Ej 10-k
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http://www.sec.gov/Archives/edgar/data/815917/000106880010000036/jones10k.htm#item11
hey gourd head,
I guess you have to be able to read financial statements and have a recall on past claims from the cult leaders to understand. Sorry that the post didn't include cheat sheets that you needed to follow the concepts.
You still haven't answered his question - what's your point. Is it that you think EDJ is in financial trouble? Is it that you think the GPs make too much money? Is it that you know how to cut and paste? What's your point?
spiffy,
question1 - yes
2- no (look at how drastically their comp has dropped ....hence the reason for an increase in production...d'oh)
3 - yeah I just learned how to cut and paste, I learned from those old green screens... just like you got email at EJ how many years ago? I was there in '98 and it was promised too us HOW MANY TIMES???? Just remember it took the EJ "bird" to go DARK around Thankgiving of 2004 to jolt everyone into action regarding land lines versus the dishes. The brokers in UK had email from day one, yet the US and Canada didn't?
4 - it took them how long to admit failure in UK how much longer will they stay in Canada. Tthey've been there what 16 years, claiming anywheres from 5000 down (orginally projected) to 1200 locations (last time the Canadian GP was quoted). Where is that operation now around 600 reps? (and just how many of those are in Quebec....12?)
These are indications of poor planning and execution that only can be condoned / excused in a privately held firm. When your firm needs to expand what do they do....borrow money from the down-trodden and offer them pie in the sky dreams of becoming a GP...... talk about a ponzi scheme.
good luck to you and yours...especially since you're going refute everyone of these glaring mistakes.
Snore....snore.....snore.....snore......
Jones in financial trouble? Seriously. Of ALL the things you could come up with, if you knew how to look at a balance sheet, you would realize how dumb that sounds. It amazes me you are allowed to practice in this industry.
STILL talking about e-mail? C'mon. It's been 4 years. We were late, time to get over it.
Do you realize what LITTLE financial impact the UK had on the firm? Oh that's right, you can't read a balance sheet, so I guess you can't read an income statement either.
And finally, "When your firm needs to expand what do they do....borrow money from the down-trodden and offer them pie in the sky dreams of becoming a GP...... talk about a ponzi scheme."
Seriously. LP has returned 21% per year for the past 30 years, with very little variation in returns. Even in the WORST year ever, they returned 13% to the LP's. Let's just look at the last 10 years, notably not the greatest timer period in market history, but we'll look at it:
2000 25.4%
2001 17.2%
2002 15.8%
2003 18.3%
2004 20.1%
2005 20.1%
2006 23.7%
2007 24.1%
2008 16.1%
2009 13.4%
And 2009 was the worst year EVER in 30 years, by almost 200 basis points. And if you think that most FA's have some pipedream about becoming GP's, you are sadly mistaken. Yes, there are some big producers that would probably want a RL position, and MAYBE a efw that would want to go to the home-office, but by and large, nobody is duped into thinking they will ever become GP's.
Sure, the LP returns are basically taxable bond interest payments. Jones even SAYS that in their literature about LP. But if I could guarantee 7.5% minimum distributions for life, and double or more almost every year, that isn't so bad for the fixed-income component of your portfolio. In the last 20 years, exactly 6 years have returned less than 20%.
I think you need to come up with something new....
exej - you might be the first person ever on these boards to say that the Jones GPs don't make too much money. That kind of makes me question your objectivity.
True, the 2009 statements were not as good as 2008 or 2007. But certainly you can't simply be looking at GP compensation and making the call that Jones is in financial trouble. Please tell me you looked at of the numbers, not just the ones that you could use to make your case. Is there something else glaring that we've missed that would give us a more dire viewpoint of EDJ's financial viewpoint?
Canada is barely a blip on the radar screen. 690 FAs as of the end of March. Compared to the 12,717 in the US, that makes them barely significant. Even though they've been in business for 15 years, they've never gained a lot of traction. So the question with Jones GPs is do you just flush all the time, effort, and money down the drain and sell them like the UK, or do you put more resources into the operation in the hopes that you can make money. The current plan is to work towards profitability in Canada. I don't really have an opinion on what the right thing to do would be. If you sell that division it doesn't just affect the 690 FAs. An equal amount, or more, BOAs would lose their jobs. Hundreds of people in Tornoto lose their jobs because you would need to shut down the Canadian headquarters too. Not to mention the job losses of all of the non-Jones people who work in those buildings full time (maintenance, food service, etc.) So, do you do that, or do you just keep plugging away at it and hope that eventually those 690 FAs become profitable? For now the choice is the latter.
You can't put lipstick on a pig.
Happens all the time. It's called free enterprise. Sell off everything and maybe you can recoup some of the losses. No reason to continue except ego. I'll bet if you query the bonusable reps in the US they will agree to pull the plug now on the Canada experiment..
The real issue is Jone's seeming inability to alter it's culture. If innovative thinking will be critical to excellence in the future, then there is nothing in Jone's history to give any confidence that that is possible. In fact, the kool-ade drinkers boast that Jone's has survived while risk-taking companies didn't , gives me more concern about Jones future. It seems to have further imbedded lack of innovation into Jone's culture. Jones may continue to survive, but the only way they will outgrow the rest of the industry is if the rest of the industry fails. In other words, hold your place on the mountain and hope all the other climbers fall.
BC, I agree with you. I would cut bait now. Seems like it's draining some intangible resources (mind share of senior execs) in addition to straight returns. But I am sure there is good reason not to yet. They may be waiting for the right time in terms of real estate, or maybe they are waiting for the right deal to come along (from another B/D). Or maybe they really know something about the development of the business up there that will lead them to profitability. Who knows. But it's obvious from the UK, that they have done plenty of DD on whether they should save or scrap Canada. So I am sure they have good reasons for not getting rid of it (yet).
b24 - enough DD in Canada? The firm is basicallly frozen out of nearly 1/3 of the population (no pun intended).
they have a handfull of reps in a province that has nearly 8 million in population. 8 reps to handle the greater Montreal area which accounts for nearly HALF of that population. And that is DOWN from 12.
You have been in Canada for 16 years and have only 8 reps for a pop of 3.7 Million......now that is some fine DD.
Now check out my original post. Who is the second most highly compensated in your firm and what does he do???
scroll down to the last three paragraphs for some interesting reading
http://stlouis.bizjournals.com/stlouis/stories/2010/04/12/story3.html?b=1271044800%5E3167971
[quote=xej1984]
b24 - enough DD in Canada? The firm is basicallly frozen out of nearly 1/3 of the population (no pun intended).
they have a handfull of reps in a province that has nearly 8 million in population. 8 reps to handle the greater Montreal area which accounts for nearly HALF of that population. And that is DOWN from 12.
You have been in Canada for 16 years and have only 8 reps for a pop of 3.7 Million......now that is some fine DD.
Now check out my original post. Who is the second most highly compensated in your firm and what does he do???
[/quote]
I wasn't suggesting they are doing an excellent job at executing their plan. I have no idea what they do up there. My point was that since they had chosen to close down the UK, they ahd obviously put conisderable thought into whether they could make Canada work or not. From what I understand, in the UK, scale almost didn;t matter, they just couldn't make the economics work at the branch level. In Canada, the economics are similar to the US from the branch level. They just need to increase scale in order to overcome the home office expenses. They currently have $14B AUM, and average $20mm AUM per branch, so there is room to grow at the branch level.
And by the way, what would you pay the CEO of a $14B AUM wealth management firm? That's basically what Reamy is. I don't think he's overpaid for his level of responsibility.
Cmon B...
If you can't make a profit should you earn the kind of money that Reamy is. I just don't get it. Weddle wants to grow by 100 FA's even though Canada hasn't made a lick of profit in 15 years.
I think this has alot more to do about the egos of GP's who don't want to admit the move to Canada is a mistake. Time to cut bait. Curious that they want the US FA's to produce more and yet they admit that they have a drain on profits in Canada. If I were a US FA I wouldn't be happy with my bonus income especially in the face of the continuous bleeding.
What's the current bonus bracket? I hear from one of my friends that his bonus has been cut by almost 40% (Seg 4 doing about 250K now it was 325K ) since they changed to 10 grids. So if the profits are growing as Weddle indicated it appears the GP's are holding on to more of the profit. Am I correct in my assumption?
[quote=BigCheese]
Cmon B...
If you can't make a profit should you earn the kind of money that Reamy is. I just don't get it. Weddle wants to grow by 100 FA's even though Canada hasn't made a lick of profit in 15 years.
I think this has alot more to do about the egos of GP's who don't want to admit the move to Canada is a mistake. Time to cut bait. Curious that they want the US FA's to produce more and yet they admit that they have a drain on profits in Canada. If I were a US FA I wouldn't be happy with my bonus income especially in the face of the continuous bleeding.
What's the current bonus bracket? I hear from one of my friends that his bonus has been cut by almost 40% (Seg 4 doing about 250K now it was 325K ) since they changed to 10 grids. So if the profits are growing as Weddle indicated it appears the GP's are holding on to more of the profit. Am I correct in my assumption?
[/quote]
BC, I'm not necessarily in disagreement. The point that I was trying to make is that they were obviously able to set aside their "egos" to shutter the UK, and would likely do the same in Canada. However, there are a couple of different potential scenarios being played out here....(1) they have a plan that they feel will get them profitable within an acceptable amount of time, (2) shutting down Canada would cost them more in the long run than trying to break-even operationally in Canada, or (3) they are waiting for the right offer/opportunity to sell Canada.
My guess is that it is #1, with some of #2 mixed in. Either way, they can't announce it to the world, especially if #3 is a possibility (hence the way UK went down). In any case, it's not always as easy as just throwing up your hands and giving up. Ditching Canada would probably be the simplist thing to do, but there are so many reasons why they might not want to do that, and 99% of it is financial. If they could unload Canada, including all the real estate, and not lose their shirts, they might have already done it. But since they are coming closer and closer to break-even, continuing operations probably costs them LESS than shuttering it. So even if it takes them 5 more years to break even, the loss has narrowed so much, that it makes the most economic sense, and then future new branches have a much greater profit contribution to the operation. On top of that, they probably have a lot of scale in Canada (i.e. can add many more branches without much home office overhead).
But even if #3 (selling) is on the table, they can't even hint at that as a possibility for obvious reasons. We may come in tomorrow to find out we are now a 100% domestic company again. Who knows. But either way, Im not losing sleep over it. It's pure economics, and I highly doubt that GP egos are driving this thing. If anything, GP egos are putting pressure on to either make it work or get rid of it.
Honestly BC, I think you "personalize" the whole Jones thing too much. I think most of the decisions that are made (at least currently, I can't speak for the past) are purely economic and based on a rational business process. I have been around the block in other industries in high-level finance roles, and I have seen how large organizations run. I have to say that I am impressed with the current business philosophy that Jones has adopted the past few years. I don't necessarily agree with their tactics in all areas (which we've discussed ad nauseum), but their overall strategy is rather sound, IMHO.
As far as bonuses and LP/GP returns, I have no idea. I have not heard anyone complain that the current bonus structure pays them less. Obviously the financial results and the economy has given them, a big pay cut, so it's hard to compare apples-to-apples. They have a calculator on the system that allows you to compare your bonus pre-and-post accounting change. From what I understood, 95% of people would make roughly the same or more, with 5% making less (in unique branch situations). I do think that the whole system sucks for big producers in bad years (when bonuses go away). But on the flipside, it can be great in good times, so it sort of balances itself out over time. One of the biggest prodcuers in our region (who actually only does like 850K) said that during real good years, his payout is over 60%, not including his LP and SLP (former RL/GP) and 401K profit sharing, but like last year, was back to 40%-ish (plus profit sharing). Sucks to have a 150K+ pay cut in a bad year for the firm. Not that I feel bad - he has like $1mm in LP/SLP, so he's bringing down $200-250K+ just in partnership returns each year.
B-
I too am impressed with Weddle. I think he has taken on the old guard and shown great leadership with the exception of the Canadian experiment. You are spot on, he can't divulge his plan, especially if he's looking to sell the Canadian operation.
As an independent business owner, I am constantly trying to make my businesss more efficient. In my biz, I have to analyze every aspect. If something isn't working I have to decide whether to continue, modify, or abandon. I haven't got 15 years to decide. When my profits are drained I feel it. As an employee of Jones, you can't control much other than your revenue. When you get to the point of concern over expenses you can't control (i.e., Canada etc) and your income is impacted...you will care much more.
b24, I assume you are referring to all the leasing when you refer to Canadian real-estate as ejc doesn't own any property north of the 49°. This probably why no new plans for "new" sub-branch locations have been annouced as most nuubies are housed in existing locations (usually in the back or the conference room).
Weddle is part of the new guard how do you figure that one, FYI - guess who his main competition to become managing partner was. Hint his operation used to loose betwen 2.5 and 3 million a month but according to some he has turned the tide and is only loosing 1.0 million a month.