Later this week, Leucadia National (JEF -0.68%) will report its earnings for the third quarter, and there are three things investors need to watch when this "baby Berkshire" announces its results.

Jefferies' growth prospects
When Leucadia announced its second-quarter results, its investment-banking arm, Jefferies, which was fully acquired in March 2013, reported record earnings. Some questioned the takeover of Jefferies when it was announced over two years ago, but the move has proved to be a profitable one.

In fact, at its annual investor day early this fall, we learned that Jefferies' torrid growth has continued. Through the first nine months of the year, it once again reported both record earnings and revenue, with earnings climbing 30% through the nine-month period, versus all of 2012.



Source: Jefferies Group 2014 investor day presentation.

One of the most interesting remarks from Leucadia's management team following the second-quarter earnings announcement was this:

It is evident that the scale of the firm's opportunity has expanded meaningfully. Jefferies' position as the only U.S. non-bank, full-service global investment banking firm allows us to play a unique and increasingly important role for our clients. In the first half of 2014, the momentum of our franchise and broad client recognition of Jefferies' unique market position resulted in significant growth in Investment Banking, across debt and equity capital markets and advisory.

In short, management clearly thought this growth showed no sign of slowing down anytime soon -- and they were absolutely correct -- so it will be important to monitor how they evaluate their own growth prospects moving forward.

Source: Leucadia National Corporation 2014 investor meeting.

Can margins at Berkadia continue to expand?
Berkadia, Leucadia's commercial mortgage joint venture with Berkshire Hathaway (BRK.A -0.55%) (BRK.B -0.22%), had an interesting first half of the year. Although total loan originations fell by more than 30% -- which was on par with broader industry trends -- it saw its pre-tax income increase, as the chart to the right shows.

How did it manage to grow its income with falling loan originations? Part of the reason was the impressive expansion of its pre-tax margin, which rose from 27% through the first six months of 2013 to 31% in 2014.

This is an encouraging trend, because the broader industry expects there to be a commercial mortgage refinancing wave over the next four years. It's estimated that only $92 billion worth of loans will mature in 2014, versus an average of $170 billion from 2015 to 2018. 

If the company is able to maintain its margin at heightened levels with future revenue growth on the horizon, it could mean great things to this business and its bottom line.

Will Garcadia continue to outperform industry averages?
The final business I'll be closely monitoring is Garcadia, the network of used car dealerships that Leucadia has a 75% interest in. As management noted:

Garcadia's growth of new car sales year over year exceeded the U.S. industry average -- our same-store new-unit sales increased by 13.4% in the first half of 2014, while the industry was up 4.3%.

Leucadia National Corporation 2014 investor meeting.

The company says it has embraced technology in an effort to "accelerate inventory turn," and it is clearly doing an impressive job. As the chart to the left shows, this outperformance was even more remarkable at its dealerships located in Houston and throughout Iowa.

So the last thing to keep an eye on will be to better understand whether this outperformance was simply a six-month blip or an indicator of a truly differentiating competitive advantage.

Leucadia has an almost endless array of businesses it has invested in through the years, and these are just three of the things I'll be watching when it announces earnings this week.