and confess and I've also been the victim and we've been the victim. And I can't tell you there's anything to that other than most people try to avoid when they think there's an issue, can protect themselves in different ways. We had a lot of protections here. We're going to find out the outcome.

It troubles offs the coincidence of several of these. It's causing us to ask questions. It's causing us to scrutinize. We're not aware that we have any other comparable narrow concentration or illiquid concentration. Most of the strategies in asset management are liquid. Our own balance sheet is dramatically liquid other than our longer-term commitments. So again, it will be easier when we have all the facts and we have the outcome, but we still like to believe that these are unfortunate coincidence of narrow facts, but we're looking at it much more seriously.

And we will do a complete and thorough reevaluation of it. We take this seriously. This is not just, by the way, this happened. We take this [indiscernible] that seriously.

Brennan Hawken, Bank of Montreal. I'd like to follow up on that. The asset management business, many investors view as kind of a side hustle. You guys talk about being the pure-play Investment Bank, the last sort of OG of investment banking. And I think that's why folks own Jefferies. So yet, we've had some struggles and setbacks here from the asset management business. Have you wondered whether or not this is worth staying in this business or whether or not there are sufficient controls and whatnot around all the different potential complex?

Lots of wonders. As explained by Nick and Sol, we have driven the focus of the asset management business toward the diversified multi-manager and other platforms and toward credit. Credit particularly is ultimately strategic to us. We are a significant originator of credit. Credit is a opportunity and an element of our overall investment banking and trading strategy. And to extend that through the asset management side, you saw, I think, $29 billion that sit at Jefferies Finance, that's in private credit and in CLOs. That is something that is integrated and ultimately fairly important to us and creates further compounding opportunity.

On the multi manager, we have access [indiscernible], the George Wise story, which we think is a very narrow and distinct story and somewhat of a story of an individual. The net of it is that we've had very little challenge in the last several years. We're massively diversified and the returns -- both the returns have been good and the fee and other opportunity has been good. So we think we're bringing it to the right place. Sadly, I would have said that 3 weeks ago, so I don't have the conviction I have 3 [indiscernible], we've got work to do.

Great. And then just one more, if I may. Some investors are asking some questions about the extent of the relationship in between Jefferies and [indiscernible]. You guys did a lot of their acquisition finance and so. And then the level of concentration to the prior question in Point Bonita, lead some to wonder about whether or not there might have been some conflict of interest or checks and balances. Could you walk through maybe some of those processes that you have and hopefully address some of those issues?

I'm going to answer on a couple of levels. Number one, the Point Bonita fund in asset management sits absolutely separate, distinct and apart from whatever happens in investment banking kind of Chinese wall 101 nothing more to be said. The 2 have absolutely no relationship. And in fact, the decision in 2019 of the asset management Point Bonita team to engage with first brands was absolutely away from independent and disconnected from anything on the investment banking side.

As far as our investment banking relationship, facts that are getting lost in all of the innuendo and all of the headlines and all of whatever. We did not do a deal for First Brands in 2025. We, over the years, arranged some number of financings. Some number of financings were arranged by us with others involved. Some numbers were arranged by others without our involvement. The company arranged some financings directly. We did not close a deal with them in 2025. The record is that the company entered 2025 with audited financials with a range of banks involved with the paper generally trading, give or take, at par with the facts of all of their acquisitions, the facts around factoring in their financial statements and footnotes.

There was not a lot of what is known today that wasn't on paper and known. We, as we do, entered into an engagement to help them refinance what was a, at the time, more than a year out maturity, normal natural. I think that I'm going to be wrong on the number, $1 billion is coming due in 16 months time to take a look. And the thought was that the most efficient way to do this is a comprehensive package refi.

That effort ended when the company did not produce a quality of earnings. I mean there's something to be said that the effort around that refinancing led to the request for a quality of earnings, which ended up, whether this is causal, we don't know. But days after they didn't provide it or acknowledge that it wasn't going to be forthcoming, they went into a bunker and filed Chapter 11.

Again, I said earlier, I've seen frauds, I've seen whatever, I've seen companies collapse that didn't have a fraud. Sadly with highly levered companies, which, again, no one entered 2025 not aware, okay? Lawyers, accountants, rating agencies, investment bankers, commercial bankers, the whole world know everything in concept. Again, if there's a fraud and something we didn't know, we all didn't know. But a highly levered company has a higher level of risk and it came home. That's the only thing we can say now, but this was separate. This was understood.

Again, fair questions that we're not answering, but I think we're answering in a way that you should see it's not an outlier, it's not a -- and again, there are companies where investment bankers are the house banker and intimate. I will tell you that same minority, okay? A majority -- the relationship is real, but it is episodic. You're called in, you call with an idea. They have a need, they call you. You have a thought, you call them. And this company was much more in the latter category than in the former category, and we know the difference.

And I would just add, most of our major interactions with [indiscernible] strong banking team in the automotive space selling them assets that they paid for in cash. So we were representing someone against them in terms of maximizing the price. So it wasn't like we were in [indiscernible] with them as they were accumulating this. We were actually helping clients sell their companies, and they were the buyer.

Yes. Yes. If you don't mind, just maybe one more because this is important, and I think this is -- have you seen -- it's very early days, and we know this stuff can take time to play out, but within your client franchise. Have you seen any concern around counterparties, whether they be issuers or trading counterparties or other parts of your business, a call into express concern? Have you seen any of that?

I think what you'd expect is people like always, in this room and ourselves, ask questions, the support has been remarkable. We have not had any issues. Our clients are with us. Our counterparties are with us. Our statistics are the same they were at quarter end, and we basically having a good -- I said we're having a good quarter [indiscernible] and business is good, okay? And our backlogs are building each week, and it's -- that's why my segue was so wacky, okay? It's like we have to acknowledge it, but we actually are in a great spot.

We have a basis in our daily, weekly, monthly backlog, et cetera to have the confidence and enthusiasm we have.

Gave my General Counsel a heart attack by the way.

Ryan Kenny, Morgan Stanley. So clearly, credit is a big theme that's impacting not just Jefferies stock with this one issue, but a variety of stocks in the financial services industry right now. So there have been a few bankruptcies. They seem idiosyncratic. You have a unique view into credit given you're advising high-yield clients, you're trading high-yield securities. So what are you seeing in your client base? Are you seeing any other signs of cracks?

And then if you could give us just an overview of if we do see more events, how would Jefferies business react? Is it a headwind to trading? Is it opportunities and restructuring?

So I'll just say, this is us personally, we believe we were defrauded, okay, from a company. I personally talked to a lot of investors, a lot of CEOs, a lot of operating businesses. I think the environment is generally pretty darn good. I don't see this as the canary in the coal mine. I'm not saying there aren't other issues like this. There was one yesterday that one of our competitors had to deal with. I think these things happen. But I don't see the -- I think there's a fight going on right now between the banks and direct lenders who each want to point fingers at each other and say, it's your fault, no it's your fault.

The fact of the matter is, the economy is generally good. interest rates are probably coming down, unemployment is relatively low. There's definitely volatility, but there's the geopolitical volatility has been handled remarkably well, all things considered. And it doesn't feel like we're on the edge of a default cycle. Quite frankly, I've been on the edge of default cycles before. I think that's one of the reasons why our business is doing so well right now. Private equity is flushed with capital and they have to basically sell companies, corporates feel pretty strong, so they're actually being acquisitive. And there's a functioning liquid and equity market right now and certain parts of the world are better than other parts of the world, but it doesn't feel like 2007 when the world is going to -- about to come to an end.

Look at the financial sector. The financial sector across the board is usually the canary in the coal mine, okay? And across the board, the financial sector for the most part, is doing incredibly well right now as are we. So I don't see it as the beginning of the end. Clearly, there will be episodic situations. Yes, we have a restructuring business. By the way, our restructuring business this year is doing great. So this is all happening in scale, and I don't feel like we're about to jump off the cliff.

No, not at all. I mean there's a little bit of what's in the air creeping into spreads. That's going to happen from moment to moment. But we've actually gone longer than people appreciate without having a really difficult corporate credit cycle. You've tended to have subsector problems. You've tended to have 3 random things in a short period. But even if you -- and you have to go back a long way, even if you go back to '01, '02, spreads blew out and paper that was issued in par, traded at 60 and the bulk of it ended up paying off at 100. I mean there's a lot back in this, particularly private equity supported companies. There's a lot more to this.

Again, that's not to say that everyone is buying pieces of paper they understand. It's not saying that they're pricing correctly. They may be -- that will be seen in time. But in terms of credit cycle, no.

All right. And then shifting gears a bit to a more positive question. So if we don't get a credit cycle and investment thinking keeps picking up, can you give us a little bit more color on the operating leverage that you would expect? Is it a 2026 story where we might see some comp ratio improvement? Is that a 4Q story?

With your assumptions? Yes. Okay. With your assumptions, again, the easiest thing to do, okay, my partner just gave it away, right? We feel pretty good about the fourth quarter, interpret that whatever you want to interpret it, but take the third quarter, multiply it by 4, assumes some progress. What does that tell you is reasonably possible that's about as far as we'll go in a prognostication in 2026.

Matt gave you a commitment on operating leverage. It's all here. It's real. It came through. No reason it doesn't continue to come through. I'm going to stop there because we don't predict but you're going in the right direction.

Chris in the back. I am sorry [indiscernible].

Joanna [indiscernible], Jefferies. With the announced strengthening of the SMBC alliance, what effects do you see on our culture and also [indiscernible] joining the Board a year or so ago?

The goal from the very beginning -- the goal from the very beginning was to take corporate banking at SMBC and investment banking and capital markets at Jefferies, and I'll put in suspense in this discussion, Nico, which is investment banking and capital markets, most significantly in Japan and now heading into a joint venture with us. So think of it as commercial banking and investment banking. Some people think about CIB. But C&I are being put next to each other. And what we are doing is building bridges from one to the other, familiarity between one and the other. And we are trying to build an internal joint culture of cooperation, communication, openness and joint effort that gets our clients the best. It's something that we usually believe is the right way to do this.

We've seen a lot of people try other ways that didn't work so well. And the result is that we're going at this methodically. As I said, 4 years ago, we announced a toe in the water. 2 years ago, we announced a swath of focus. This time, we announced some serious things. I mean, just to put it in perspective and also talk about sort of the future upside, the joint venture in equities doesn't operate until 2027. So a little bit of cost and no benefit for the next 5 quarters, followed by, hopefully, relatively immediate benefit and a meaningful growth trajectory.

So we're doing this on a brick-by-brick, day by day. I saw a list yesterday of something like 25 senior MDs and investment banking that either have been or will be in the last few months and the next few months in Japan. We -- as of July 1, denominated 71 Japanese companies as joint focus because of their predilection to work on a global cross-border basis, which will really utilize our joint capabilities. So at this point, it's down at the [indiscernible] phase day by day, and we will maintain our culture. They will maintain their culture. You got to believe there's going to be a little creep towards each other, and that will be wonderful.

I would just say, having [indiscernible] on the Board has been seamless. I mean it's just been a pleasure. He's very smart. We have a very open and transparent conversation at our report level. As you would expect, our Board is not a formal board. Our Board, we speak as point and transparent. And he appreciates it. He understands it, and it's very exciting.

Chris in the back.

Chris Kotowski from Oppenheimer. I guess one of the most striking things in the environment in my career is that the number of public companies has gone down from 9,000 to 4,000. And I wonder if you could just reflect on that a little bit. In terms of your business, is it a good thing or is it a bad thing? Are the private markets revenues, better margins, worse margins, more predictable, less predictable? And also, like, does that trend against public companies go on forever? And what is the impact of that on [indiscernible] business in the future?

So I'll tell you, you're entirely right, that has been the path. I think things have changed over the course of the last several years, and that's a good thing for our business, and I'll tell you why. The pressure in private equity to return capital to LPs is intense. And there's ways you could do it. You could do a dividend recap, you could do a sale, you could do a continuation fund or you could do an IPO. From a regulatory perspective and from a process perspective, their IPOs were very, very challenging, very difficult for a long period of time. Additionally, you only had a handful of stocks that were outperforming in the public markets. So the comps weren't really there.

If you look at the climate today and the anticipated climate, there are good comps. There's a better process to go public. There's more pressure on the LPs -- on the GPs to actually do it. And I think you're going to see -- and we've seen it in our business, we're pitching -- I mean, gosh, I mean, we're going we're 5 or 10 pictures in a week on real companies that are all high-quality varying sizes who all want to access to public markets.

That being said, like today, I kind of wish Jefferies was a private company. So I can -- in fact, at this price, I'd be happy to buy Jefferies as a private company. But I could emphasize with the challenges of running a public company, probably better than most with [indiscernible] that you have to deal with. I think -- I think you're going to see a lot of opportunity for us to take advantage of the Republic -- and it will be good for [indiscernible] also the Republican of a lot of companies. They will be good for [indiscernible] and they will be good for Jefferies.

And a continuing defense of [indiscernible]. Okay.

And that was not an unsolicited takeover of Jefferies by me. Okay.

If you go back 50 or 60 years, we had a commission rate per share that would have been somewhere in the 15 to 20x what our average commission rate is today. we peaked in the number of public companies 20 years ago. As Pete suggested, we expect to have record revenues in equities this year. So in a way, it's not holding us back [indiscernible] equities. I'll add a couple of thoughts on the number of public companies, and this is maybe in the end of personal view, I think some number of us share it. I think the number is going to grow. Some good number of the ones that went away, should have gone away. Some of them shouldn't have been. I mean, we can even go back to 2021, right, how many of those [indiscernible] shouldn't have had a merger.

But if you look at it on a today basis, market capitalization in the world has multiplied. While the largest single private equity fund has grown relatively modestly in scale. In other words, the capacity of private equity to own a company is somewhat constrained. And I'll say this, let's put the electronic arts deal to decide that had a major sovereign component, whatever the case.

Generally, when companies reach, give or take a $10 billion scale, the ability for private equity to be the next step starts to go down precipitously. It probably starts to go down in the 6, 7, 8, and it goes down even more precipitously around 10. And by the way, if you're the private equity buyer at 10, your goal is to see it going out the outdoor in 3, 5, 7 years at 15 or 20.

The IPO market is, in my view, all but essential to the PE world and the VC world. We have a good number of companies in the hands of sponsor in VC that fit what I just described that are somewhere in our backlog. In some cases, without a number because they're a year out and 2 years out. But you're likely if the market goes as we think it will, you're likely to see a robust IPO market. The test will be whether it is as robust as what we experienced unfortunately, you have to go back almost more than 25 years ago, it may be. That's one thing.

There is -- and by the way, the buyers are not having a problem, okay? The average manager is looking for alpha in a world where a small number of stocks are driving indices, right? And IPO buyers have lined up readily. We've had great success. Now going back over 2 years. I mean we've had strength in the IPO market since give or take, June of 2023. And we actually put out a firm note over a year ago saying, hey, the window is open, wake up. People are not fully awake to the window is open, the buyers are there. Ironically, the merchandise is sitting. It needs to be moved forward, and it's something we're employing owners to be mindful of that there's a market for them to participate.

The second thing I'll say is that at least on a U.S. basis, things that the President have said, things that Chairman Atkins have said, there is a recognition of the issue. This has been an administration that tends to respond and respond practically. There are practical things they can do to make it more hospitable to be a public company and to feel better about being a public company and accept what the obligations and risks are being a public company, the more of that comes through, the more what we're suggesting, we think is likely to happen. And the good news is, I think with this government, we're going to hear about that over the next months to year, not 10 years.

Madeleine Hines, Millennium. I just wanted to circle back on operating leverage across the industry. We've seen comp ratios stick here at higher levels. And I'm just curious what your perspective is on competition for talent, retaining bankers and what you're seeing in the industry?

The competition for talent is intense. I'd say it's mostly coming in our case, from the folks that have been left behind, which is a lot of folks. So the good news for us in dealing with it is, number one, we treat our people right, we believe. And our attrition historically, our undesired attrition has been incredibly low. We're going to continue to keep our guard up. It puts pressure to make sure that we're right in our judgments. We've only lost, I'd say, a very, very, very small number of MDs in investment banking that we were surprised or disappointed. Again, in some cases, we were disappointed but not surprised it was unique to the individual.

But yes, no, it's totally intense. It's not likely to abate because I think a number of folks are realizing that they're behind. And if they don't catch up, they're going to be further behind. Personally, I've never seen anybody catch up, so it will be interesting.

I will say that's one of the reasons why we're not being super aggressive right now, and we were super aggressive 2 years ago. It's always hardest especially running a public company, but it's always hard to play offense when things are tough, and it's also very hard to play defense when things are good. Not that we're playing defense, we're still offensive, but we're not doing -- we're not as aggressively going after people.

But more importantly, it comes down to culture. Every one of the 6,000 people at Jefferies, every one of them, okay, can get a job elsewhere, okay? I really believe that. And they come in every -- and we have that mentality that it's a privilege for us that they come back up our elevator every single day. And when you treat people that way versus we're a brand and we have ATM machines or credit cards and you're lucky to work here, and these are all great companies, but it's a different mentality. And I think that's what is our secret sauce that allows us to keep our people in times of frenzy, and it's a fight every day.

Mike Brown, UBS. So great to see you, and thanks again for hosting a great event. It's always a good annual event. So having steady hands on the wheel and that long-term view has really been a clear driver of the results that you've shared today. With impressive milestones like I think you said 36 years for you, Rich, and 26 years for you, Brian, just curious, how do you see yourselves steering the ship towards those 40 and 30-year marks when we gather at the Investor Day in a few years?

And then on a related note, can you just share a bit about how you and the Board think about that long-term leadership and succession planning?

So I'll go to a shot. First off, I think our company is in an enviable position to have 2 people who are actually partners who like each other, who work together, who are complementary. Always like each other [indiscernible] like each other. And that is a -- it's a great thing to have in any organization. I would also add, and I think the Board has comfort and there are a lot of really special people within our organization who are also complementary to both of us. And I think you should assume that our Board has a perspective god forbid something happens to both of us, or one of us, there are strategies and contingency plans.

I am speaking just for myself, Brian can speak for himself. I'm not looking to do anything other than this. I love this job, okay. I love this job. As I said before, I'm all in. I've never had a contract here. So today, they're done with me, and they can just tell me goodbye. But I feel like we're at the ground for building this company, and I've got great partners around me including Brian, that are all prepared to build this company going forward, and the Board is aware of it and they're cognizant of it, and I think it's a pretty good situation.

The energy, the enthusiasm, the optimism that you're hearing is real and we're deeply committed. And I'll make the personal comment, I think Rich will agree. One of the ultimate measures of our contribution to Jefferies will be the transition. And I think that's true for every leadership team that what comes after is also from your watch and on your watch. And it's something we're conscious. We're deeply aware of. You've seen our team around us evolve over time. We have more and better leadership by a mile than ever we've had. For me, personally, it manifest that my number of miles has probably been cut in half in the last 5 years. And that alone is a measure of how many great people we have running around.

And I'll just tell you, I know Brian feels the same, the breadth of support and people who are doing the heavy lifting around here, okay, we've never been in this position before. And don't tell our board and keep this between yourselves, but this place has [indiscernible] around us. It really does.

You want to deliver a microphone?

[indiscernible] the microphones up front please.

James Yaro, Goldman Sachs. Just quickly on the prime brokerage opportunity. For many years, you talked about being very measured in that growth, expensive to fund that. And you talked about a little bit of a different message here that you're being invited in to provide financing for some of the largest hedge funds. Maybe you could just talk about your aspirations in that business and how you plan to fund that and maybe what that means for the balance sheet?

Yes. I think it's important. And thank you for the question because I think this is very important. The way I would frame it is, yes, we are being invited in to some of the largest hedge funds. So let's think about why. The first thing is they value the broader platform we have. That's the first thing in the deep partnership we have.

The second thing is they are hitting capacity constraints at some [indiscernible] that's probably not a surprise to you. And for us to leg into this business is an opportunity for us. And it's something that we're doing in a very measured fashion. There are some large hedge funds that would like to give us even more balances than we're ready to take at this point. So we're legging into this. We can also get a lot of this off balance sheet via repos, et cetera. But it's important to frame the opportunity in that when we do this and we bring on those larger funds, there's a lot of internalization. So there's inherent leverage with that. And our sales and trading businesses go up.

But important to your question is because we're being invited in, we're looking to see what fits us. I wouldn't expect that you're going to see us look like one of the big banks in prime brokerage. But the leverage we have right now on the platform because of this and this, again, being asked to do this, we're in a very good position. I hope that answers it.

I would just add, it's hard to really understand, especially from where I started in 1990 with our equity business, the stock was $0.25 a share crossing. We have every single thing these clients want, okay? The research, the electronics, the global footprint, the high touch, the calendar. I mean you go through it [indiscernible]. It took us forever, and this is kind of a microcosm of Jefferies. We had to build each of these things in place forever. And at this snapshot in time, we have it all.

So Pete is going to look at the mosaic of opportunity. It's very strange when clients want you to do more, and you have to figure out what is a smart thing for us to do from a risk perspective, from a capital perspective, from a growth perspective, from a partnership perspective, and that's how we're trying to look at everything from banking to fixed income to equity right now. It's a very enviable place to be.

And we entered prime brokerage 20 years ago in 2005. This has been a very slow, very focused, very methodical build. And the second thing I'll say is that there have been those who have entered the prime brokerage business from purely a financing perspective. We are coming into it from entirely a service and relationship perspective where financing becomes an added feature that expands our opportunity. In many ways, it's no different than what we're doing in investment banking.

Thanks for taking another. Brennan Hawken at BMO. So after hearing your comments on the quarter, the stock is actually nearly [indiscernible] paired the drawdown, which is great.

Who here is trading? Raise your hand.

We got a hot hand so let's keep it going. So Madeleine asked about this a little bit. Comp leverage is very much in focus. You guys did a great job recruiting when things were cooler, as you said, don't like the competition today, which sounds really, really sensible. So one of the things that's been a bit of a headwind for the comp leverage has been the amortization of the recruiting packages. So given you're slowing on the recruiting front, how should we be thinking about when we're modeling out the comp, how should we be thinking about the roll off of those recruiting packages, especially since we're slowing now?

Again, you're right. Okay. So the concept is right. I don't think we can give you a narrow on the slope, but the slope is the direction that you're suggesting. What I would always emphasize is that we will see more meaningful and more rapid -- more meaningful and steeper benefit on the noncomp side. Now it's a smaller number, but we'll see more meaningful and faster leverage there. We will see leverage from the incremental margin on revenue.

And then only third, will you really get benefit from comp. And I want to emphasize that. It's very hard to compare us other than that is obvious, we're below, I think, all the boutiques and we're above all of the highly diversified where you're blending in the cost of people that are filling up the ATMs. Our comp ratio will come down with scale slowly in time. There's no question.

And the amortization is one part. The leverage on the pyramid is the other part, and you tell me the revenue, and I'll tell you the slope.

But also just look at the first half of this year when the markets were basically closed in the third quarter and how the world feels right now. I mean, that revenue comes right to us in all of our various businesses. And so we have the ability, as long as there is some remote stability in the world, we're a very good pure play now at a huge discount on this environment continuing.

Taylor [indiscernible], Citadel. So when I did investment banking many years ago, it was a lot of work, right, as an analyst. And when you look at the AI technology today, like it seems like a materially improved productivity. So can you maybe help us think through like what investments are you making today? And do you expect that to be kind of more enhancing on the revenue side? Or can there be good margin benefits over time?

I smiled at Andrea because she is spearheading this project, but it's -- I shouldn't say, I mean, in fairness that other people are in the project but Andrea is one of the leaders and thinking about [indiscernible] anybody else. There are several aspects to this. AI is coming into the system, and it's just going to be a matter of the degree and when the quality -- we have to get the error rate, right, even the type rates down to a place that it works for us. We have opened up a center in Virginia, where this is now -- we're now 1.5 years into it, where we've hired kind of non-analyst/analysts out of college, and we're driving more of a production mindset than a professional training mindset. So there's a, I think, a [indiscernible] change taking place in how we approach it broadly.

There's -- again, this hopefully is because it isn't, I think that AI is overhyped. This is hopefully the first inning of where AI will make a difference. It's the old story. It will get dark early because 5 years from now, I believe in, but it's just my belief, it will be a material difference in the ease with which we work, the speed with which we could work, the accuracy of it actually will be higher. And yes, the leverage operationally will be dramatic.

I mean, in our minds, the focus is going to be how do we make sure we can train and have enough VP and above, and we have ideas for that. I won't go into today. But we really are looking at that, playing in it, testing it, implementing it, and it's -- again, in my view, it's a 5-year curve. My guess is probably a 7- or 10-year curve, but it can happen. It should happen.

I think with that, we thank you very much -- excuse me, from the outside.

This is a question from Matthew Beagle at [indiscernible]. Third quarter 25 tangible gross leverage was 8% compared to 7.7% last year and 7.9% last quarter. In the past, you've articulated a 7% to 8% operating range for tangible gross leverage. Is that still the appropriate range moving forward? And if so, why? And if not, why not?

I'm looking at Matt Larsen, the answer is that is the [indiscernible]. Yes. I mean, the only point we would make is [indiscernible] Matt's earlier slide, the growth in our balance sheet has been disproportionately what I would call storage assets and facilitation assets as distinct from inventory and more active assets. And with that in mind, the growth of the business could drive that a bit. And if we go above 8% on a consistent basis, it will be for that reason, and it will be very much in a low-risk mindset.

Matt, correct me if I am wrong, the rating agencies are looking around 10? What was -- reading agencies are around 10. We are like 20% [indiscernible] that's where they're comfortable. We are far below any [indiscernible] agency that on all of our metrics, and that's how we operate the company. And that's really one of our governing principles.

And we're also running a little bit higher than historical short- to intermediate-term debt in part for the T+0 exercise. It's also why we're carrying the highest probably cash we've ever carried, which something we pointed out on Sunday. I mean, I think we're at $12 billion at quarter end. So there's a whole bunch of little vagaries around that, that make it less of [indiscernible].

But just to explain it to everybody, in -- when was T+0, Mattie?

May of last year.

May of last year, okay. We knew we were going to be ready. We weren't sure if our counterparties were going to be ready. So we raised a bunch of short-term funding just to have extra cash on the balance sheet and to be prudent. What Brian is basically saying is we've left it out there because the volatility in the world, and that's one of the reasons why it's ticked up. It's not because we're putting more risk on [indiscernible] basically in cash.

I was just going to say, well, it's in cash. But the good news is in the world we live in today, cash earns reasonably. And so our negative carry on that is relatively modest.

Question on return on tangible equity from Brian Grefe at Raymond James. Based on a review of the proxy filings over the last 12 years since 2013, ROTE has only exceeded 11% in 3 of the last 12 years. It exceeded 10% 6 times in the last 12 years. Without a commensurate increase in leverage, can this business sustainably earn a double-digit return on equity? If so, what do you believe the drivers will be to get it above 10% to 11%?

I think in 2 or 3 pieces, we've effectively answered this, which is that this was an aberrational period. The third quarter is indicative of our potential capacity and opportunity. And again, if you go back pre [indiscernible], you see a different picture. We're very comfortable with what we've said today about where we think returns go over these next several years and earnings growth.

A question from Jason Aldridge, who is a private investor. Anything in particular note on [indiscernible] efforts regarding the momentum in [indiscernible]? Anything else at [indiscernible] do you want to discuss?

[indiscernible] is the crown jewel and the biggest chunk of the capital in the assets. And HomeFed, it's going give or take the way we would have expected it to. The only challenge we have with [indiscernible] is that it can be lumpy because we are generally building 1 or 2 multifamily projects at a time. We then mature them out and we then typically realize on them. So the realizations are going to be lumpy. It could be on every x number of quarters. Away from that, similarly, in the home sale business, we will occasionally have some lumpiness. So x the lumpiness on an annual basis is progressing as we expected.

And Southern California real estate is generally strong. The good news is we are fully entitled. We've been able to do a few things to give ourselves more units than we might have expected. So it's kind of leveraging positively for us all fine.

No further questions.

Look, we are really excited about our company. I hope you understand that we take the elephant in the room very seriously, and we're going to do our work to do what needs to be done to optimize the result for our stakeholders and also learn ourselves how we can be better. But it really does -- and it's [indiscernible] serious to us, and we take it to heart.

That said, the big picture here, I hope you all got a chance to understand it. There is so much positive at this organization right now globally and so much potential going forward, it's palpable. And we feel every day -- if you ask people around this firm, going up down the elevators, they're excited about coming to work every day because we know what we have, we know what we have to do, and we know what we're capable of. And so from this 35/40% of the shares to you 40% to 45%, thank you for being our partners. And you could trust us that we are completely focused.

So thank you.