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It's OK To Be ‘Unlovable’ As Long As You Don't Get A Margin Call, And Other Musings On Love From Jefferies

When you've hit rock bottom, there's nowhere to go but Jefferies.
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Some executives, when met with criticism or failure, will say something to the effect of “I don't need to be loved by everyone.” Don't believe them. As humans we all need love, without exception, and anyone claiming otherwise is deluding themselves.


No one knows this better than Rich Handler and Brian Friedman, CEO and president, respectively, of Jefferies LLC, and evidently foremost experts in the field of lovelessness.

In a letter to clients and employees this week, the two meditated on the crushing despair felt by those who are “unlovable,” as Jefferies' parent company Leucadia was deemed by the Wall Street Journal back in March, 2016. The article capped off an 18-month period in which “more seemed to go wrong than right,” Handler and Friedman wrote. But they took it all in stride:

We lived with the story, including all the stock graphs pointing sharply in the wrong direction, which were side by side with pictures of management who supposedly was pretty decent for decades, but had been smacked hard on the head by the stupidity stick.

Now, having seen Leucadia's stock leap 60 percent since the article was published, the two Jefferies executives have some thoughts to share. Not as a victory lap or Dalioesque media rant – “Everyone who runs a company or manages money is a “big boy or girl,” and we all know media coverage goes with the territory,” they write – but as a guide for those perplexed by the vagaries of love. Here are their main lessons for the unlovable, in abridged form.

1. If you aren’t constantly trying to improve, evolve, adapt, and grow, you will not make it in business because every good competitor is stretching to do these things every day. That said, you cannot do all of these important things without taking calculated risk and even if you are the best risk taker on the planet, sometimes you will get it wrong and you will find yourself being “unlovable” for a period. This is necessary if you want to win long term.[...]

2. It is always OK to be “unlovable” as long as you don’t get a margin call. Your company’s capital structure must be secure and conservative. Your overnight funding and liquidity must always be smart (never rely on short term unsecured lines to finance long term assets). A slightly reduced ROE is a small price to pay for excess liquidity. [...]

3. When you find yourself in an “unlovable” period, that is when you find out what your culture and team are all about. Do they point fingers? Do they abandon ship? Do they whisper, “I told them so?” Or do they roll up their sleeves, work even harder, and help make the tough decisions and find smart compromises with the goal of finding the path to be “lovable” once again. Everyone is with you when you are “lovable.” The best operating and investment companies truly shine when they are actually “unlovable” because that is when their people truly distinguish themselves.

4. Being “unlovable” is very personal. Whether you are running a company or investing in them, bad results over a period of time can be very unsettling, embarrassing, and humiliating. We are all human beings and for those of us in these positions, we know it is not about the money, power, or glory. It is about pride and not letting the people you care about down. That is why it is so important to have a strong foundation of family and friends that you can always rely on no matter how much you may “stink” lately at work. To family and true friends, regardless of your missteps or failures, you are always “lovable.”

5. Then there are those times in the cycle when everything you and your company does is working well and success and great results are free flowing from every part of your organization. These are the times when you are exceptionally “lovable” from a business and professional perspective. What the reporters who write silly headlines really don’t understand is that this is truly the most dangerous time and it is generally when investors should be on alert and someone should be firing off the warning flares. [...]

With Appreciation (and love),

Rich and Brian

Jefferies - Back to being a love machine [HITC]



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