Jefferies' 2024 investor day is a paean to countercyclical hiring

Next time the investment banking industry falls into a multi-year dealmaking quagmire, senior executives and strategy-setters may want to take out their bank's cheque books and hire, hire and hire again. 

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This is what Jefferies has been doing. And in today's investor day presentation, Jefferies says it's a strategy that has worked out very well. 

This time last year, Jefferies predicted it would have 360 managing directors (MDs) by the end of 2023, of whom it said more than half would have joined in the previous three years. Jefferies' 2024 investor presentation suggests it has since beaten that target, with 364 MDs globally, and that this is a very good thing. 

Source: Jefferies 

As the chart below shows, Jefferies specifically ascribes its increased market share in M&A advisory and equity capital markets (ECM) to its investment in all this talent. Banks that didn't set out to hire talent have flatlined. Banks like Barclays, that lost managing directors, have lost market share. 

Source: Jefferies 

While Jefferies says most of its global hiring happened in 2020, search firm Sheffield Haworth says Jefferies' US MD hiring peaked in 2023, when it added 23 new MDs in America. There have been exits too, though. Sheffield Haworth thinks Jefferies has added 48 US MDs since 2021, and that 26 have left for competitors. 

In investment banking, much of Jefferies' global hiring has been in industrials and TMT.  

Source: Jefferies 

However, today's 2024 investor day presentation stresses that Jefferies has been adding staff in sales and trading too. The bank has launched an equity research offering in Canada, MENA and Latin America, and has hired a new life sciences analyst in the US. It's also increased its fixed income sales and trading staff 41% since 2019 and has doubled the size of its investor relations and marketing team to 26 people. 

In every case, Jefferies says the revenue increase has outweighed the recruitment cost. In fixed income sales and trading, for example, revenues have increased 2.4 times since 2019.

Like most other banks, Jefferies thinks investment banking revenues are now on a multi-year upwards trajectory. As the chart below (from today's presentation), shows, revenues have a long way to go if they are to match the rise in equities valuations.  

If Jefferies predictions come to pass, and investment banking fees rise 50% in the coming years, other banks might wish they'd hired hundreds of bankers since 2019 too. 

Source: Jefferies

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