Why Doesn't Jones Issue More LP Units?

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Lance Legstrong's picture
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Joined: 2005-01-12

Maybe some of your homies at HQ can explain to all of us why the GPs at EDJ have not issued any LPs units for the past couple of years?  This should be a fun post!

compliancejerk's picture
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Joined: 2004-12-03

Wasn't the last time LP was offered in 2000?

BigPayDay's picture
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CJ

LP was offered in 2003. It was not completed. All who accepted the offer have been earning profits on whatever amount they were offered even though they did not actually have to put any many up. LP has averaged 20%+ earnings over the last two years. The LP bonus pool continues to earn profits and will contine to earn profits until the next offer is completed. Not a bad deal.

Sorry to ruin your thread Lance.

You may want to take off the "It's The Capital Stupid" tagline. It's making you look rather stupid.

BPD

P.S. The Jones LP has averaged 22%+ over the last 15 years. Not a bad return considering that the stock market which has had one of it's best runs over that same period has only averaged about 11% comparitively.

compliancejerk's picture
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candybar,
you are correct, what I meant to say was that the last time an LP was ISSUED was 2000.
If your stement is correct AND your firm has collect ed the funds for an offering that was pulled then perhaps this is the next SEC investigation in the making. How can you offer , collect and credit an investment IF it doesn't have SEC approval?????
candybar I believe you are winner when it comes to awarding who looks stupid as it is ALWAYS about the Capital

BigPayDay's picture
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CJ,

You would think that someone that works in the compliance department like yourself would have better reading comprehension. Notice where I said "..didn't have to put any money up.." and "..lp bonus pool..".

Maybe you should just take your ball and go home.

BPD

troll's picture
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Joined: 2004-11-29

BigPayDay wrote:CJ LP was offered in 2003. It was not completed. All who accepted the offer have been earning profits on whatever amount they were offered even though they did not actually have to put any many up. LP has averaged 20%+ earnings over the last two years. The LP bonus pool continues to earn profits and will contine to earn profits until the next offer is completed. Not a bad deal. Sorry to ruin your thread Lance. You may want to take off the "It's The Capital Stupid" tagline. It's making you look rather stupid. BPD P.S. The Jones LP has averaged 22%+ over the last 15 years. Not a bad return considering that the stock market which has had one of it's best runs over that same period has only averaged about 11% comparitively.
It is an illiquid investment concentrated in a single private company.  Thus, risk/return would suggest that it SHOULD deliver better returns than the S&P 500 which is diversified and liquid, in order to compensate for the greater risk.

Cowboy93's picture
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Joined: 2005-05-10

Not to be picky, but isn't the "22% annually" a single year at a time (ie simple interest) whereas that S&P 500 11% is compounded--makes the numbers looks a lot different.  Obviously the LP has been a great investment, but you can't reinvest in more shares with your returns, can you?For simplicity, if you have 100 units and earn 20 units simple interest for 7 years, you have 240 units (100 + 7x20)...if you earn 10 units compounded annually, rule of 72 says you have about 200 units.  The former still gives you more units, but the difference (240 vs. 200) isn't as stark as a "I got 20% and you got 10%" comparison would make it sound.
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Lance Legstrong's picture
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Again The Question:

Why hasn't EDJ issued LP units in over 5 years?

Revealer's picture
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Joined: 2005-02-13

22% per year?? Gee, Warren Buffett is jealous.

troll's picture
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Joined: 2004-11-29

Lance Legstrong wrote:Again The Question: Why hasn't EDJ issued LP units in over 5 years?
Most likely:
a.)  Regulatory issues make it impossible...they're having to spend too much time and energy elsewhere.
b.)  There is something else in the way of big problems that they would legally have to disclose in the process of offering the units for sale.
c.)  They have nowhere to use new capital that would generate a sufficient return to support the payback on the LP's.  They can't earn above their cost of capital on new LP's, so issuing them would cut into the returns paid to the GP's.
I vote for C or B.

Uptick1's picture
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BIGPAYDAY
Just curious if you are going to comment on Cowboy93s remarks or are you still wiping egg off your face?
"It's the MATH stupid"
 

Beagle's picture
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Joined: 2005-03-21

I guess I don't understand - what does it matter to you whether Jones
issues more LP units?  Unless you are a current or prospective LP
Unit holder, isn't this a worthless point?

Unless your sole purpose in life is bashing the company.  I don't work for Jones so it doesn't effect my life in the least.

compliancejerk's picture
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Joined: 2004-12-03

Beagle
you don't know the history of all of us "darker siders", so you don't understand why we're always slammin' the only firm that does right by it's clients.

Lance Legstrong's picture
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Joined: 2005-01-12

I just enjoy reading the post that the Kool Aid drinkers post. 
The fact is that EDJ can not issue any kind of equity capital units due
to its pending litigation exposure

noggin's picture
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Joined: 2004-11-30

Thanks Captain Obvious!!

unsunghero's picture
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Joined: 2005-07-12

BPD,
Are you still trying to figure out Cowboys math on you Jones terminal.  Here's a hint: Use your Putnam sliding calculator(shows 10k growing at diff rates over diff lengths of time), that's a better tool than most of the tech your firm provides.
Noggin,
Captain Obvious?  Here's a question with a less than obvious answer: Why are you still at Jones?

BigPayDay's picture
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Cowboy93 wrote: Not to be picky, but isn't the "22% annually" a single year at a time (ie simple interest) whereas that S&P 500 11% is compounded--makes the numbers looks a lot different.  Obviously the LP has been a great investment, but you can't reinvest in more shares with your returns, can you?For simplicity, if you have 100 units and earn 20 units simple interest for 7 years, you have 240 units (100 + 7x20)...if you earn 10 units compounded annually, rule of 72 says you have about 200 units.  The former still gives you more units, but the difference (240 vs. 200) isn't as stark as a "I got 20% and you got 10%" comparison would make it sound.

Cowboy93, Unsung,

Gees....let me think. Would I rather have 22% simple interest over the past 15 years or 11% compounded. You don't really need to use fancy math to figure this one out. A pretty week argument. My earnings from my partnership over the last 15 years have gone directly into various equity mutual funds. The Jones partnership has been the best investment I have ever made. Period.

BPD

troll's picture
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Joined: 2004-11-29

BigPayDay wrote: Cowboy93 wrote: Not to be picky, but isn't the "22% annually" a single year at a time (ie simple interest) whereas that S&P 500 11% is compounded--makes the numbers looks a lot different.  Obviously the LP has been a great investment, but you can't reinvest in more shares with your returns, can you?For simplicity, if you have 100 units and earn 20 units simple interest for 7 years, you have 240 units (100 + 7x20)...if you earn 10 units compounded annually, rule of 72 says you have about 200 units.  The former still gives you more units, but the difference (240 vs. 200) isn't as stark as a "I got 20% and you got 10%" comparison would make it sound. Cowboy93, Unsung, Gees....let me think. Would I rather have 22% simple interest over the past 15 years or 11% compounded. You don't really need to use fancy math to figure this one out. A pretty week argument. My earnings from my partnership over the last 15 years have gone directly into various equity mutual funds. The Jones partnership has been the best investment I have ever made. Period. BPD
Good for you!

unsunghero's picture
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Joined: 2005-07-12

Lance Legstrong wrote:
Maybe some of your homies at HQ can explain to all of us why the GPs at EDJ have not issued any LPs units for the past couple of years?  This should be a fun post!

Here's a hint:
Bill Lockyear. 

BigPayDay's picture
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BigPayDay wrote: Cowboy93 wrote: Not to be picky, but isn't the "22% annually" a single year at a time (ie simple interest) whereas that S&P 500 11% is compounded--makes the numbers looks a lot different.  Obviously the LP has been a great investment, but you can't reinvest in more shares with your returns, can you?For simplicity, if you have 100 units and earn 20 units simple interest for 7 years, you have 240 units (100 + 7x20)...if you earn 10 units compounded annually, rule of 72 says you have about 200 units.  The former still gives you more units, but the difference (240 vs. 200) isn't as stark as a "I got 20% and you got 10%" comparison would make it sound.

Cowboy93, Unsung,

Gees....let me think. Would I rather have 22% simple interest over the past 15 years or 11% compounded. You don't really need to use fancy math to figure this one out. A pretty week argument. My earnings from my partnership over the last 15 years have gone directly into various equity mutual funds. The Jones partnership has been the best investment I have ever made. Period.

BPD

You asked me to comment on Cowboys93 question. I have. No comment?

Didn't think so. Maybe you need to take your ball and go home.

BPD

Cowboy93's picture
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Joined: 2005-05-10

Owning a growing company is a wonderful investment, so I have no doubt that even semi-ownership (LP) has been as EJ has grown from 300 to 9000 brokers in the last 25 years.  I was merely pointing out that return difference is not as simple as "22 vs. 11."
But more importantly, for the newer EJ broker--and statistically speaking the vast majority ARE junior in the biz--whose end of the rainbow is just over the horizon, I'd remember this little saying I came up with:  past performance is no guarantee of future results.
If you want to look backwards, give me Calamos Growth or Vanguard Health Care funds (and their corresponding 15 year total returns).  Because someone happened to fall into the best investment of their life, doesn't mean luck and skill have become the same thing.
However, I DO NOT begrudge the presumably phenomenal returns a real EJ partner received, because he/she took risk when it wasn't clear that Jones would grow to the size they are now...I say presumably because I can only guess that their incomes are substantial for the nice size incomes they give up, not to mention having to move to St Louis.  However, past performance blah blah blah...and it's harder to become a partner when you've got 5000 other junior folks competing for it vs. 200 back in the day.  This is why the "pyramid scheme" comparison comes in--many new Jonesers are sold on the story of the guy who signed up in '82, but I can ALMOST guarantee that the '03 hire will NOT experience the same financial success (as an owner of a fast growing firm) that the '82 did.  Aint gonna happen...but good (I'm sorry--probably lucky) for the '82 guy.

exdrone's picture
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Joined: 2005-07-01

Giddyup!

BigPayDay's picture
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If the market decling 40% and a $75 Million dollar settlement won't stop Edward Jones, what will Cowboy93?

exdrone's picture
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The law of diminishing returns.

BigPayDay's picture
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So you see the growth of the financial services industry slowing over the coming years?

exdrone's picture
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I dont know about that, but I think that growing a firm with 10,000 brokers is alot different than growing one with 1000.  With larger scale managment becomes more challenging.  The flat IR growth of the last couple years would probably look diff if Jones was smaller.  This will get more challenging as the firm gets bigger.  Also, with size comes more attention, both good and bad.  I think we've seen a little of that lately too.  I dont think keepin up the past rate of growth is impossible, but it will certainly be more challenging.  Time will tell if the firm and it's management are up to it.

BigPayDay's picture
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Ex,

You'd be suprised how strong Edward Jones management team is. And they realize that the managing partners of the past have had to much power and responsibility. This is changing as Jim is taking over.

You are correct it will be more difficult to grow the firm as fast as it has grown in the past. No doubt. Jones is the only non independent to grow over the past five years however. Once CA is done (may be awhile) and future partnerships come out this will help immensely. I believe there will be a partnership this year. I know you non Jones people are rooting against it. Sorta like when the Yankees are in the World Series and if you are not a Yankee fan, rooting against them. It's just fun to root against the Yankees. They are certainly a dynasty. This is why folks like to root against Edward Jones as well. Damon a Yankee, that must have pissed some people off!

BPD

noggin's picture
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unsunghero wrote:
BPD,
Are you still trying to figure out Cowboys math on you Jones terminal.  Here's a hint: Use your Putnam sliding calculator(shows 10k growing at diff rates over diff lengths of time), that's a better tool than most of the tech your firm provides.
Noggin,
Captain Obvious?  Here's a question with a less than obvious answer: Why are you still at Jones?

Because I don't have 40M AUM yet.

troll's picture
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Joined: 2004-11-29

SonnyClips wrote:You know comparing Jones to the Yankees just cries out for a rebuke. Besides guess who is second only to the Yankees winning the pennant... thats right the Cardinals. Lets say all these haters are like Cubs fans and we're the Cardinals. Fcuk the Yankees... and all those bandwagon riding idiots who where those goddam Red Sox hats... not the team just assholes who ran right out and bought one after they finally won a World Series.
comparing Jones to ANY team of MAJOR LEAGUE professionals deserves a rebuke if you ask me....
They're more like the P.R. Winter League teams......fellas who might move up to 'the bigs" one day...

Indyone's picture
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Joined: 2005-05-31

noggin wrote:unsunghero wrote: 
Noggin,
Captain Obvious?  Here's a question with a less than obvious answer: Why are you still at Jones?

Because I don't have 40M AUM yet.

I'll give you credit for using your "noggin" on that one.  Those who take their time and build their business as they plan their exit are in a much better position to succeed when they make the move.  Take extra good care of your A-list clients and spend at least six months planning your exit if/when you decide to make the move...
...and in the meantime, stay away fom that Kool-Aid!!!

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