|
(Mark One)
|
|
Q
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
For the quarterly period ended June 30, 2019
|
|
or
|
|
o
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
For the transition period from to
|
Delaware
(State or Other Jurisdiction of
Incorporation or Organization)
|
27-0423711
(I.R.S. Employer
Identification No.)
|
599 Lexington Avenue
New York, New York
(Address of Principal Executive Offices)
|
10022
(Zip Code)
|
Title of Each Class
|
|
Trading Symbol
|
|
Name of Exchange on Which Registered
|
Class A Common Stock, par value $0.01 per share
|
|
COWN
|
|
The Nasdaq Global Market
|
7.35% Senior Notes due 2027
|
|
COWNZ
|
|
The Nasdaq Global Market
|
7.75% Senior Notes due 2033
|
|
COWNL
|
|
The Nasdaq Global Market
|
|
Large accelerated filer
o
|
|
Accelerated filer
Q
|
|
Non-accelerated filer
o
|
|
Smaller reporting company
o
|
|
Emerging growth company
o
|
|
Item No.
|
|
|
Page No.
|
|
|
|
|||
|
|
|||
|
|
|||
|
|
|||
|
|
|||
|
|
|
||
|
|
|
||
|
|
|||
|
|
|||
|
|
|||
|
||||
|
|
|||
|
|
|||
|
|
|||
|
|
|||
|
|
|||
|
|
|||
|
|
|||
Cowen Inc.
Condensed Consolidated Statements of Financial Condition
(dollars in thousands, except share and per share data)
(unaudited)
|
|||||||
Assets
|
As of June 30, 2019
|
|
As of December 31, 2018
|
||||
Cash and cash equivalents
|
$
|
182,400
|
|
|
$
|
259,148
|
|
Cash collateral pledged
|
7,097
|
|
|
6,318
|
|
||
Segregated cash
|
139,070
|
|
|
176,647
|
|
||
Securities owned, at fair value ($224,264 and $57,583 were pledged to various parties)
|
900,346
|
|
|
520,888
|
|
||
Receivable on derivative contracts, at fair value
|
32,220
|
|
|
25,125
|
|
||
Securities borrowed
|
1,390,366
|
|
|
407,795
|
|
||
Other investments ($146,133 and $141,236 at fair value, respectively)
|
200,297
|
|
|
181,407
|
|
||
Deposits with clearing organizations, brokers and banks
|
97,723
|
|
|
89,423
|
|
||
Receivable from brokers, dealers and clearing organizations, net of allowance of $780 and $472, respectively
|
617,368
|
|
|
786,113
|
|
||
Receivable from customers, net of allowance of $563 and $516, respectively
|
87,480
|
|
|
37,858
|
|
||
Fees receivable, net of allowance of $915 and $1,569, respectively
|
126,500
|
|
|
111,946
|
|
||
Due from related parties
|
29,007
|
|
|
33,870
|
|
||
Fixed assets, net of accumulated depreciation and amortization of $29,684 and $31,630, respectively
|
27,728
|
|
|
26,443
|
|
||
Operating lease right-of-use assets
|
101,628
|
|
|
—
|
|
||
Goodwill
|
137,728
|
|
|
60,678
|
|
||
Intangible assets, net of accumulated amortization of $44,633 and $38,093, respectively
|
40,604
|
|
|
24,943
|
|
||
Deferred tax asset, net
|
86,464
|
|
|
93,057
|
|
||
Other assets, net of allowance of $11 and $0, respectively
|
105,265
|
|
|
79,014
|
|
||
Consolidated Funds
|
|
|
|
||||
Cash and cash equivalents
|
3,357
|
|
|
38,118
|
|
||
Securities owned, at fair value
|
345,292
|
|
|
187,633
|
|
||
Receivable on derivative contracts, at fair value
|
4,454
|
|
|
4,416
|
|
||
Other investments
|
177,828
|
|
|
186,395
|
|
||
Receivable from brokers
|
19,524
|
|
|
8,328
|
|
||
Other assets
|
2,436
|
|
|
740
|
|
||
Total Assets
|
$
|
4,862,182
|
|
|
$
|
3,346,303
|
|
Liabilities and Stockholders' Equity
|
|
|
|
||||
Liabilities
|
|
|
|
||||
Securities sold, not yet purchased, at fair value
|
$
|
438,584
|
|
|
$
|
195,307
|
|
Payable for derivative contracts, at fair value
|
22,445
|
|
|
16,082
|
|
||
Securities loaned
|
1,492,986
|
|
|
414,852
|
|
||
Payables to brokers, dealers and clearing organizations
|
241,012
|
|
|
228,731
|
|
||
Payable to customers
|
428,146
|
|
|
525,153
|
|
||
Commission management payable
|
96,731
|
|
|
95,270
|
|
||
Compensation payable
|
117,634
|
|
|
223,994
|
|
||
Operating lease liabilities
|
106,873
|
|
|
—
|
|
||
Notes payable and other debt
|
315,290
|
|
|
262,965
|
|
||
Convertible debt
|
116,273
|
|
|
134,489
|
|
||
Fees payable
|
45,881
|
|
|
22,565
|
|
||
Due to related parties
|
675
|
|
|
571
|
|
||
Accounts payable, accrued expenses and other liabilities
|
162,921
|
|
|
110,423
|
|
||
Consolidated Funds
|
|
|
|
||||
Payable for derivative contracts, at fair value
|
2,616
|
|
|
1,663
|
|
||
Payable to brokers
|
11,126
|
|
|
23,521
|
|
||
Capital withdrawals payable
|
4,759
|
|
|
11,106
|
|
||
Accounts payable, accrued expenses and other liabilities
|
494
|
|
|
424
|
|
||
Total Liabilities
|
$
|
3,604,446
|
|
|
$
|
2,267,116
|
|
Cowen Inc.
Condensed Consolidated Statements of Financial Condition
(dollars in thousands, except share and per share data)
(unaudited)
|
|||||||
|
As of June 30, 2019
|
|
As of December 31, 2018
|
||||
(continued)
|
|
|
|
||||
Commitments and Contingencies (Note 17)
|
|
|
|
||||
Redeemable non-controlling interests
|
$
|
440,312
|
|
|
$
|
284,780
|
|
Stockholders' equity
|
|
|
|
||||
Preferred stock, par value $0.01 per share: 10,000,000 shares authorized, 120,750 shares issued and outstanding as of June 30, 2019 (aggregate liquidation preference of $120,750,000) and 10,000,000 shares authorized, 120,750 shares issued and outstanding as of December 31, 2018 (aggregate liquidation preference of $120,750,000), respectively
|
$
|
1
|
|
|
$
|
1
|
|
Class A common stock, par value $0.01 per share: 62,500,000 shares authorized, 46,144,900 shares issued and 29,480,287 outstanding as of June 30, 2019 and 62,500,000 shares authorized, 43,774,731 shares issued and 28,437,860 outstanding as of December 31, 2018, respectively (including 174,285 and 253,772 restricted shares, respectively)
|
334
|
|
|
324
|
|
||
Class B common stock, par value $0.01 per share: 62,500,000 authorized, no shares issued and outstanding as of June 30, 2019 and December 31, 2018, respectively
|
—
|
|
|
—
|
|
||
Additional paid-in capital
|
1,093,898
|
|
|
1,062,877
|
|
||
(Accumulated deficit) retained earnings
|
(22,449
|
)
|
|
(34,648
|
)
|
||
Accumulated other comprehensive income (loss)
|
(3
|
)
|
|
(5
|
)
|
||
Less: Class A common stock held in treasury, at cost, 16,664,613 and 15,336,871 shares as of June 30, 2019 and December 31, 2018, respectively
|
(254,357
|
)
|
|
(234,142
|
)
|
||
Total Stockholders' Equity
|
$
|
817,424
|
|
|
$
|
794,407
|
|
Total Liabilities and Stockholders' Equity
|
$
|
4,862,182
|
|
|
$
|
3,346,303
|
|
Cowen Inc.
Condensed Consolidated Statements of Operations
(in thousands, except per share data)
(unaudited)
|
|||||||||||||||
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Revenues
|
|
|
|
|
|
|
|
||||||||
Investment banking
|
$
|
114,705
|
|
|
$
|
84,826
|
|
|
$
|
194,811
|
|
|
$
|
182,814
|
|
Brokerage
|
111,382
|
|
|
103,285
|
|
|
208,845
|
|
|
209,018
|
|
||||
Management fees
|
7,039
|
|
|
7,373
|
|
|
14,180
|
|
|
14,790
|
|
||||
Incentive income
|
8
|
|
|
48
|
|
|
23
|
|
|
64
|
|
||||
Interest and dividends
|
40,047
|
|
|
25,109
|
|
|
69,139
|
|
|
51,063
|
|
||||
Reimbursement from affiliates
|
254
|
|
|
336
|
|
|
542
|
|
|
713
|
|
||||
Aircraft lease revenue
|
—
|
|
|
419
|
|
|
—
|
|
|
1,134
|
|
||||
Reinsurance premiums
|
14,331
|
|
|
9,226
|
|
|
20,922
|
|
|
17,873
|
|
||||
Other revenues
|
930
|
|
|
876
|
|
|
1,991
|
|
|
2,212
|
|
||||
Consolidated Funds
|
|
|
|
|
|
|
|
||||||||
Interest and dividends
|
3,449
|
|
|
3,075
|
|
|
5,774
|
|
|
6,271
|
|
||||
Other revenues
|
19
|
|
|
—
|
|
|
34
|
|
|
5
|
|
||||
Total revenues
|
292,164
|
|
|
234,573
|
|
|
516,261
|
|
|
485,957
|
|
||||
Interest and dividends expense
|
39,528
|
|
|
24,306
|
|
|
68,612
|
|
|
48,846
|
|
||||
Total net revenues
|
252,636
|
|
|
210,267
|
|
|
447,649
|
|
|
437,111
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Expenses
|
|
|
|
|
|
|
|
||||||||
Employee compensation and benefits
|
135,984
|
|
|
131,845
|
|
|
266,172
|
|
|
266,985
|
|
||||
Brokerage and trade execution costs
|
27,124
|
|
|
28,902
|
|
|
52,770
|
|
|
59,100
|
|
||||
Underwriting expenses
|
6,406
|
|
|
4,785
|
|
|
9,537
|
|
|
8,848
|
|
||||
Professional, advisory and other fees
|
13,620
|
|
|
5,819
|
|
|
23,861
|
|
|
12,843
|
|
||||
Service fees
|
5,659
|
|
|
4,852
|
|
|
11,323
|
|
|
10,047
|
|
||||
Communications
|
8,278
|
|
|
7,106
|
|
|
16,359
|
|
|
14,672
|
|
||||
Occupancy and equipment
|
10,454
|
|
|
10,384
|
|
|
20,376
|
|
|
20,245
|
|
||||
Depreciation and amortization
|
4,952
|
|
|
3,194
|
|
|
9,908
|
|
|
6,419
|
|
||||
Client services and business development
|
11,884
|
|
|
7,865
|
|
|
23,185
|
|
|
16,096
|
|
||||
Goodwill impairment
|
4,100
|
|
|
—
|
|
|
4,100
|
|
|
—
|
|
||||
Reinsurance claims, commissions and amortization of deferred acquisition costs
|
10,782
|
|
|
9,924
|
|
|
16,944
|
|
|
18,655
|
|
||||
Other expenses
|
5,638
|
|
|
5,591
|
|
|
9,653
|
|
|
9,672
|
|
||||
Consolidated Funds
|
|
|
|
|
|
|
|
||||||||
Interest and dividends
|
1,356
|
|
|
2,479
|
|
|
2,223
|
|
|
4,390
|
|
||||
Professional, advisory and other fees
|
373
|
|
|
345
|
|
|
518
|
|
|
557
|
|
||||
Brokerage and trade execution costs
|
35
|
|
|
89
|
|
|
88
|
|
|
153
|
|
||||
Other expenses
|
467
|
|
|
236
|
|
|
884
|
|
|
480
|
|
||||
Total expenses
|
247,112
|
|
|
223,416
|
|
|
467,901
|
|
|
449,162
|
|
||||
Other income (loss)
|
|
|
|
|
|
|
|
||||||||
Net gains (losses) on securities, derivatives and other investments
|
3,910
|
|
|
16,719
|
|
|
42,994
|
|
|
32,688
|
|
||||
Gain/(loss) on debt extinguishment
|
—
|
|
|
(556
|
)
|
|
—
|
|
|
(556
|
)
|
||||
Consolidated Funds
|
|
|
|
|
|
|
|
||||||||
Net realized and unrealized gains (losses) on investments and other transactions
|
6,536
|
|
|
28,268
|
|
|
9,180
|
|
|
44,004
|
|
||||
Net realized and unrealized gains (losses) on derivatives
|
(719
|
)
|
|
2,119
|
|
|
(1,481
|
)
|
|
4,594
|
|
||||
Net gains (losses) on foreign currency transactions
|
(35
|
)
|
|
598
|
|
|
(59
|
)
|
|
252
|
|
||||
Total other income (loss)
|
9,692
|
|
|
47,148
|
|
|
50,634
|
|
|
80,982
|
|
||||
Income (loss) before income taxes
|
15,216
|
|
|
33,999
|
|
|
30,382
|
|
|
68,931
|
|
||||
Income tax expense (benefit)
|
5,073
|
|
|
3,993
|
|
|
8,250
|
|
|
10,916
|
|
||||
Net income (loss)
|
10,143
|
|
|
30,006
|
|
|
22,132
|
|
|
58,015
|
|
||||
|
|
|
|
|
|
|
|
||||||||
|
|
|
|
|
|
|
|
||||||||
|
|
|
|
|
|
|
|
||||||||
|
|
|
|
|
|
|
|
Cowen Inc.
Condensed Consolidated Statements of Operations
(in thousands, except per share data)
(unaudited)
|
|||||||||||||||
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
(continued)
|
|
|
|
|
|
|
|
||||||||
Net income (loss) attributable to redeemable non-controlling interests in consolidated subsidiaries and investment funds
|
4,331
|
|
|
24,607
|
|
|
6,537
|
|
|
35,763
|
|
||||
Net income (loss) attributable to Cowen Inc.
|
5,812
|
|
|
5,399
|
|
|
15,595
|
|
|
22,252
|
|
||||
Preferred stock dividends
|
1,698
|
|
|
1,698
|
|
|
3,396
|
|
|
3,396
|
|
||||
Net income (loss) attributable to Cowen Inc. common stockholders
|
$
|
4,114
|
|
|
$
|
3,701
|
|
|
$
|
12,199
|
|
|
$
|
18,856
|
|
|
|
|
|
|
|
|
|
||||||||
Weighted average common shares outstanding:
|
|
|
|
|
|
|
|
|
|
|
|||||
Basic
|
29,769
|
|
|
29,769
|
|
|
29,766
|
|
|
29,688
|
|
||||
Diluted
|
31,522
|
|
|
30,720
|
|
|
31,572
|
|
|
30,460
|
|
||||
Earnings (loss) per share:
|
|
|
|
|
|
|
|
||||||||
Basic
|
$
|
0.14
|
|
|
$
|
0.12
|
|
|
$
|
0.41
|
|
|
$
|
0.64
|
|
Diluted
|
$
|
0.13
|
|
|
$
|
0.12
|
|
|
$
|
0.39
|
|
|
$
|
0.62
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||||||||||||||
Net income (loss)
|
|
|
$
|
10,143
|
|
|
|
|
$
|
30,006
|
|
|
|
|
$
|
22,132
|
|
|
|
|
$
|
58,015
|
|
||||
Other comprehensive income (loss), net of tax:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Foreign currency translation
|
2
|
|
|
|
|
—
|
|
|
|
|
2
|
|
|
|
|
1
|
|
|
|
||||||||
Total other comprehensive income (loss), net of tax
|
|
|
2
|
|
|
|
|
—
|
|
|
|
|
2
|
|
|
|
|
1
|
|
||||||||
Comprehensive income (loss)
|
|
|
$
|
10,145
|
|
|
|
|
$
|
30,006
|
|
|
|
|
$
|
22,134
|
|
|
|
|
$
|
58,016
|
|
|
Common Shares Outstanding
|
|
Common Stock
|
|
Preferred Shares Outstanding
|
|
Preferred Stock
|
|
Treasury Stock
|
|
Additional
Paid-in Capital
|
|
Accumulated Other Comprehensive Income (Loss)
|
|
Retained Earnings/ (Accumulated deficit)
|
|
Total Stockholders' Equity
|
|
Redeemable Non-controlling Interest
|
||||||||||||||||||
Balance, March 31, 2019
|
29,580,687
|
|
|
$
|
334
|
|
|
120,750
|
|
|
$
|
1
|
|
|
$
|
(243,519
|
)
|
|
$
|
1,084,534
|
|
|
$
|
(5
|
)
|
|
$
|
(26,563
|
)
|
|
$
|
814,782
|
|
|
$
|
418,277
|
|
Net income (loss) attributable to Cowen Inc.
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
5,812
|
|
|
5,812
|
|
|
—
|
|
||||||||
Net income (loss) attributable to redeemable non-controlling interests in consolidated subsidiaries and investment funds
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4,331
|
|
||||||||
Foreign currency translation
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2
|
|
|
—
|
|
|
2
|
|
|
—
|
|
||||||||
Capital contributions
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
40,622
|
|
||||||||
Capital withdrawals
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(22,918
|
)
|
||||||||
Restricted stock awards issued
|
585,383
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||||
Purchase of treasury stock, at cost
|
(685,783
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(10,838
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(10,838
|
)
|
|
|
|||||||||
Preferred stock dividends, $0.06/share (See Note 19)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,698
|
)
|
|
(1,698
|
)
|
|
—
|
|
||||||||
Amortization of share-based compensation
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
9,364
|
|
|
—
|
|
|
—
|
|
|
9,364
|
|
|
—
|
|
||||||||
Balance, June 30, 2019
|
29,480,287
|
|
|
$
|
334
|
|
|
120,750
|
|
|
$
|
1
|
|
|
$
|
(254,357
|
)
|
|
$
|
1,093,898
|
|
|
$
|
(3
|
)
|
|
$
|
(22,449
|
)
|
|
$
|
817,424
|
|
|
$
|
440,312
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
|
Common Shares Outstanding
|
|
Common Stock
|
|
Preferred Shares Outstanding
|
|
Preferred Stock
|
|
Treasury Stock
|
|
Additional
Paid-in Capital
|
|
Accumulated Other Comprehensive Income (Loss)
|
|
Retained Earnings/ (Accumulated deficit)
|
|
Total Stockholders' Equity
|
|
Redeemable Non-controlling Interest
|
||||||||||||||||||
Balance, March 31, 2018
|
29,517,218
|
|
|
$
|
324
|
|
|
120,750
|
|
|
$
|
1
|
|
|
$
|
(200,915
|
)
|
|
$
|
1,014,904
|
|
|
$
|
(7
|
)
|
|
$
|
(55,520
|
)
|
|
$
|
758,787
|
|
|
$
|
392,326
|
|
Net income (loss) attributable to Cowen Inc.
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
5,399
|
|
|
5,399
|
|
|
—
|
|
||||||||
Net income (loss) attributable to redeemable non-controlling interests in consolidated subsidiaries and funds
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
24,607
|
|
||||||||
Capital contributions
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
10,876
|
|
||||||||
Capital withdrawals
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(15,742
|
)
|
||||||||
Restricted stock awards issued
|
558,723
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||||
Purchase of treasury stock, at cost
|
(466,469
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(7,094
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(7,094
|
)
|
|
—
|
|
||||||||
Preferred stock dividends (See Note 19)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,698
|
)
|
|
(1,698
|
)
|
|
—
|
|
||||||||
Embedded cash conversion option (See Note 19)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
28,973
|
|
|
—
|
|
|
—
|
|
|
28,973
|
|
|
—
|
|
||||||||
Amortization of share-based compensation
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
8,840
|
|
|
—
|
|
|
—
|
|
|
8,840
|
|
|
—
|
|
||||||||
Balance, June 30, 2018
|
29,609,472
|
|
|
$
|
324
|
|
|
120,750
|
|
|
$
|
1
|
|
|
$
|
(208,009
|
)
|
|
$
|
1,052,717
|
|
|
$
|
(7
|
)
|
|
$
|
(51,819
|
)
|
|
$
|
793,207
|
|
|
$
|
412,067
|
|
|
Common Shares Outstanding
|
|
Common Stock
|
|
Preferred Shares Outstanding
|
|
Preferred Stock
|
|
Treasury Stock
|
|
Additional
Paid-in Capital
|
|
Accumulated Other Comprehensive Income (Loss)
|
|
Retained Earnings/ (Accumulated deficit)
|
|
Total Stockholders' Equity
|
|
Redeemable Non-controlling Interest
|
||||||||||||||||||
Balance, December 31, 2018
|
28,437,860
|
|
|
$
|
324
|
|
|
120,750
|
|
|
$
|
1
|
|
|
$
|
(234,142
|
)
|
|
$
|
1,062,877
|
|
|
$
|
(5
|
)
|
|
$
|
(34,648
|
)
|
|
$
|
794,407
|
|
|
$
|
284,780
|
|
Net income (loss) attributable to Cowen Inc.
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
15,595
|
|
|
15,595
|
|
|
—
|
|
||||||||
Net income (loss) attributable to redeemable non-controlling interests in consolidated subsidiaries and investment funds
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
6,537
|
|
||||||||
Foreign currency translation
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2
|
|
|
—
|
|
|
2
|
|
|
—
|
|
||||||||
Capital contributions
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
202,595
|
|
||||||||
Capital withdrawals
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(53,600
|
)
|
||||||||
Restricted stock awards issued
|
1,336,819
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||||
Purchase of treasury stock, at cost
|
(1,327,742
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(20,215
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(20,215
|
)
|
|
—
|
|
||||||||
Common stock issuance upon acquisition (See Note 3)
|
1,033,350
|
|
|
10
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
14,436
|
|
|
—
|
|
|
—
|
|
|
14,446
|
|
|
—
|
|
||||||||
Preferred stock dividends, $0.06/share (See Note 19)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(3,396
|
)
|
|
(3,396
|
)
|
|
—
|
|
||||||||
Embedded cash conversion option, net of tax (See Note 19)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(596
|
)
|
|
—
|
|
|
—
|
|
|
(596
|
)
|
|
—
|
|
||||||||
Amortization of share-based compensation
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
17,181
|
|
|
—
|
|
|
—
|
|
|
17,181
|
|
|
—
|
|
||||||||
Balance, June 30, 2019
|
29,480,287
|
|
|
$
|
334
|
|
|
120,750
|
|
|
$
|
1
|
|
|
$
|
(254,357
|
)
|
|
$
|
1,093,898
|
|
|
$
|
(3
|
)
|
|
$
|
(22,449
|
)
|
|
$
|
817,424
|
|
|
$
|
440,312
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
|
Common Shares Outstanding
|
|
Common Stock
|
|
Preferred Shares Outstanding
|
|
Preferred Stock
|
|
Treasury Stock
|
|
Additional
Paid-in Capital
|
|
Accumulated Other Comprehensive Income (Loss)
|
|
Retained Earnings/ (Accumulated deficit)
|
|
Total Stockholders' Equity
|
|
Redeemable Non-controlling Interest
|
||||||||||||||||||
Balance, December 31, 2017
|
29,632,020
|
|
|
$
|
324
|
|
|
120,750
|
|
|
$
|
1
|
|
|
$
|
(186,846
|
)
|
|
$
|
1,004,664
|
|
|
$
|
(8
|
)
|
|
$
|
(70,116
|
)
|
|
$
|
748,019
|
|
|
$
|
440,604
|
|
Cumulative effect of the adoption of the new revenue recognition standard (See Note 2)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(559
|
)
|
|
(559
|
)
|
|
—
|
|
||||||||
Net income (loss) attributable to Cowen Inc.
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
22,252
|
|
|
22,252
|
|
|
—
|
|
||||||||
Net income (loss) attributable to redeemable non-controlling interests in consolidated subsidiaries and funds
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
35,763
|
|
||||||||
Foreign currency translation
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|
—
|
|
|
1
|
|
|
—
|
|
||||||||
Capital contributions
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
19,136
|
|
||||||||
Capital withdrawals
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(50,877
|
)
|
||||||||
Deconsolidation of entity
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(32,559
|
)
|
||||||||
Restricted stock awards issued
|
1,439,755
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||||
Purchase of treasury stock, at cost
|
(1,462,303
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(21,163
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(21,163
|
)
|
|
—
|
|
||||||||
Preferred stock dividends (See Note 19)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(3,396
|
)
|
|
(3,396
|
)
|
|
—
|
|
||||||||
Embedded cash conversion option (See Note 19)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
28,973
|
|
|
—
|
|
|
—
|
|
|
28,973
|
|
|
—
|
|
||||||||
Amortization of share-based compensation
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
19,080
|
|
|
—
|
|
|
—
|
|
|
19,080
|
|
|
—
|
|
||||||||
Balance, June 30, 2018
|
29,609,472
|
|
|
$
|
324
|
|
|
120,750
|
|
|
$
|
1
|
|
|
$
|
(208,009
|
)
|
|
$
|
1,052,717
|
|
|
$
|
(7
|
)
|
|
$
|
(51,819
|
)
|
|
$
|
793,207
|
|
|
$
|
412,067
|
|
Cowen Inc.
Condensed Consolidated Statements of Cash Flows (dollars in thousands
(unaudited)
|
|||||||
|
Six Months Ended June 30,
|
||||||
|
2019
|
|
2018
|
||||
Cash flows from operating activities:
|
|
|
|
||||
Net income (loss)
|
$
|
22,132
|
|
|
$
|
58,015
|
|
Adjustments to reconcile net income (loss) to net cash provided by / (used in) operating activities:
|
|
|
|
||||
Depreciation and amortization
|
9,908
|
|
|
6,419
|
|
||
Amortization of debt issuance costs
|
509
|
|
|
656
|
|
||
Amortization of debt discount
|
2,419
|
|
|
2,871
|
|
||
Noncash lease expense
|
(1,632
|
)
|
|
—
|
|
||
Gain / (loss) on extinguishment of debt
|
—
|
|
|
652
|
|
||
Share-based compensation
|
17,181
|
|
|
19,080
|
|
||
Change in deferred taxes
|
5,997
|
|
|
10,953
|
|
||
Deferred rent obligations
|
—
|
|
|
(939
|
)
|
||
Net loss (gain) on disposal of fixed assets
|
97
|
|
|
155
|
|
||
Goodwill impairment
|
4,100
|
|
|
—
|
|
||
Purchases of securities owned, at fair value
|
(900,815
|
)
|
|
(2,525,789
|
)
|
||
Proceeds from sales of securities owned, at fair value
|
751,611
|
|
|
2,779,569
|
|
||
Proceeds from sales of securities sold, not yet purchased, at fair value
|
639,630
|
|
|
1,789,059
|
|
||
Payments to cover securities sold, not yet purchased, at fair value
|
(590,363
|
)
|
|
(1,940,907
|
)
|
||
Proceeds from the sale of other investments
|
8,174
|
|
|
3,870
|
|
||
Net (gains) losses on securities, derivatives and other investments
|
(42,314
|
)
|
|
(28,237
|
)
|
||
Consolidated Funds
|
|
|
|
||||
Purchases of securities owned, at fair value
|
(1,421,720
|
)
|
|
(306,995
|
)
|
||
Proceeds from sales of securities owned, at fair value
|
1,280,181
|
|
|
344,079
|
|
||
Purchases of other investments
|
(2,798
|
)
|
|
(1,414
|
)
|
||
Proceeds from sales of other investments
|
17,168
|
|
|
10,289
|
|
||
Net realized and unrealized (gains) losses on investments and other transactions
|
(22,496
|
)
|
|
(47,628
|
)
|
||
(Increase) decrease in operating assets:
|
|
|
|
||||
Securities owned, at fair value, held at broker-dealer
|
(201,355
|
)
|
|
(89,077
|
)
|
||
Receivable on derivative contracts, at fair value
|
(7,095
|
)
|
|
43,982
|
|
||
Securities borrowed
|
(982,571
|
)
|
|
(104,973
|
)
|
||
Deposits with clearing organizations, brokers and banks
|
(8,300
|
)
|
|
(660
|
)
|
||
Receivable from brokers, dealers and clearing organizations
|
168,745
|
|
|
(159,702
|
)
|
||
Receivable from customers, net of allowance
|
(49,622
|
)
|
|
(5,321
|
)
|
||
Fees receivable, net of allowance
|
(7,285
|
)
|
|
(32,917
|
)
|
||
Due from related parties
|
4,862
|
|
|
2,448
|
|
||
Other assets
|
(27,269
|
)
|
|
13,027
|
|
||
Consolidated Funds
|
|
|
|
||||
Cash and cash equivalents
|
34,816
|
|
|
5,590
|
|
||
Receivable on derivative contracts, at fair value
|
(38
|
)
|
|
882
|
|
||
Receivable from brokers
|
(11,196
|
)
|
|
(3,294
|
)
|
||
Other assets
|
(963
|
)
|
|
(91
|
)
|
||
Increase (decrease) in operating liabilities:
|
|
|
|
||||
Securities sold, not yet purchased, at fair value, held at broker-dealer
|
177,006
|
|
|
30,292
|
|
||
Payable for derivative contracts, at fair value
|
6,363
|
|
|
10,097
|
|
||
Securities loaned
|
1,078,134
|
|
|
(22,365
|
)
|
||
Payable to brokers, dealers and clearing organizations
|
12,281
|
|
|
(11,510
|
)
|
||
Payable to customers
|
(97,007
|
)
|
|
168,099
|
|
||
Commission management payable
|
1,461
|
|
|
21,721
|
|
||
Compensation payable
|
(119,012
|
)
|
|
(28,644
|
)
|
||
Fees payable
|
23,316
|
|
|
15,562
|
|
||
Due to related parties
|
(4,646
|
)
|
|
4
|
|
||
Accounts payable, accrued expenses and other liabilities
|
18,221
|
|
|
6,747
|
|
||
|
|
|
|
||||
|
|
|
|
||||
|
|
|
|
||||
|
|
|
|
Cowen Inc.
Condensed Consolidated Statements of Cash Flows (dollars in thousands
(unaudited)
|
|||||||
|
Six Months Ended June 30,
|
||||||
|
2019
|
|
2018
|
||||
|
|
|
|
||||
(continued)
|
|
|
|
||||
Consolidated Funds
|
|
|
|
||||
Payable to brokers
|
(12,395
|
)
|
|
1,241
|
|
||
Payable for derivative contracts, at fair value
|
953
|
|
|
(6,085
|
)
|
||
Accounts payable, accrued expenses and other liabilities
|
(144
|
)
|
|
225
|
|
||
Net cash provided by / (used in) operating activities
|
(225,771
|
)
|
|
29,036
|
|
||
Cash flows from investing activities:
|
|
|
|
||||
Purchases of other investments
|
(9,513
|
)
|
|
(20,227
|
)
|
||
Purchase of business (See Note 3)
|
(48,581
|
)
|
|
—
|
|
||
Proceeds from sales of other investments
|
12,867
|
|
|
13,295
|
|
||
Proceeds from loans held for investment
|
—
|
|
|
13
|
|
||
Purchase of fixed assets
|
(3,666
|
)
|
|
(1,397
|
)
|
||
Net cash provided by / (used in) investing activities
|
(48,893
|
)
|
|
(8,316
|
)
|
||
Cash flows from financing activities:
|
|
|
|
||||
Repayments on convertible debt
|
(20,860
|
)
|
|
(13,500
|
)
|
||
Deferred debt issuance cost
|
(1,480
|
)
|
|
(3,883
|
)
|
||
Borrowings on notes and other debt
|
55,175
|
|
|
105,516
|
|
||
Repayments on notes and other debt
|
(5,051
|
)
|
|
(2,987
|
)
|
||
Purchase of treasury stock
|
(8,079
|
)
|
|
(10,862
|
)
|
||
Contingent liability payment
|
(1,235
|
)
|
|
(570
|
)
|
||
Capital contributions by redeemable non-controlling interests in operating entities
|
11,110
|
|
|
200
|
|
||
Capital withdrawals to redeemable non-controlling interests in operating entities
|
(1,346
|
)
|
|
(1,113
|
)
|
||
Consolidated Funds
|
|
|
|
||||
Capital contributions by redeemable non-controlling interests in Consolidated Funds
|
191,485
|
|
|
18,937
|
|
||
Capital withdrawals to redeemable non-controlling interests in Consolidated Funds
|
(58,601
|
)
|
|
(58,136
|
)
|
||
Net cash provided by / (used in) financing activities
|
161,118
|
|
|
33,602
|
|
||
Change in cash and cash equivalents
|
(113,546
|
)
|
|
54,322
|
|
||
Cash and cash equivalents, including cash collateral pledged and segregated cash, beginning of period
|
442,113
|
|
|
264,208
|
|
||
Cash and equivalents at end of period:
|
|
|
|
||||
Cash and cash equivalents
|
182,400
|
|
|
207,708
|
|
||
Cash collateral pledged
|
7,097
|
|
|
15,513
|
|
||
Segregated cash
|
139,070
|
|
|
95,309
|
|
||
Cash and cash equivalents, including cash collateral pledged and segregated cash, end of period
|
$
|
328,567
|
|
|
$
|
318,530
|
|
Supplemental information
|
|
|
|
||||
Cash paid during the year for interest
|
$
|
52,260
|
|
|
$
|
39,061
|
|
Cash paid during the year for taxes
|
$
|
3,580
|
|
|
$
|
2,233
|
|
Supplemental non-cash information
|
|
|
|
||||
Purchase of treasury stock, at cost, through net settlement (See Note 19)
|
$
|
12,015
|
|
|
$
|
8,376
|
|
Preferred stock dividends declared (See Note 19)
|
$
|
3,396
|
|
|
$
|
3,396
|
|
Net assets (liabilities) acquired upon acquisition (net of cash)
|
$
|
90,727
|
|
|
$
|
—
|
|
Transfer of investment from consolidated funds, securities owned, fair value to securities owned, fair value
|
$
|
—
|
|
|
$
|
8,820
|
|
Initial recognition of operating lease right-of-use assets
|
$
|
103,694
|
|
|
$
|
—
|
|
Initial recognition of operating lease liabilities
|
$
|
110,505
|
|
|
$
|
—
|
|
Noncash transfer of net assets from Unconsolidated Master Fund to Consolidated Fund
|
$
|
97,655
|
|
|
$
|
—
|
|
Net decrease in redeemable non-controlling interests in Consolidated Funds due to deconsolidation of consolidated fund (See Note 2)
|
$
|
—
|
|
|
$
|
32,559
|
|
Separately recognized conversion option reclassification from a derivative liability to equity (Note 19)
|
$
|
—
|
|
|
$
|
28,973
|
|
Common stock issuance upon close of acquisition (see Note 3)
|
$
|
14,446
|
|
|
$
|
—
|
|
Notes to Condensed Consolidated Financial Statements
|
|
Page
|
|
|
|
||
|
|
||
|
|
||
|
|
||
|
|
||
|
|
||
|
|
||
|
|
||
|
|
||
|
|
||
|
|
||
|
|
||
|
|
||
|
|
||
|
|
||
|
|
||
|
|
||
|
|
||
|
|
||
|
|
||
|
|
||
|
|
||
|
|
||
|
|
||
|
|
||
|
|
•
|
The Op Co segment consists of four divisions: Cowen Investment Management
, Investment Banking, Markets, and Research. Each of Op Co’s four divisions leverage the Research division’s core domain expertise to drive harmonized repeatable revenue for the segment.
|
–
|
The CIM division offers innovative investment products and solutions across the liquidity spectrum to institutional and private clients. CIM offers investors access to a number of strategies to meet their specific needs including merger arbitrage, activism, healthcare royalties, private healthcare investing and private sustainable investing which leverage the content and domain expertise that are aligned with the Company's core areas of expertise ("Cowen DNA").
|
–
|
The Investment Banking division includes public and private capital raising transactions and providing strategic advisory services.
|
–
|
The Markets division includes trading equity and equity-linked securities on behalf of institutional investors as well as a full-service suite of prime brokerage services, cross-asset trading, securities finance, global execution, clearing and commission management businesses.
|
–
|
The Research division provides the thought leadership and domain expertise that drives Cowen DNA. The research content that is created helps to facilitate brokerage revenue in the Markets division, drive deal flow in the Investment Banking division and facilitate investor relationships and investing within CIM’s innovative investment products and solutions.
|
•
|
The Asset Co segment consists of certain of the Company’s private investments, private real estate business and other legacy multi-strategy funds. While the Asset Co segment is not a reportable segment, the Company will provide segment level information for Asset Co.
|
b.
|
Principles of consolidation
|
c.
|
Use of estimates
|
d.
|
Allowance for credit losses
|
e.
|
Valuation of investments and derivative contracts
|
i.
|
Portfolio funds—
Portfolio funds (“Portfolio Funds”) include interests in private investment partnerships, foreign investment companies and other collective investment vehicles which may be managed by the Company or its affiliates. The Company follows US GAAP regarding fair value measurements and disclosures relating to investments in certain entities that calculate net asset value (“NAV”) per share (or its equivalent). The guidance permits, as a practical expedient, an entity holding investments in certain entities that (a) do not have readily determinable fair values, (b) are investments in an investment company within the scope of
ASC 946 Financial Services - Investment Companies
(“ASC 946”) and (c) whose NAV is calculated in a manner consistent with the measurement principles of
ASC 946
as of the reporting date, to measure the fair value of such investments on the basis of that NAV per share, or its equivalent, without adjustment.
In accordance with US GAAP, investments which are valued using NAV per share as a practical expedient are not categorized within the fair value hierarchy.
|
ii.
|
Real estate investments—
Real estate debt and equity investments are valued at fair value. The fair value of real estate investments is estimated based on the price that would be received to sell an asset in an orderly transaction between marketplace participants at the measurement date. Real estate investments without a public market are valued based on assumptions and valuation techniques used by the Company. Such valuation techniques may include discounted cash flow analysis, prevailing market capitalization rates or earnings multiples applied to earnings from the investment, analysis of recent comparable sales transactions, actual sale negotiations and bona fide purchase offers received from third parties, consideration of the amount that currently would be required to replace the asset, as adjusted for obsolescence, as well as independent external appraisals. In general, the Company considers several valuation techniques when measuring the fair value of a real estate investment. However, in certain circumstances, a single valuation technique may be appropriate. Real estate investments are reviewed on a quarterly basis by the Company for significant changes at the property level or a significant change in the overall market which would impact the value of the real estate investment resulting in unrealized appreciation or depreciation.
|
f.
|
Fees receivable
|
g.
|
Securities financing arrangements
|
h.
|
Fixed assets
|
Asset
|
Depreciable Lives
|
|
Depreciation and/or Amortization Method
|
Telephone and computer equipment
|
3-5 years
|
|
Straight-line
|
Computer software
|
3-8 years
|
|
Straight-line
|
Furniture and fixtures
|
5 years
|
|
Straight-line
|
Leasehold improvements
|
Term of Lease
|
|
Straight-line
|
Finance lease right-of-use asset
|
5 years
|
|
Straight-line
|
i.
|
Goodwill and intangible assets
|
j.
|
Debt
|
k.
|
Right-of-use assets and lease liabilities
|
•
|
Underwriting fees.
The Company earns underwriting fees in securities offerings in which the Company acts as an underwriter, such as initial public offerings, follow-on equity offerings, debt offerings, and convertible securities offerings. Fee revenue relating to underwriting commitments is recorded at the point in time when all significant items relating to the underwriting process have been completed and the amount of the underwriting revenue has been determined. This generally is the point at which all of the following have occurred: (i) the issuer's registration statement has become effective with the SEC or the other offering documents are finalized; (ii) the Company has made a firm commitment for the purchase of securities from the issuer; (iii) the Company has been informed of the number of securities that it has been allotted; and (iv) the issuer obtains control and benefits of the offering; which generally occurs on trade date.
|
•
|
Strategic/financial advisory fees.
The Company's strategic advisory revenue includes success fees earned in connection with advising companies, principally in mergers, acquisitions and restructuring transactions. The Company also earns fees for related advisory work such as providing fairness opinions. A significant portion of the Company's advisory revenue (i.e., success related advisory fees) is considered variable consideration and recognized when it is probable that the variable consideration will not be reversed in a future period. The variable consideration is constrained until satisfaction of the performance obligation. The Company records strategic advisory revenues at the point in time, gross of related expenses, when the services for the transactions are completed or the contract is canceled under the terms of each assignment or engagement.
|
•
|
Placement and sales agent fees.
The Company earns agency placement fees and sales agent commissions in non-underwritten transactions, such as private placements of loans and debt and equity securities, including, private investment in public equity transactions (“PIPEs”), and as sales agent in at-the-market offerings of equity securities. The Company records placement revenues (which may be in cash and/or securities) at the point in time when the services for the transactions are completed under the terms of each assignment or engagement. The Company records sales agent commissions on a trade-date basis.
|
•
|
Expense reimbursements from clients.
Investment banking revenue includes expense reimbursements for transaction-related expenses, primarily consisting of legal, travel and other costs directly associated with the transaction. Expense reimbursements associated with investment banking engagements are recognized in revenue at the point in time when the Company is contractually entitled to reimbursement. The related expenses are presented gross within their respective expense category in the accompanying
condensed consolidated
statements of operations.
|
•
|
Commissions.
Commission revenue includes fees from executing and clearing client transactions and commission sharing arrangements. Trade execution and clearing services, when provided together, represent a single performance
|
•
|
Principal transactions.
Principal transactions revenue includes net trading gains and losses from the Company's market-making activities in over-the-counter equity and fixed income securities, trading of convertible securities, and trading gains and losses on inventory and other Company positions, which include securities previously received as part of investment banking transactions. In certain cases, the Company provides liquidity to clients by buying or selling blocks of shares of listed stocks without previously identifying the other side of the trade at execution, which subjects the Company to market risk. These positions are typically held for a short duration.
|
•
|
Equity and credit research fees.
Equity and credit research fees are paid to the Company for providing its equity and credit research. In the US, revenue is recognized once an arrangement exists, access to research has been provided and the customer has benefited from the research. As part of MiFID II, the Company’s international broker-dealers have executed equity and credit research contacts with its clients. The contracts either contain a fixed price for providing access to research or a price at the discretion of the customer with a contract minimum. Fixed equity and credit research fees are recognized over the contract period as the customer is benefiting from the research throughout the contracts term. When the equity and credit research fees are based on the customer’s discretion with a contract minimum, the Company recognizes the contract minimum over the life of the contract as the customer benefits from the research provided and adjusts the revenue when the Company can estimate the amount of equity and credit research fees over the contract minimum. Additionally, the Company earns variable consideration for attending client conferences and events. Revenue is recognized when the Company attends a client conference or event.
|
•
|
Trade conversion revenue.
Trade conversion revenue includes fees earned from converting foreign securities into an American Depository Receipt (“ADR”) and fees earned from converting an ADR into foreign securities on behalf of customers, and margins earned from facilitating customer foreign exchange transactions. Trade conversion revenue is recognized on a trade-date basis.
|
•
|
Hedge Funds.
Management fees for the Company's hedge funds are generally charged at an annual rate of up to
2%
of utilized invested capital, committed capital or notional trading level. Management fees are generally calculated monthly at the end of each month.
|
•
|
Private Equity Funds.
Management fees for the Company's private equity or debt funds are generally charged at an annual rate of
1%
to
2%
of committed capital during the investment period (as defined in the relevant partnership agreement). After the investment period, management fees for these private equity funds are generally charged at an annual rate of
0.5%
to
2%
of the net asset value or the aggregate cost basis of the unrealized investments held by the private equity funds. For certain other private equity funds (and managed accounts), the management fees range from
0.2%
to
1%
and there is no adjustment based on the investment period. Management fees for the Company's private equity funds are generally paid on a quarterly basis.
|
•
|
Cowen Trading Strategies.
Advisory fees for the Company's collateral management advisory business are typically paid quarterly based on utilized invested capital or committed capital, generally subject to a minimum fee.
|
•
|
Hedge Funds.
Management fees for the Company's hedge funds are generally charged at an annual rate of up to
2%
of utilized invested capital, committed capital or notional trading level. Management fees are generally calculated monthly at the end of each month.
|
•
|
Real Estate.
Management fees from the Company's real estate business are generally charged at an annual rate from
0.25%
to
1.50%
of total capital commitments during the investment period and of invested capital or net asset value of the applicable real estate fund after the investment period has ended. Management fees are typically paid to the general partners on a quarterly basis, at the beginning of the quarter in arrears.
|
|
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
|
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
|
(dollars in thousands)
|
|||||||||||||||||
Revenue from contracts with customers
|
Operating Company
|
|||||||||||||||||
Investment Banking
|
|
|
|
|
|
|
|
|
|
|||||||||
Underwriting fees
|
|
$
|
75,169
|
|
|
$
|
62,751
|
|
|
$
|
123,204
|
|
|
$
|
134,519
|
|
||
Strategic/financial advisory fees
|
11,131
|
|
|
14,498
|
|
|
31,676
|
|
|
28,858
|
|
|||||||
Placement and sales agent fees
|
23,515
|
|
|
7,577
|
|
|
33,013
|
|
|
19,437
|
|
|||||||
Expense reimbursements from clients
|
4,890
|
|
|
—
|
|
|
6,918
|
|
|
—
|
|
|||||||
|
Total Investment Banking Revenue
|
114,705
|
|
|
84,826
|
|
|
194,811
|
|
|
182,814
|
|
||||||
Brokerage
|
|
|
|
|
|
|
|
|
|
|||||||||
Commissions
|
|
|
96,341
|
|
|
91,008
|
|
|
181,116
|
|
|
185,303
|
|
|||||
Trade conversion revenue
|
|
4,559
|
|
|
5,815
|
|
|
8,665
|
|
|
9,337
|
|
||||||
Equity and credit research fees
|
5,355
|
|
|
5,724
|
|
|
8,945
|
|
|
9,563
|
|
|||||||
|
Total Brokerage Revenue from Customers
|
106,255
|
|
|
102,547
|
|
|
198,726
|
|
|
204,203
|
|
||||||
Management Fees
|
6,796
|
|
|
6,287
|
|
|
13,439
|
|
|
12,960
|
|
|||||||
Incentive Income
|
8
|
|
|
48
|
|
|
8
|
|
|
64
|
|
|||||||
Total revenue from contracts with customers - Op Co
|
$
|
227,764
|
|
|
$
|
193,708
|
|
|
$
|
406,984
|
|
|
$
|
400,041
|
|
|||
|
|
|
|
|
|
|
|
|||||||||||
|
Asset Company
|
|||||||||||||||||
Management Fees
|
243
|
|
|
1,086
|
|
|
741
|
|
|
1,830
|
|
|||||||
Incentive Income
|
—
|
|
|
—
|
|
|
15
|
|
|
—
|
|
|||||||
Total revenue from contracts with customers - Asset Co
|
243
|
|
|
1,086
|
|
|
756
|
|
|
1,830
|
|
|||||||
Total revenue from contracts with customers
|
$
|
228,007
|
|
|
$
|
194,794
|
|
|
$
|
407,740
|
|
|
$
|
401,871
|
|
|
Estimated intangible assets acquired
|
|
Estimated average remaining useful lives
|
||
|
(dollars in thousands)
|
|
|
(in years)
|
|
Intangible asset class
|
|
|
|
||
Trade name
|
$
|
900
|
|
|
3
|
Customer relationships
|
7,100
|
|
|
4
|
|
Backlog
|
12,600
|
|
|
2
|
|
Proprietary software
|
1,600
|
|
|
3
|
|
Total intangible assets
|
$
|
22,200
|
|
|
|
|
(dollars in thousands)
|
||
2019
|
$
|
4,454
|
|
2020
|
8,908
|
|
|
2021
|
2,608
|
|
|
2022
|
1,775
|
|
|
2023
|
—
|
|
|
Thereafter
|
—
|
|
|
|
$
|
17,745
|
|
|
Three Months Ended June 30, 2018
|
|
Six Months Ended June 30, 2018
|
||||
|
(dollars in thousands, except per share data)
|
||||||
Net revenues
|
$
|
218,625
|
|
|
$
|
454,962
|
|
Net income (loss) attributable to Cowen Inc. common stockholders
|
3,057
|
|
|
19,888
|
|
||
|
|
|
|
||||
Net income (loss) per common share:
|
|
|
|
||||
Basic
|
$
|
0.10
|
|
|
$
|
0.65
|
|
Diluted
|
0.10
|
|
|
0.63
|
|
a.
|
Operating Entities
|
|
As of June 30, 2019
|
|
As of December 31, 2018
|
||||
|
(dollars in thousands)
|
||||||
Common stock
|
$
|
824,881
|
|
|
$
|
472,299
|
|
Preferred stock
|
9,772
|
|
|
5,617
|
|
||
Warrants and rights
|
9,874
|
|
|
7,990
|
|
||
Government bonds (a)
|
12,892
|
|
|
13,398
|
|
||
Corporate bonds (d)
|
24,625
|
|
|
13,041
|
|
||
Convertible bonds (b) (c)
|
6,318
|
|
|
3,000
|
|
||
Term loan (b)
|
1,496
|
|
|
—
|
|
||
Trade claims (b)
|
10,488
|
|
|
5,543
|
|
||
|
$
|
900,346
|
|
|
$
|
520,888
|
|
(a)
|
As of
June 30, 2019
, maturities range from August 2019 to October 2019 with an interest rate of
0%
. As of
December 31, 2018
, maturities ranged from April 2019 to August 2019 with an interest rate of
0%
.
|
(b)
|
The Company has elected the fair value option for investments in securities of trade claims, convertible bond and term loan with a fair value of
$10.5 million
,
$6.3 million
and
$1.5 million
, respectively, at
June 30, 2019
. The Company has elected the fair value option for investments in securities of trade claims and convertible bond at a fair value of
$5.5 million
and
$3.0 million
, respectively, at
December 31, 2018
.
|
(c)
|
As of
June 30, 2019
, maturities range from April 2020 to May 2024 with an interest rate of
8%
. As of
December 31, 2018
, the maturity was June 2020 with an interest rate of
8%
.
|
(d)
|
As of
June 30, 2019
, maturities ranged from October 2019 to March 2038 and interest rates ranged from
4.88%
to
10.75%
. As of
December 31, 2018
, maturities ranged from April 2019 to April 2049 and interest rates ranged from
2%
to
15.50%
.
|
Receivable on derivative contracts
|
As of June 30, 2019
|
|
As of December 31, 2018
|
||||||||||||
|
Number of contracts / Notional Value
|
|
Fair value
|
|
Number of contracts / Notional Value
|
|
Fair value
|
||||||||
|
(dollars in thousands)
|
||||||||||||||
Futures
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
42,288
|
|
|
$
|
334
|
|
Currency forwards
|
$
|
105,769
|
|
|
279
|
|
|
$
|
395
|
|
|
1
|
|
||
Swaps
|
$
|
121,469
|
|
|
9,440
|
|
|
$
|
13,702
|
|
|
917
|
|
||
Options other (a)
|
325,493
|
|
|
22,501
|
|
|
654,506
|
|
|
23,130
|
|
||||
Pay to hold
|
$
|
—
|
|
|
—
|
|
|
$
|
—
|
|
|
743
|
|
||
|
|
|
$
|
32,220
|
|
|
|
|
$
|
25,125
|
|
Payable for derivative contracts
|
As of June 30, 2019
|
|
As of December 31, 2018
|
||||||||||||
|
Number of contracts / Notional Value
|
|
Fair value
|
|
Number of contracts / Notional Value
|
|
Fair value
|
||||||||
|
(dollars in thousands)
|
||||||||||||||
Futures
|
$
|
29,986
|
|
|
$
|
434
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Currency forwards
|
$
|
960
|
|
|
1
|
|
|
$
|
96,406
|
|
|
709
|
|
||
Swaps
|
$
|
79,407
|
|
|
2,231
|
|
|
$
|
52,905
|
|
|
2,162
|
|
||
Options other (a)
|
136,420
|
|
|
19,779
|
|
|
90,730
|
|
|
13,211
|
|
||||
|
|
|
$
|
22,445
|
|
|
|
|
$
|
16,082
|
|
|
|
|
|
|
|
|
Gross amounts not offset in the Condensed Consolidated Statement of Financial Condition
|
|
|
||||||||||||||
|
Gross amounts recognized
|
|
Gross amounts offset on the Condensed Consolidated Statements of Financial Condition (a)
|
|
Net amounts included on the Condensed Consolidated Statements of Financial Condition
|
|
Financial instruments
|
|
Cash Collateral pledged (b)
|
|
Net amounts
|
||||||||||||
|
(dollars in thousands)
|
||||||||||||||||||||||
As of June 30, 2019
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Receivable on derivative contracts, at fair value
|
$
|
32,220
|
|
|
$
|
—
|
|
|
$
|
32,220
|
|
|
$
|
—
|
|
|
$
|
9,719
|
|
|
$
|
22,501
|
|
Payable for derivative contracts, at fair value
|
22,445
|
|
|
—
|
|
|
22,445
|
|
|
—
|
|
|
2,232
|
|
|
20,213
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
As of December 31, 2018
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Receivable on derivative contracts, at fair value
|
$
|
25,125
|
|
|
$
|
—
|
|
|
$
|
25,125
|
|
|
$
|
—
|
|
|
$
|
1,662
|
|
|
$
|
23,463
|
|
Payable for derivative contracts, at fair value
|
16,082
|
|
|
—
|
|
|
16,082
|
|
|
—
|
|
|
2,871
|
|
|
13,211
|
|
(a)
|
Includes financial instruments subject to enforceable master netting provisions that are permitted to be offset to the extent an event of default has occurred.
|
(b)
|
Includes the amount of collateral held or posted.
|
|
As of June 30, 2019
|
|
As of December 31, 2018
|
||||
|
(dollars in thousands)
|
||||||
Portfolio Funds, at fair value (1)
|
$
|
146,133
|
|
|
$
|
141,236
|
|
Equity method investments (2)
|
54,164
|
|
|
40,171
|
|
||
|
$
|
200,297
|
|
|
$
|
181,407
|
|
|
As of June 30, 2019
|
|
As of December 31, 2018
|
||||
|
(dollars in thousands)
|
||||||
Starboard Value and Opportunity Fund LP (c)(*)
|
$
|
36,585
|
|
|
$
|
32,579
|
|
Formation8 Partners Fund I, L.P. (f)
|
33,613
|
|
|
34,099
|
|
||
RCG Longview Debt Fund V, L.P. (g)(*)
|
2,110
|
|
|
4,394
|
|
||
RCG Longview II LP
(g) (*)
|
4,461
|
|
|
4,400
|
|
||
Cowen Healthcare Investments II LP (i) (*)
|
23,925
|
|
|
21,717
|
|
||
Eclipse Ventures Fund I, L.P. (b)
|
4,580
|
|
|
4,412
|
|
||
HealthCare Royalty Partners LP (a)(*)
|
1,368
|
|
|
1,833
|
|
||
Lagunita Biosciences, LLC (d)
|
5,054
|
|
|
3,833
|
|
||
RCG IO Renergys Sarl (i) (*)
|
868
|
|
|
6,369
|
|
||
Starboard Leaders Fund LP (e)(*)
|
1,454
|
|
|
1,230
|
|
||
Eclipse SPV I, LP (j)(*)
|
1,447
|
|
|
1,447
|
|
||
RCG Longview Equity Fund, LP (g) (*)
|
795
|
|
|
802
|
|
||
RCG Longview Debt Fund VI, LP (g) (*)
|
2,003
|
|
|
1,586
|
|
||
RCG Park Liberty GP Member LLC (g) (*)
|
1,102
|
|
|
1,023
|
|
||
HealthCare Royalty Partners II LP (a)(*)
|
1,653
|
|
|
1,037
|
|
||
RCGL PE MPA, LLC (g)(*)
|
646
|
|
|
618
|
|
||
RCG LPP2 PNW5 Co-Invest, L.P. (h)(*)
|
12
|
|
|
296
|
|
||
Other private investment (k)(*)
|
19,900
|
|
|
15,898
|
|
||
Other affiliated funds (l)(*)
|
4,557
|
|
|
3,663
|
|
||
|
$
|
146,133
|
|
|
$
|
141,236
|
|
(a)
|
HealthCare Royalty Partners, L.P. and HealthCare Royalty Partners II, L.P. are private equity funds and therefore distributions will be made when cash flows are received from the underlying investments, typically on a quarterly basis.
|
(b)
|
Eclipse Ventures Fund I, L.P. is a private equity fund which invests in early stage and growth hardware companies. Distributions will be made when the underlying investments are liquidated.
|
(c)
|
Starboard Value and Opportunity Fund LP permits quarterly withdrawals upon
90
days' notice.
|
(d)
|
Lagunita Biosciences, LLC, is a healthcare investment company that creates and grows early stage companies to commercialize impactful translational science that addresses significant clinical needs, is a private equity structure and therefore distributions will be made when the underlying investments are liquidated.
|
(e)
|
Starboard Leaders Fund LP does not permit withdrawals, but instead allows terminations with respect to capital commitments upon
30
days' prior written notice at any time following the first anniversary of an investor's initial capital contribution.
|
(f)
|
Formation8 Partners Fund I, L.P. is a private equity fund which invests in early stage and growth transformational information and energy technology companies. Distributions will be made when the underlying investments are liquidated.
|
(g)
|
RCG Longview Debt Fund V, L.P., RCG Longview II LP, RCG Park Liberty GP Member LLC, RCG Longview Equity Fund, LP, RCGL PE MPA, LLC and RCG Longview Debt Fund VI, LP are real estate private equity structures. The timing of distributions depends on the nature of the underlying investments and therefore will be made either quarterly or when the underlying investments are liquidated.
|
(h)
|
RCG LPP2 PNW5 Co-Invest, L.P. is a single purpose entity formed to participate in a joint venture which acquired five multi-unit residential rental properties located in the Pacific Northwest. RCG LPP2 PNW5 Co-Invest, L.P. is a private equity structure and therefore distributions will be made when the underlying investments are liquidated.
|
(i)
|
Cowen Healthcare Investments II LP and RCG IO Renergys Sarl are private equity funds. Distributions are made from these funds when cash flows or securities are received from the underlying investments. Investors do not have redemption rights.
|
(j)
|
Eclipse SPV I, L.P. is a co-investment vehicle organized to invest in a private company focused on software-driven automation projects. Distributions will be made when the underlying investments are liquidated.
|
(k)
|
Other private investment represents the Company's closed end investment in a Portfolio Fund that invests in a wireless broadband communication provider in Italy.
|
(l)
|
The majority of these investment funds are affiliates of the Company or are managed by the Company and the investors can redeem from these funds as investments are liquidated.
|
(2)
|
Equity method investments
|
|
|
|
|
||||
|
As of June 30, 2019
|
|
As of December 31, 2018
|
||||
|
(dollars in thousands)
|
||||||
Surf House Ocean Views Holdings, LLC
|
$
|
8,493
|
|
|
$
|
7,589
|
|
Starboard Value LP
|
27,472
|
|
|
12,699
|
|
||
RCG Longview Debt Fund V Partners, LLC
|
4,845
|
|
|
11,000
|
|
||
RCG Longview Management, LLC
|
4,407
|
|
|
1,167
|
|
||
RCG Longview Debt Fund VI Partners LLC
|
1,431
|
|
|
1,254
|
|
||
HealthCare Royalty GP, LLC
|
112
|
|
|
149
|
|
||
HealthCare Royalty GP II, LLC
|
280
|
|
|
176
|
|
||
RCG Longview Debt Fund IV Management, LLC
|
331
|
|
|
331
|
|
||
HealthCare Royalty GP III, LLC
|
2,016
|
|
|
1,573
|
|
||
Triartisan ES Partners LLC
|
1,026
|
|
|
1,500
|
|
||
Triartisan PFC Partners LLC
|
1,000
|
|
|
—
|
|
||
RCG Kennedy House, LLC
|
131
|
|
|
131
|
|
||
RCG Longview Equity Management, LLC
|
107
|
|
|
114
|
|
||
RCG LPP II GP, LLC
|
94
|
|
|
272
|
|
||
RCG Park Liberty GP Member Manager, LLC
|
1,248
|
|
|
1,248
|
|
||
Other
|
1,171
|
|
|
968
|
|
||
|
$
|
54,164
|
|
|
$
|
40,171
|
|
|
As of June 30, 2019
|
|
As of December 31, 2018
|
||||
|
(dollars in thousands)
|
|
|
||||
Assets
|
|
|
|
||||
Cash
|
$
|
532
|
|
|
$
|
37
|
|
Performance & management fee receivable
|
81,031
|
|
|
16,594
|
|
||
Investments
|
4,211
|
|
|
3,599
|
|
||
Liabilities
|
—
|
|
|
—
|
|
||
Equity
|
$
|
85,774
|
|
|
$
|
20,230
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
|
(dollars in thousands)
|
||||||||||||||
Revenues
|
$
|
10,144
|
|
|
$
|
21,356
|
|
|
$
|
78,723
|
|
|
$
|
25,926
|
|
Expenses
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Net realized and unrealized gains (losses)
|
102
|
|
|
191
|
|
|
662
|
|
|
242
|
|
||||
Net Income
|
$
|
10,246
|
|
|
$
|
21,547
|
|
|
$
|
79,385
|
|
|
$
|
26,168
|
|
|
As of June 30, 2019
|
|
As of December 31, 2018
|
||||
|
(dollars in thousands)
|
||||||
|
|
|
|
||||
Common stock
|
$
|
409,034
|
|
|
$
|
194,305
|
|
Corporate bonds (a)
|
2,581
|
|
|
750
|
|
||
Government bonds (b)
|
4,681
|
|
|
—
|
|
||
Preferred stock
|
2,088
|
|
|
199
|
|
||
Warrants and rights
|
20,200
|
|
|
53
|
|
||
|
$
|
438,584
|
|
|
$
|
195,307
|
|
(a)
|
As of
June 30, 2019
, the maturities ranged from October 2020 to May 2029 and interest rates ranged from
1.88%
to
15.50%
. As of
December 31, 2018
,
the maturities ranged from October 2022 to January 2034 and interest rates ranged from
2.25%
to
9.38%
.
|
(b)
|
As of
June 30, 2019
, the maturities ranged from October 2019 to March 2038 and interest rates ranged from
7.00%
to
8.25%
.
|
|
|
|
|
|
|
|
Gross amounts not offset on the Condensed Consolidated Statement of Financial Condition
|
|
|
||||||||||||||||||
|
Gross amounts recognized
|
|
Gross amounts offset on the Condensed Consolidated Statements of Financial Condition (a)
|
|
Net amounts included on the Condensed Consolidated Statements of Financial Condition
|
|
Additional Amounts Available
|
|
Financial instruments
|
|
Cash Collateral pledged (b)
|
|
Net amounts
|
||||||||||||||
|
(dollars in thousands)
|
||||||||||||||||||||||||||
As of June 30, 2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Securities borrowed
|
$
|
1,390,366
|
|
|
$
|
—
|
|
|
$
|
1,390,366
|
|
|
$
|
—
|
|
|
$
|
1,343,751
|
|
|
$
|
—
|
|
|
$
|
46,615
|
|
Securities loaned
|
1,492,986
|
|
|
—
|
|
|
1,492,986
|
|
|
—
|
|
|
1,445,362
|
|
|
—
|
|
|
47,624
|
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
As of December 31, 2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Securities borrowed
|
$
|
407,795
|
|
|
$
|
—
|
|
|
$
|
407,795
|
|
|
$
|
—
|
|
|
$
|
383,593
|
|
|
$
|
—
|
|
|
$
|
24,202
|
|
Securities loaned
|
414,852
|
|
|
—
|
|
|
414,852
|
|
|
—
|
|
|
391,310
|
|
|
—
|
|
|
23,542
|
|
(a)
|
Includes financial instruments subject to enforceable master netting provisions that are permitted to be offset to the extent an event of default has occurred.
|
(b)
|
Includes the amount of cash collateral held/posted.
|
|
Open and Overnight
|
|
Up to 30 days
|
|
31 - 90 days
|
|
Greater than 90 days
|
|
Total
|
||||||||||
|
(dollars in thousands)
|
||||||||||||||||||
As of June 30, 2019
|
|
|
|
|
|
|
|
|
|
||||||||||
Securities loaned
|
|
|
|
|
|
|
|
|
|
||||||||||
Common stock
|
$
|
1,195,846
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,195,846
|
|
Corporate bonds
|
297,140
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
297,140
|
|
|||||
As of December 31, 2018
|
|
|
|
|
|
|
|
|
|
||||||||||
Securities loaned
|
|
|
|
|
|
|
|
|
|
||||||||||
Common stock
|
$
|
414,852
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
414,852
|
|
b.
|
Consolidated Funds
|
|
As of June 30, 2019
|
|
As of December 31, 2018
|
||||
|
|
|
|
||||
|
(dollars in thousands)
|
||||||
Preferred stock
|
$
|
24,322
|
|
|
$
|
24,314
|
|
Common stock
|
236,066
|
|
|
95,565
|
|
||
Government bonds (a)
|
—
|
|
|
38,377
|
|
||
Corporate bonds (b)
|
78,630
|
|
|
24,098
|
|
||
Warrants and rights
|
6,274
|
|
|
5,279
|
|
||
|
$
|
345,292
|
|
|
$
|
187,633
|
|
(a)
|
As of
December 31, 2018
, maturities ranged from January 2019 to April 2019 and interest rates were
0%
.
|
(b)
|
As of June 30,2019, maturities ranged from May 2022 to November 2025 and interest rates ranged from
4.87%
to
6.50%
. As of
December 31, 2018
, maturities ranged from August 2020 to March 2026 and interest rates ranged from
5.88%
to
7.63%
.
|
|
As of June 30, 2019
|
|
As of December 31, 2018
|
||||
|
(dollars in thousands)
|
||||||
Currency forwards
|
$
|
379
|
|
|
$
|
186
|
|
Equity swaps
|
1,273
|
|
|
2,477
|
|
||
Options
|
2,802
|
|
|
1,753
|
|
||
|
$
|
4,454
|
|
|
$
|
4,416
|
|
|
As of June 30, 2019
|
|
As of December 31, 2018
|
||||
|
(dollars in thousands)
|
||||||
Currency forwards
|
$
|
103
|
|
|
$
|
96
|
|
Equity swaps
|
2,405
|
|
|
713
|
|
||
Options
|
108
|
|
|
854
|
|
||
|
$
|
2,616
|
|
|
$
|
1,663
|
|
|
As of June 30, 2019
|
|
As of December 31, 2018
|
||||
|
(dollars in thousands)
|
||||||
Investments of Enterprise LP
|
$
|
99,493
|
|
|
$
|
97,656
|
|
Investments of Merger Fund
|
78,335
|
|
|
88,739
|
|
||
|
$
|
177,828
|
|
|
$
|
186,395
|
|
|
Investment's percentage of the Company's equity
|
|||||||||||||
|
Issuer
|
|
Security Type
|
|
Country
|
|
Industry
|
|
Percentage of Equity
|
|
Market Value
|
|||
|
|
|
|
|
|
|
|
|
|
|
(dollars in thousands)
|
|||
As of June 30, 2019
|
Linkem
|
|
Equity
|
|
Italy
|
|
Wireless Broadband
|
|
8.82
|
%
|
|
$
|
72,036
|
|
As of December 31, 2018
|
Linkem
|
|
Equity
|
|
Italy
|
|
Wireless Broadband
|
|
8.36
|
%
|
|
$
|
66,439
|
|
|
As of December 31, 2018
|
||
|
(dollars in thousands)
|
||
Common stock
|
$
|
469
|
|
|
$
|
469
|
|
|
|
As of December 31, 2018
|
||
|
Strategy
|
(dollars in thousands)
|
||
RCG Special Opportunities Fund, Ltd*
|
Multi-Strategy
|
$
|
111,548
|
|
Other Private Investments
|
Various
|
846
|
|
|
|
|
$
|
112,394
|
|
*
|
Affiliates of the Company.
|
|
As of June 30, 2019
|
|
As of December 31, 2018
|
||||
|
(dollars in thousands)
|
||||||
Securities owned by Merger Master, at fair value
|
|
|
|
||||
Common stock
|
$
|
324,742
|
|
|
$
|
162,811
|
|
Corporate bonds
|
70,194
|
|
|
116,488
|
|
||
|
$
|
394,936
|
|
|
$
|
279,299
|
|
|
|
|
|
||||
Securities sold, not yet purchased, by Merger Master, at fair value
|
|
|
|
||||
Common stock
|
$
|
111,074
|
|
|
$
|
9,610
|
|
|
$
|
111,074
|
|
|
$
|
9,610
|
|
|
As of June 30, 2019
|
|
As of December 31, 2018
|
||||
|
|
|
|
||||
Description
|
(dollars in thousands)
|
||||||
Options
|
$
|
4,291
|
|
|
$
|
3,450
|
|
Equity swaps
|
102
|
|
|
5,320
|
|
||
|
$
|
4,393
|
|
|
$
|
8,770
|
|
|
As of June 30, 2019
|
|
As of December 31, 2018
|
||||
Description
|
(dollars in thousands)
|
||||||
Options
|
$
|
194
|
|
|
$
|
1,430
|
|
Currency forwards
|
37,309
|
|
|
270
|
|
||
Equity swaps
|
347
|
|
|
28
|
|
||
|
$
|
37,850
|
|
|
$
|
1,728
|
|
|
Assets at Fair Value as of June 30, 2019
|
||||||||||||||
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
|
|
|
(dollars in thousands)
|
|
|
||||||||||
Operating Entities
|
|
|
|
|
|
|
|
||||||||
Securities owned, at fair value
|
|
|
|
|
|
|
|
||||||||
Government bonds
|
$
|
12,892
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
12,892
|
|
Preferred stock
|
2,371
|
|
|
—
|
|
|
7,401
|
|
|
9,772
|
|
||||
Common stock
|
811,041
|
|
|
2,834
|
|
|
11,006
|
|
|
824,881
|
|
||||
Convertible bonds
|
—
|
|
|
—
|
|
|
6,318
|
|
|
6,318
|
|
||||
Corporate bonds
|
—
|
|
|
23,850
|
|
|
775
|
|
|
24,625
|
|
||||
Trade claims
|
—
|
|
|
—
|
|
|
10,488
|
|
|
10,488
|
|
||||
Term Loan
|
—
|
|
|
1,496
|
|
|
—
|
|
|
1,496
|
|
||||
Warrants and rights
|
9,279
|
|
|
—
|
|
|
595
|
|
|
9,874
|
|
||||
Receivable on derivative contracts, at fair value
|
|
|
|
|
|
|
|
|
|||||||
Currency forwards
|
—
|
|
|
279
|
|
|
—
|
|
|
279
|
|
||||
Swaps
|
—
|
|
|
9,440
|
|
|
—
|
|
|
9,440
|
|
||||
Options
|
22,501
|
|
|
—
|
|
|
—
|
|
|
22,501
|
|
||||
Consolidated Funds
|
|
|
|
|
|
|
|
||||||||
Securities owned, at fair value
|
|
|
|
|
|
|
|
||||||||
Preferred stock
|
—
|
|
|
—
|
|
|
24,322
|
|
|
24,322
|
|
||||
Common stock
|
235,049
|
|
|
—
|
|
|
1,017
|
|
|
236,066
|
|
||||
Corporate bonds
|
—
|
|
|
78,630
|
|
|
—
|
|
|
78,630
|
|
||||
Warrants and rights
|
—
|
|
|
—
|
|
|
6,274
|
|
|
6,274
|
|
||||
Receivable on derivative contracts, at fair value
|
|
|
|
|
|
|
|
||||||||
Currency forwards
|
—
|
|
|
379
|
|
|
—
|
|
|
379
|
|
||||
Equity swaps
|
—
|
|
|
1,273
|
|
|
—
|
|
|
1,273
|
|
||||
Options
|
2,802
|
|
|
—
|
|
|
—
|
|
|
2,802
|
|
||||
|
$
|
1,095,935
|
|
|
$
|
118,181
|
|
|
$
|
68,196
|
|
|
$
|
1,282,312
|
|
Percentage of total assets measured at fair value on a recurring basis
|
85.5
|
%
|
|
9.2
|
%
|
|
5.3
|
%
|
|
|
|||||
Portfolio Funds measured at net asset value (a)
|
|
|
|
|
|
|
146,133
|
|
|||||||
Consolidated Funds' Portfolio Funds measured at net asset value (a)
|
|
|
|
|
|
|
177,828
|
|
|||||||
Equity method investments
|
|
|
|
|
|
|
54,164
|
|
|||||||
Total investments
|
|
|
|
|
|
|
$
|
1,660,437
|
|
|
Liabilities at Fair Value as of June 30, 2019
|
||||||||||||||
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
|
(dollars in thousands)
|
||||||||||||||
Operating Entities
|
|
|
|
|
|
|
|
||||||||
Securities sold, not yet purchased, at fair value
|
|
|
|
|
|
|
|
||||||||
Government bonds
|
$
|
—
|
|
|
$
|
4,681
|
|
|
$
|
—
|
|
|
$
|
4,681
|
|
Common stock
|
409,034
|
|
|
—
|
|
|
—
|
|
|
409,034
|
|
||||
Corporate bonds
|
—
|
|
|
2,581
|
|
|
—
|
|
|
2,581
|
|
||||
Preferred stock
|
2,088
|
|
|
—
|
|
|
—
|
|
|
2,088
|
|
||||
Warrants and rights
|
20,200
|
|
|
—
|
|
|
—
|
|
|
20,200
|
|
||||
Payable for derivative contracts, at fair value
|
|
|
|
|
|
|
|
||||||||
Futures
|
434
|
|
|
—
|
|
|
—
|
|
|
434
|
|
||||
Currency forwards
|
—
|
|
|
1
|
|
|
—
|
|
|
1
|
|
||||
Swaps
|
—
|
|
|
2,231
|
|
|
—
|
|
|
2,231
|
|
||||
Options
|
17,000
|
|
|
—
|
|
|
2,779
|
|
|
19,779
|
|
||||
Accounts payable, accrued expenses and other liabilities
|
|
|
|
|
|
|
|
|
|
|
|||||
Contingent consideration liability (b)
|
—
|
|
|
—
|
|
|
29,536
|
|
|
29,536
|
|
||||
Consolidated Funds
|
|
|
|
|
|
|
|
||||||||
Payable for derivative contracts, at fair value
|
|
|
|
|
|
|
|
||||||||
Currency forwards
|
—
|
|
|
103
|
|
|
—
|
|
|
103
|
|
||||
Options
|
108
|
|
|
—
|
|
|
—
|
|
|
108
|
|
||||
Equity swaps
|
—
|
|
|
2,405
|
|
|
—
|
|
|
2,405
|
|
||||
|
$
|
448,864
|
|
|
$
|
12,002
|
|
|
$
|
32,315
|
|
|
$
|
493,181
|
|
Percentage of total liabilities measured at fair value
|
91.0
|
%
|
|
2.4
|
%
|
|
6.6
|
%
|
|
|
|
Assets at Fair Value as of December 31, 2018
|
||||||||||||||
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
|
|
|
(dollars in thousands)
|
|
|
||||||||||
Operating Entities
|
|
|
|
|
|
|
|
||||||||
Securities owned, at fair value
|
|
|
|
|
|
|
|
||||||||
Government bonds
|
$
|
13,398
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
13,398
|
|
Preferred stock
|
449
|
|
|
—
|
|
|
5,168
|
|
|
5,617
|
|
||||
Common stock
|
459,601
|
|
|
2,848
|
|
|
9,850
|
|
|
472,299
|
|
||||
Convertible bonds
|
—
|
|
|
—
|
|
|
3,000
|
|
|
3,000
|
|
||||
Corporate bonds
|
—
|
|
|
13,041
|
|
|
—
|
|
|
13,041
|
|
||||
Trade claims
|
—
|
|
|
—
|
|
|
5,543
|
|
|
5,543
|
|
||||
Warrants and rights
|
6,324
|
|
|
—
|
|
|
1,666
|
|
|
7,990
|
|
||||
Receivable on derivative contracts, at fair value
|
|
|
|
|
|
|
|
||||||||
Futures
|
334
|
|
|
—
|
|
|
—
|
|
|
334
|
|
||||
Currency forwards
|
—
|
|
|
1
|
|
|
—
|
|
|
1
|
|
||||
Swaps
|
—
|
|
|
917
|
|
|
—
|
|
|
917
|
|
||||
Options
|
23,130
|
|
|
—
|
|
|
—
|
|
|
23,130
|
|
||||
Pay to hold
|
—
|
|
|
743
|
|
|
—
|
|
|
743
|
|
||||
Consolidated Funds
|
|
|
|
|
|
|
|
||||||||
Securities owned, at fair value
|
|
|
|
|
|
|
|
||||||||
Government bonds
|
38,377
|
|
|
—
|
|
|
—
|
|
|
38,377
|
|
||||
Preferred stock
|
—
|
|
|
—
|
|
|
24,314
|
|
|
24,314
|
|
||||
Common stock
|
95,471
|
|
|
—
|
|
|
94
|
|
|
95,565
|
|
||||
Corporate bonds
|
—
|
|
|
24,098
|
|
|
—
|
|
|
24,098
|
|
||||
Warrants and rights
|
—
|
|
|
—
|
|
|
5,279
|
|
|
5,279
|
|
||||
Receivable on derivative contracts, at fair value
|
|
|
|
|
|
|
|
||||||||
Currency forwards
|
—
|
|
|
186
|
|
|
—
|
|
|
186
|
|
||||
Equity swaps
|
—
|
|
|
2,477
|
|
|
—
|
|
|
2,477
|
|
||||
Options
|
1,753
|
|
|
—
|
|
|
—
|
|
|
1,753
|
|
||||
|
$
|
638,837
|
|
|
$
|
44,311
|
|
|
$
|
54,914
|
|
|
$
|
738,062
|
|
Percentage of total assets measured at fair value on a recurring basis
|
86.6
|
%
|
|
6.0
|
%
|
|
7.4
|
%
|
|
|
|||||
Portfolio Funds measured at net asset value (a)
|
|
|
|
|
|
|
141,236
|
|
|||||||
Consolidated Funds' Portfolio Funds measured at net asset value (a)
|
|
|
|
|
|
|
186,395
|
|
|||||||
Equity method investments
|
|
|
|
|
|
|
40,171
|
|
|||||||
Total investments
|
|
|
|
|
|
|
$
|
1,105,864
|
|
|
Liabilities at Fair Value as of December 31, 2018
|
||||||||||||||
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
|
(dollars in thousands)
|
||||||||||||||
Operating Entities
|
|
|
|
|
|
|
|
||||||||
Securities sold, not yet purchased, at fair value
|
|
|
|
|
|
|
|
||||||||
Common stock
|
$
|
194,305
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
194,305
|
|
Corporate bonds
|
—
|
|
|
750
|
|
|
—
|
|
|
750
|
|
||||
Preferred stock
|
199
|
|
|
—
|
|
|
—
|
|
|
199
|
|
||||
Warrants and rights
|
53
|
|
|
—
|
|
|
—
|
|
|
53
|
|
||||
Payable for derivative contracts, at fair value
|
|
|
|
|
|
|
|
||||||||
Currency forwards
|
—
|
|
|
709
|
|
|
—
|
|
|
709
|
|
||||
Swaps
|
—
|
|
|
2,162
|
|
|
—
|
|
|
2,162
|
|
||||
Options
|
11,115
|
|
|
—
|
|
|
2,096
|
|
|
13,211
|
|
||||
Accounts payable, accrued expenses and other liabilities
|
|
|
|
|
|
|
|
||||||||
Contingent consideration liability (b)
|
—
|
|
|
—
|
|
|
3,070
|
|
|
3,070
|
|
||||
Consolidated Funds
|
|
|
|
|
|
|
|
||||||||
Payable for derivative contracts, at fair value
|
|
|
|
|
|
|
|
||||||||
Currency forwards
|
—
|
|
|
96
|
|
|
—
|
|
|
96
|
|
||||
Options
|
854
|
|
|
—
|
|
|
—
|
|
|
854
|
|
||||
Equity swaps
|
—
|
|
|
713
|
|
|
—
|
|
|
713
|
|
||||
|
$
|
206,526
|
|
|
$
|
4,430
|
|
|
$
|
5,166
|
|
|
$
|
216,122
|
|
Percentage of total liabilities measured at fair value
|
95.6
|
%
|
|
2.0
|
%
|
|
2.4
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
|
Three Months Ended June 30, 2019
|
||||||||||||||||||||||||||||||
|
Balance at March 31, 2019
|
|
Transfers in
|
|
Transfers out
|
|
Purchases/(covers)
|
|
(Sales)/shorts
|
|
Realized and Unrealized gains/losses
|
|
Balance at June 30, 2019
|
|
Change in unrealized gains/losses relating to instruments still held (1)
|
||||||||||||||||
|
(dollars in thousands)
|
||||||||||||||||||||||||||||||
Operating Entities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Preferred stock
|
$
|
7,157
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,243
|
|
|
$
|
(1,000
|
)
|
|
$
|
1
|
|
|
$
|
7,401
|
|
|
$
|
1
|
|
Common stock
|
4,951
|
|
|
—
|
|
|
—
|
|
|
12,896
|
|
|
(6,519
|
)
|
|
(322
|
)
|
|
11,006
|
|
|
(325
|
)
|
||||||||
Convertible bonds
|
5,000
|
|
|
|
|
|
(2,025
|
)
|
(b)
|
9,971
|
|
|
(6,692
|
)
|
|
64
|
|
|
6,318
|
|
|
64
|
|
||||||||
Corporate bond
|
261
|
|
|
—
|
|
|
—
|
|
|
514
|
|
|
—
|
|
|
—
|
|
|
775
|
|
|
—
|
|
||||||||
Options, liability
|
1,733
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,046
|
|
|
2,779
|
|
|
1,046
|
|
||||||||
Warrants and rights
|
454
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
141
|
|
|
595
|
|
|
141
|
|
||||||||
Trade claims
|
5,487
|
|
|
—
|
|
|
—
|
|
|
5,095
|
|
|
(96
|
)
|
|
2
|
|
|
10,488
|
|
|
—
|
|
||||||||
Contingent consideration liability
|
29,536
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
29,536
|
|
|
—
|
|
||||||||
Consolidated Funds
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Preferred stock
|
24,322
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
24,322
|
|
|
—
|
|
||||||||
Common stock
|
1,017
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,017
|
|
|
—
|
|
||||||||
Warrants and rights
|
4,708
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,566
|
|
|
6,274
|
|
|
1,566
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
|
Three Months Ended June 30, 2018
|
||||||||||||||||||||||||||||||
|
Balance at March 31, 2018
|
|
Transfers in
|
|
Transfers out
|
|
Purchases/(covers)
|
|
(Sales)/shorts
|
|
Realized and Unrealized gains/losses
|
|
Balance at June 30, 2018
|
|
Change in unrealized gains/losses relating to instruments still held (1)
|
||||||||||||||||
|
(dollars in thousands)
|
||||||||||||||||||||||||||||||
Operating Entities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Preferred stock
|
$
|
8,817
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(217
|
)
|
|
$
|
(1,178
|
)
|
|
$
|
7,422
|
|
|
$
|
(1,817
|
)
|
Common stock
|
7,400
|
|
|
—
|
|
|
—
|
|
|
221
|
|
|
(1,200
|
)
|
|
(572
|
)
|
|
5,849
|
|
|
(547
|
)
|
||||||||
Options, liability
|
21,395
|
|
|
—
|
|
|
(28,973
|
)
|
(c)
|
—
|
|
|
(259
|
)
|
|
8,138
|
|
|
301
|
|
|
8,138
|
|
||||||||
Warrants and rights
|
1,702
|
|
|
—
|
|
|
(374
|
)
|
(b)
|
—
|
|
|
(143
|
)
|
|
71
|
|
|
1,256
|
|
|
(1,176
|
)
|
||||||||
Trade claims
|
5,955
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(334
|
)
|
|
78
|
|
|
5,699
|
|
|
14
|
|
||||||||
Lehman claim
|
312
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(17
|
)
|
|
295
|
|
|
(18
|
)
|
||||||||
Contingent consideration liability
|
3,440
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(570
|
)
|
|
—
|
|
|
2,870
|
|
|
—
|
|
||||||||
Consolidated Funds
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Preferred stock
|
11,893
|
|
|
—
|
|
|
—
|
|
|
3,066
|
|
|
—
|
|
|
9,355
|
|
|
24,314
|
|
|
9,356
|
|
||||||||
Common stock
|
50
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
44
|
|
|
94
|
|
|
43
|
|
||||||||
Warrants and rights
|
5,254
|
|
|
—
|
|
|
—
|
|
|
(1,340
|
)
|
|
—
|
|
|
824
|
|
|
4,738
|
|
|
(516
|
)
|
|
Six Months Ended June 30, 2019
|
||||||||||||||||||||||||||||||
|
Balance at December 31, 2018
|
|
Transfers in
|
|
Transfers out
|
|
Purchases/(covers)
|
|
(Sales)/shorts
|
|
Realized and Unrealized gains/losses
|
|
Balance at June 30, 2019
|
|
Change in unrealized gains/losses relating to instruments still held (1)
|
||||||||||||||||
|
(dollars in thousands)
|
|
|
||||||||||||||||||||||||||||
Operating Entities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Preferred stock
|
$
|
5,168
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
3,243
|
|
|
$
|
(1,000
|
)
|
|
$
|
(10
|
)
|
|
$
|
7,401
|
|
|
$
|
(10
|
)
|
Common stock
|
9,850
|
|
|
—
|
|
|
—
|
|
|
14,158
|
|
|
(12,472
|
)
|
|
(530
|
)
|
|
11,006
|
|
|
(332
|
)
|
||||||||
Convertible bonds
|
3,000
|
|
|
—
|
|
|
(2,025
|
)
|
(b)
|
14,971
|
|
|
(9,692
|
)
|
|
64
|
|
|
6,318
|
|
|
64
|
|
||||||||
Corporate bond
|
—
|
|
|
—
|
|
|
—
|
|
|
775
|
|
|
—
|
|
|
—
|
|
|
775
|
|
|
—
|
|
||||||||
Options, liability
|
2,096
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(4
|
)
|
|
687
|
|
|
2,779
|
|
|
687
|
|
||||||||
Warrants and rights
|
1,666
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(116
|
)
|
|
(955
|
)
|
|
595
|
|
|
32
|
|
||||||||
Trade claims
|
5,543
|
|
|
—
|
|
|
—
|
|
|
5,095
|
|
|
(152
|
)
|
|
2
|
|
|
10,488
|
|
|
—
|
|
||||||||
Contingent consideration liability
|
3,070
|
|
|
—
|
|
|
—
|
|
|
27,700
|
|
|
(1,234
|
)
|
|
—
|
|
|
29,536
|
|
|
—
|
|
||||||||
Consolidated Funds
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Preferred stock
|
24,314
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
8
|
|
|
24,322
|
|
|
8
|
|
||||||||
Common stock
|
94
|
|
|
—
|
|
|
—
|
|
|
407
|
|
|
—
|
|
|
516
|
|
|
1,017
|
|
|
516
|
|
||||||||
Warrants and rights
|
5,279
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,088
|
)
|
|
2,083
|
|
|
6,274
|
|
|
995
|
|
|
Six Months Ended June 30, 2018
|
||||||||||||||||||||||||||||||
|
Balance at December 31, 2017
|
|
Transfers in
|
|
Transfers out
|
|
Purchases/(covers)
|
|
(Sales)/shorts
|
|
Realized and Unrealized gains/losses
|
|
Balance at June 30, 2018
|
|
Change in unrealized gains/losses relating to instruments still held (1)
|
||||||||||||||||
|
(dollars in thousands)
|
||||||||||||||||||||||||||||||
Operating Entities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Preferred stock
|
$
|
8,115
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,415
|
|
|
$
|
(695
|
)
|
|
$
|
(1,413
|
)
|
|
$
|
7,422
|
|
|
$
|
(1,331
|
)
|
Common stock
|
7,570
|
|
|
—
|
|
|
—
|
|
|
531
|
|
|
(1,333
|
)
|
|
(919
|
)
|
|
5,849
|
|
|
(959
|
)
|
||||||||
Convertible bonds
|
282
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(307
|
)
|
|
25
|
|
|
—
|
|
|
—
|
|
||||||||
Options, asset
|
1,455
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,455
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||||
Options, liability
|
22,401
|
|
|
—
|
|
|
(28,973
|
)
|
(c)
|
—
|
|
|
(259
|
)
|
|
7,132
|
|
|
301
|
|
|
7,132
|
|
||||||||
Warrants and rights
|
2,517
|
|
|
—
|
|
|
(374
|
)
|
(b)
|
—
|
|
|
(143
|
)
|
|
(744
|
)
|
|
1,256
|
|
|
(666
|
)
|
||||||||
Trade claim
|
5,950
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(334
|
)
|
|
83
|
|
|
5,699
|
|
|
20
|
|
||||||||
Lehman claim
|
301
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(6
|
)
|
|
295
|
|
|
(6
|
)
|
||||||||
Contingent consideration liability
|
3,440
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(570
|
)
|
|
—
|
|
|
2,870
|
|
|
—
|
|
||||||||
Consolidated Funds
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Preferred stock
|
50,445
|
|
|
—
|
|
|
(38,552
|
)
|
(a)
|
3,066
|
|
|
—
|
|
|
9,355
|
|
|
24,314
|
|
|
9,356
|
|
||||||||
Common stock
|
50
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
44
|
|
|
94
|
|
|
43
|
|
||||||||
Warrants and rights
|
3,568
|
|
|
—
|
|
|
(20
|
)
|
(a)
|
(1,340
|
)
|
|
—
|
|
|
2,530
|
|
|
4,738
|
|
|
1,190
|
|
|
Quantitative Information about Level 3 Fair Value Measurements
|
||||||||
|
Fair Value at
June 30, 2019
|
|
Valuation Techniques
|
|
Unobservable Inputs
|
|
Range
|
||
Level 3 Assets
|
(dollars in thousands)
|
|
|
|
|
|
|
||
Common and preferred stocks
|
$
|
325
|
|
|
Discounted cash flows
|
|
Discount rate
|
|
8%
|
Trade claims
|
27
|
|
|
Discounted cash flows
|
|
Discount rate
|
|
20%
|
|
Warrants and rights
|
6,865
|
|
|
Model based Discounted cash flows
|
|
Volatility
Discount rate
|
|
30%
6% to 7%
|
|
Corporate and convertible bonds
|
514
|
|
|
Discounted cash flows
Recovery
|
|
Discount rate
Probability of recovery
|
|
20%
15% to 70% |
|
Other level 3 assets (a)
|
60,465
|
|
|
|
|
|
|
|
|
Total level 3 assets
|
$
|
68,196
|
|
|
|
|
|
|
|
Level 3 Liabilities
|
|
|
|
|
|
|
|
||
Options
|
2,779
|
|
|
Option pricing models
|
|
Volatility
|
|
35% to 40%
|
|
Contingent consideration liability
|
29,536
|
|
|
Discounted cash flows Monte Carlo simulation
|
|
Discount rate Volatility
|
|
14%-23% 14%-20%
|
|
Total level 3 liabilities
|
$
|
32,315
|
|
|
|
|
|
|
|
|
Quantitative Information about Level 3 Fair Value Measurements
|
||||||||
|
Fair Value at
December 31, 2018 |
|
Valuation Techniques
|
|
Unobservable Inputs
|
|
Range
|
||
Level 3 Assets
|
(dollars in thousands)
|
|
|
|
|
|
|
||
Common and preferred stocks
|
$
|
4,323
|
|
|
Guideline companies/Discounted cash flows
|
|
Discount rate
Market multiples |
|
8%-14%
6.5x to 7x |
Trade claims
|
25
|
|
|
Discounted cash flows
|
|
Discount rate
|
|
20%
|
|
Warrants and rights
|
1,666
|
|
|
Model based Discounted cash flows
|
|
Discount rate
|
|
7% to 9%
|
|
Other level 3 assets (a)
|
48,900
|
|
|
|
|
|
|
|
|
Total level 3 assets
|
$
|
54,914
|
|
|
|
|
|
|
|
Level 3 Liabilities
|
|
|
|
|
|
|
|
||
Options
|
2,096
|
|
|
Option pricing models
|
|
Volatility
|
|
35% to 40%
|
|
Contingent consideration liability
|
3,070
|
|
|
Discounted cash flows
|
|
Projected cash flow and discount rate
|
|
23%
|
|
Total level 3 liabilities
|
$
|
5,166
|
|
|
|
|
|
|
|
(a)
|
The quantitative disclosures exclude financial instruments for which the determination of fair value is based on prices from recent transactions.
|
|
June 30, 2019
|
|
December 31, 2018
|
|
Fair Value Hierarchy
|
||||||||||||
|
Carrying Amount
|
|
Fair Value
|
|
Carrying Amount
|
|
Fair Value
|
|
|||||||||
|
|
|
(dollars in thousands)
|
|
|
|
|
||||||||||
Financial Assets
|
|
|
|
|
|
|
|
|
|
||||||||
Operating companies
|
|
|
|
|
|
|
|
|
|
||||||||
Cash and cash equivalents
|
$
|
182,400
|
|
|
$
|
182,400
|
|
|
$
|
259,148
|
|
|
$
|
259,148
|
|
|
Level 1
|
Cash collateral pledged
|
7,097
|
|
|
7,097
|
|
|
6,318
|
|
|
6,318
|
|
|
Level 2
|
||||
Segregated cash
|
139,070
|
|
|
139,070
|
|
|
176,647
|
|
|
176,647
|
|
|
Level 1
|
||||
Securities borrowed
|
1,390,366
|
|
|
1,343,751
|
|
|
407,795
|
|
|
383,593
|
|
|
Level 2
|
||||
Loans receivable
|
36,190
|
|
|
36,190
|
|
(d)
|
36,021
|
|
|
36,021
|
|
(d)
|
Level 3
|
||||
Consolidated Funds
|
|
|
|
|
|
|
|
|
|
||||||||
Cash and cash equivalents
|
3,357
|
|
|
3,357
|
|
|
38,118
|
|
|
38,118
|
|
|
Level 1
|
||||
Financial Liabilities
|
|
|
|
|
|
|
|
|
|
|
|||||||
Securities loaned
|
1,492,986
|
|
|
1,445,362
|
|
|
414,852
|
|
|
391,310
|
|
|
Level 2
|
||||
Convertible debt
|
116,273
|
|
(a)
|
157,386
|
|
(b)
|
134,489
|
|
(a)
|
157,433
|
|
(b)
|
Level 2
|
||||
Notes payable and other debt
|
315,290
|
|
|
330,848
|
|
(c)
|
262,965
|
|
|
258,546
|
|
(c)
|
Level 2
|
(a)
|
The carrying amount of the convertible debt includes an unamortized discount of
$17.1 million
and
$19.5 million
as of
June 30, 2019 and December 31, 2018
, respectively.
|
(b)
|
The convertible debt includes the conversion option and is based on the last broker quote available.
|
(c)
|
Notes payable and other debt are based on the last broker quote available.
|
(d)
|
The fair market value of level 3 loans is calculated using discounted cash flows.
|
|
|
|
|
||||
|
As of June 30, 2019
|
|
As of December 31, 2018
|
||||
|
(dollars in thousands)
|
||||||
Broker-dealers
|
$
|
547,293
|
|
|
$
|
692,581
|
|
Securities failed to deliver
|
33,373
|
|
|
72,918
|
|
||
Clearing organizations
|
22,683
|
|
|
15,319
|
|
||
Securities borrowed interest receivable
|
14,019
|
|
|
5,295
|
|
||
|
$
|
617,368
|
|
|
$
|
786,113
|
|
|
|
|
|
||||
|
As of June 30, 2019
|
|
As of December 31, 2018
|
||||
|
(dollars in thousands)
|
||||||
Broker-dealers
|
$
|
166,728
|
|
|
$
|
159,443
|
|
Securities failed to receive
|
52,482
|
|
|
28,826
|
|
||
Clearing organizations
|
9,648
|
|
|
36,338
|
|
||
Securities loaned interest payable
|
12,154
|
|
|
4,124
|
|
||
|
$
|
241,012
|
|
|
$
|
228,731
|
|
|
Investment
Management
|
|
Investment Bank
|
|
Cowen Investment Management
|
|
Asset Co
|
|
Total
|
||||||||||
|
(dollars in thousands)
|
||||||||||||||||||
Beginning balance - December 31, 2017
|
|
|
|
|
|
|
|
|
|
||||||||||
Goodwill
|
$
|
29,026
|
|
|
$
|
51,337
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
80,363
|
|
|
Accumulated impairment charges
|
(10,200
|
)
|
|
(9,485
|
)
|
|
—
|
|
|
—
|
|
|
(19,685
|
)
|
|||||
Net
|
18,826
|
|
|
41,852
|
|
|
—
|
|
|
—
|
|
|
60,678
|
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Activity: 2018
|
|
|
|
|
|
|
|
|
|
||||||||||
Recognized goodwill
|
—
|
|
|
—
|
|
|
|
|
|
|
—
|
|
|||||||
Goodwill impairment charges
|
—
|
|
|
—
|
|
|
|
|
|
|
—
|
|
|||||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Ending balance: December 31, 2018
|
|
|
|
|
|
|
|
|
|
||||||||||
Goodwill
|
29,026
|
|
|
51,337
|
|
|
—
|
|
|
—
|
|
|
80,363
|
|
|||||
Accumulated impairment charges
|
(10,200
|
)
|
|
(9,485
|
)
|
|
—
|
|
|
—
|
|
|
(19,685
|
)
|
|||||
Net
|
18,826
|
|
|
41,852
|
|
|
—
|
|
|
—
|
|
|
60,678
|
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Activity: 2019
|
|
|
|
|
|
|
|
|
|
||||||||||
Recognized goodwill (See note 3)
|
—
|
|
|
81,150
|
|
|
—
|
|
|
—
|
|
|
81,150
|
|
|||||
Realignment of segment goodwill:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Goodwill
|
(29,026
|
)
|
|
—
|
|
|
22,705
|
|
|
6,321
|
|
|
—
|
|
|||||
Accumulated impairment charges
|
10,200
|
|
|
—
|
|
|
(7,979
|
)
|
|
(2,221
|
)
|
|
—
|
|
|||||
Goodwill impairment charges
|
—
|
|
|
—
|
|
|
—
|
|
|
(4,100
|
)
|
|
(4,100
|
)
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Ending balance: June 30, 2019
|
|
|
|
|
|
|
|
|
|
||||||||||
Goodwill
|
—
|
|
|
132,487
|
|
|
22,705
|
|
|
6,321
|
|
|
161,513
|
|
|||||
Accumulated impairment charges
|
—
|
|
|
(9,485
|
)
|
|
(7,979
|
)
|
|
(6,321
|
)
|
|
(23,785
|
)
|
|||||
Net
|
$
|
—
|
|
|
$
|
123,002
|
|
|
$
|
14,726
|
|
|
$
|
—
|
|
|
$
|
137,728
|
|
|
As of June 30, 2019
|
|
As of December 31, 2018
|
||||
|
(dollars in thousands)
|
||||||
Redeemable non-controlling interests in consolidated subsidiaries and investment funds
|
|
|
|
||||
Operating companies
|
$
|
22,857
|
|
|
$
|
10,434
|
|
Consolidated Funds
|
417,455
|
|
|
274,346
|
|
||
|
$
|
440,312
|
|
|
$
|
284,780
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
|
(dollars in thousands)
|
||||||||||||||
Income (loss) attributable to redeemable non-controlling interests in consolidated subsidiaries and investment funds
|
|
|
|
|
|
|
|
||||||||
Operating companies
|
$
|
853
|
|
|
$
|
1,954
|
|
|
$
|
2,659
|
|
|
$
|
3,574
|
|
Consolidated Funds
|
3,478
|
|
|
22,653
|
|
|
3,878
|
|
|
32,189
|
|
||||
|
$
|
4,331
|
|
|
$
|
24,607
|
|
|
$
|
6,537
|
|
|
$
|
35,763
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
|
(dollars in thousands)
|
||||||||||||||
Incurred and paid claims
|
$
|
4,013
|
|
|
$
|
4,112
|
|
|
$
|
6,920
|
|
|
$
|
7,729
|
|
Claims IBNR
|
756
|
|
|
156
|
|
|
10,891
|
|
|
8,411
|
|
|
Six Months Ended June 30, 2019
|
|
Six Months Ended June 30, 2018
|
||||||||||
|
Nonvested Restricted Class A Common Shares and Class A Common Restricted Stock Units
|
|
Weighted-Average
Grant Date Fair Value |
|
Nonvested Restricted Class A Common Shares and Class A Common Restricted Stock Units
|
|
Weighted-Average
Grant Date Fair Value |
||||||
Beginning balance outstanding
|
5,962,295
|
|
|
$
|
15.73
|
|
|
5,579,293
|
|
|
$
|
16.33
|
|
Granted
|
2,194,230
|
|
|
16.67
|
|
|
2,179,443
|
|
|
14.26
|
|
||
Vested
|
(1,282,843
|
)
|
|
16.21
|
|
|
(1,390,392
|
)
|
|
16.11
|
|
||
Canceled
|
(233,333
|
)
|
|
14.12
|
|
|
—
|
|
|
—
|
|
||
Forfeited
|
(153,399
|
)
|
|
13.94
|
|
|
(44,556
|
)
|
|
13.86
|
|
||
Ending balance outstanding
|
6,486,950
|
|
|
$
|
16.06
|
|
|
6,323,788
|
|
|
$
|
15.68
|
|
|
Three Months Ended June 30, 2019
|
|
Six Months Ended June 30, 2019
|
||||
|
(dollars in thousands)
|
||||||
Lease Cost
|
|
|
|
||||
Operating lease cost
|
$
|
6,063
|
|
|
$
|
12,066
|
|
Short-term lease cost
|
74
|
|
|
91
|
|
||
Variable lease cost
|
147
|
|
|
446
|
|
||
Sublease income
|
(240
|
)
|
|
(507
|
)
|
||
Total lease costs
|
$
|
6,044
|
|
|
$
|
12,096
|
|
|
Six Months Ended June 30, 2019
|
||
|
(dollars in thousands)
|
||
Other Information
|
|
||
Cash paid for amounts included in the measurement of lease liabilities:
|
|
||
Operating cash flows from operating leases
|
$
|
13,786
|
|
|
|
||
Weighted average remaining lease term - operating leases (in Years)
|
5.72
|
|
|
Weighted average discount rate - operating leases
|
4.14
|
%
|
|
Equipment Leases (operating)
|
|
Real Estate and Other Facility Rental (a) (b)
|
||||
|
(dollars in thousands)
|
||||||
2019
|
$
|
307
|
|
|
$
|
11,893
|
|
2020
|
289
|
|
|
24,020
|
|
||
2021
|
48
|
|
|
23,486
|
|
||
2022
|
5
|
|
|
20,249
|
|
||
2023
|
—
|
|
|
17,179
|
|
||
Thereafter
|
—
|
|
|
25,925
|
|
||
Total Operating Leases
|
649
|
|
|
122,752
|
|
||
Less discount
|
16
|
|
|
16,421
|
|
||
Less short term leases
|
—
|
|
|
91
|
|
||
Total Lease Liability
|
$
|
633
|
|
|
$
|
106,240
|
|
(a)
|
The Company has entered into various agreements to sublease certain of its premises.
|
(b)
|
In second quarter of 2019, the Company recognized operating ROU assets and leases liabilities of
$3.9 million
for real estate leases.
|
|
Equipment Leases (a)
|
|
Service Payments
|
|
Real Estate and other Facility Rental (b)
|
||||||
|
(dollars in thousands)
|
||||||||||
2019
|
$
|
2,434
|
|
|
$
|
21,758
|
|
|
$
|
24,584
|
|
2020
|
1,492
|
|
|
7,514
|
|
|
22,608
|
|
|||
2021
|
1,382
|
|
|
1,877
|
|
|
22,321
|
|
|||
2022
|
1,123
|
|
|
1,372
|
|
|
19,166
|
|
|||
2023
|
374
|
|
|
735
|
|
|
16,204
|
|
|||
Thereafter
|
—
|
|
|
735
|
|
|
21,478
|
|
|||
|
$
|
6,805
|
|
|
$
|
33,991
|
|
|
$
|
126,361
|
|
(a)
|
Equipment Leases includes the Company's commitments relating to operating and capital leases. See Note 18 for further information on the capital lease minimum payments which are included in the table.
|
(b)
|
The Company has entered into various agreements to sublease certain of its premises. The Company recorded sublease income related to these leases of
$1.4 million
,
$1.1 million
, and
$2.2 million
for the years ended December 31, 2018, 2017, and 2016 respectively.
|
|
|
Service Payments
|
||
|
|
(dollars in thousands)
|
||
2019
|
|
$
|
11,827
|
|
2020
|
|
10,319
|
|
|
2021
|
|
5,425
|
|
|
2022
|
|
5,198
|
|
|
2023
|
|
3,573
|
|
|
Thereafter
|
|
6,331
|
|
|
Total Operating Leases
|
|
$
|
42,673
|
|
Entity
|
|
Unfunded Commitments
|
|
Commitment term
|
||
|
|
(dollars in thousands)
|
|
|
||
Real estate (a)
|
|
$
|
23,749
|
|
|
(a)
|
HealthCare Royalty Partners funds (b)
|
|
5,665
|
|
|
2 years
|
|
Eclipse Ventures Fund I, L.P. (formerly Formation8 Partners Hardware Fund I, L.P.)
|
|
119
|
|
|
5 years
|
|
Lagunita Biosciences, LLC
|
|
500
|
|
|
3 years
|
|
Eclipse Fund II, L.P.
|
|
225
|
|
|
6 years
|
|
Eclipse Continuity Fund I, L.P.
|
|
210
|
|
|
7 years
|
|
Cowen Healthcare Investments II LP
|
|
6,891
|
|
|
2 years
|
|
|
|
|
||||
|
As of June 30, 2019
|
|
As of December 31, 2018
|
||||
|
(dollars in thousands)
|
||||||
Convertible debt
|
$
|
116,273
|
|
|
$
|
134,489
|
|
Notes payable
|
281,544
|
|
|
229,740
|
|
||
Term loan
|
28,200
|
|
|
28,200
|
|
||
Other notes payable
|
1,189
|
|
|
—
|
|
||
Finance lease obligations
|
4,357
|
|
|
5,025
|
|
||
|
$
|
431,563
|
|
|
$
|
397,454
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
|
(dollars in thousands)
|
||||||||||||||
Lease Cost
|
|
|
|
|
|
|
|
||||||||
Finance Lease Cost:
|
|
|
|
|
|
|
|
||||||||
Amortization of finance lease right-of-use assets
|
$
|
299
|
|
|
$
|
363
|
|
|
$
|
667
|
|
|
$
|
715
|
|
Interest on lease liabilities
|
56
|
|
|
52
|
|
|
118
|
|
|
97
|
|
||||
Other Information
|
|
|
|
|
|
|
|
||||||||
Cash paid for amounts included in the measurement of lease liabilities:
|
|
|
|
|
|
|
|
||||||||
Operating cash flows from finance leases
|
|
|
|
|
118
|
|
|
97
|
|
||||||
Financing cash flows from finance leases
|
|
|
|
|
$
|
668
|
|
|
$
|
1,133
|
|
|
Convertible Debt
|
|
Notes Payable
|
|
Term loan
|
|
Other Notes Payable
|
|
Finance Lease
Obligation |
||||||||||
|
(dollars in thousands)
|
||||||||||||||||||
2019
|
$
|
2,025
|
|
|
$
|
10,868
|
|
|
$
|
863
|
|
|
$
|
1,214
|
|
|
$
|
571
|
|
2020
|
4,050
|
|
|
21,736
|
|
|
29,034
|
|
|
—
|
|
|
1,358
|
|
|||||
2021
|
4,050
|
|
|
21,736
|
|
|
—
|
|
|
—
|
|
|
1,358
|
|
|||||
2022
|
139,050
|
|
|
21,736
|
|
|
—
|
|
|
—
|
|
|
1,127
|
|
|||||
2023
|
—
|
|
|
21,736
|
|
|
—
|
|
|
—
|
|
|
374
|
|
|||||
Thereafter
|
—
|
|
|
407,118
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Subtotal
|
149,175
|
|
|
504,930
|
|
|
29,897
|
|
|
1,214
|
|
|
4,788
|
|
|||||
Less (a)
|
(32,902
|
)
|
|
(223,386
|
)
|
|
(1,697
|
)
|
|
(25
|
)
|
|
(431
|
)
|
|||||
Total
|
$
|
116,273
|
|
|
$
|
281,544
|
|
|
$
|
28,200
|
|
|
$
|
1,189
|
|
|
$
|
4,357
|
|
(a)
|
Amount necessary to reduce net minimum payments to present value calculated at the Company's implicit rate at inception. This amount also includes capitalized debt costs and the unamortized discount on the convertible debt.
|
Location
|
|
Amount
|
|
Maturity
|
||
|
|
(dollars in thousands)
|
|
|
||
Boston
|
|
$
|
390
|
|
|
March 2020
|
New York
|
|
$
|
356
|
|
|
April 2020
|
New York
|
|
$
|
71
|
|
|
October 2019
|
New York
|
|
$
|
398
|
|
|
October 2019
|
New York
|
|
$
|
1,687
|
|
|
October 2019
|
New York
|
|
$
|
1,617
|
|
|
November 2019
|
San Francisco
|
|
$
|
711
|
|
|
October 2025
|
|
Treasury stock shares
|
|
Cost
(dollars in thousands) |
|
Average cost per share
|
|||||
Balance outstanding at December 31, 2018
|
15,336,871
|
|
|
$
|
234,142
|
|
|
$
|
15.27
|
|
Shares purchased for minimum tax withholding under the Equity Plans or other similar transactions
|
542,444
|
|
|
8,079
|
|
|
14.89
|
|
||
Shares of stock received in respect of indemnification claims
|
8,068
|
|
|
121
|
|
|
15.04
|
|
||
Purchase of treasury stock
|
777,230
|
|
|
12,015
|
|
|
15.46
|
|
||
Balance outstanding at June 30, 2019
|
16,664,613
|
|
|
$
|
254,357
|
|
|
$
|
15.26
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
|
(dollars in thousands)
|
||||||||||||||
Beginning Balance
|
$
|
(5
|
)
|
|
$
|
(7
|
)
|
|
$
|
(5
|
)
|
|
$
|
(8
|
)
|
Foreign currency translation
|
2
|
|
|
—
|
|
|
2
|
|
|
1
|
|
||||
Ending Balance
|
$
|
(3
|
)
|
|
$
|
(7
|
)
|
|
$
|
(3
|
)
|
|
$
|
(7
|
)
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
|
(dollars in thousands, except share and per share data)
|
||||||||||||||
Net income (loss)
|
$
|
10,143
|
|
|
$
|
30,006
|
|
|
$
|
22,132
|
|
|
$
|
58,015
|
|
Net income (loss) attributable to redeemable non-controlling interests in consolidated subsidiaries and investment funds
|
4,331
|
|
|
24,607
|
|
|
6,537
|
|
|
35,763
|
|
||||
Net income (loss) attributable to Cowen Inc.
|
5,812
|
|
|
5,399
|
|
|
15,595
|
|
|
22,252
|
|
||||
Preferred stock dividends
|
1,698
|
|
|
1,698
|
|
|
3,396
|
|
|
3,396
|
|
||||
Net income (loss) attributable to Cowen Inc. common stockholders
|
$
|
4,114
|
|
|
$
|
3,701
|
|
|
$
|
12,199
|
|
|
$
|
18,856
|
|
|
|
|
|
|
|
|
|
||||||||
Shares for basic and diluted calculations:
|
|
|
|
|
|
|
|
||||||||
Weighted average shares used in basic computation
|
29,769
|
|
|
29,769
|
|
|
29,766
|
|
|
29,688
|
|
||||
Restricted stock
|
1,753
|
|
|
951
|
|
|
1,806
|
|
|
772
|
|
||||
Weighted average shares used in diluted computation
|
31,522
|
|
|
30,720
|
|
|
31,572
|
|
|
30,460
|
|
||||
Earnings (loss) per share:
|
|
|
|
|
|
|
|
||||||||
Basic
|
$
|
0.14
|
|
|
$
|
0.12
|
|
|
$
|
0.41
|
|
|
$
|
0.64
|
|
Diluted
|
$
|
0.13
|
|
|
$
|
0.12
|
|
|
$
|
0.39
|
|
|
$
|
0.62
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
Three Months Ended June 30, 2019
|
||||||||||||||||||||||||
|
|
|
|
|
|
|
Adjustments
|
|
|
|
|
||||||||||||||
|
Operating Company
|
|
Asset Company
|
|
Total Economic Income/(Loss)
|
|
Funds
Consolidation |
|
Other
Adjustments |
|
|
|
US GAAP
|
||||||||||||
|
(dollars in thousands)
|
||||||||||||||||||||||||
Revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Investment banking
|
$
|
104,216
|
|
|
$
|
—
|
|
|
$
|
104,216
|
|
|
$
|
—
|
|
|
$
|
10,489
|
|
|
(a)
|
|
$
|
114,705
|
|
Brokerage
|
120,672
|
|
|
—
|
|
|
120,672
|
|
|
—
|
|
|
(9,290
|
)
|
|
(b)
|
|
111,382
|
|
||||||
Management fees
|
9,968
|
|
|
500
|
|
|
10,468
|
|
|
(565
|
)
|
|
(2,864
|
)
|
|
(c)
|
|
7,039
|
|
||||||
Incentive income (loss)
|
2,633
|
|
|
1,596
|
|
|
4,229
|
|
|
—
|
|
|
(4,221
|
)
|
|
(c)
|
|
8
|
|
||||||
Investment income (loss)
|
(3,141
|
)
|
|
3,626
|
|
|
485
|
|
|
—
|
|
|
(485
|
)
|
|
(d)
|
|
—
|
|
||||||
Interest and dividends
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
40,047
|
|
|
(b)(d)
|
|
40,047
|
|
||||||
Reimbursement from affiliates
|
—
|
|
|
—
|
|
|
—
|
|
|
(33
|
)
|
|
287
|
|
|
(e)
|
|
254
|
|
||||||
Reinsurance premiums
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
14,331
|
|
|
(f)
|
|
14,331
|
|
||||||
Other revenue
|
4,304
|
|
|
15
|
|
|
4,319
|
|
|
12
|
|
|
(3,401
|
)
|
|
(f)
|
|
930
|
|
||||||
Consolidated Funds revenues
|
—
|
|
|
—
|
|
|
—
|
|
|
3,468
|
|
|
—
|
|
|
|
|
3,468
|
|
||||||
Total revenues
|
238,652
|
|
|
5,737
|
|
|
244,389
|
|
|
2,882
|
|
|
44,893
|
|
|
|
|
292,164
|
|
||||||
Interest expense (Economic Income/(Loss)) / Interest and dividend expense (US GAAP)
|
5,298
|
|
|
1,408
|
|
|
6,706
|
|
|
—
|
|
|
32,822
|
|
|
(b)(d)
|
|
39,528
|
|
||||||
Total net revenues
|
233,354
|
|
|
4,329
|
|
|
237,683
|
|
|
2,882
|
|
|
12,071
|
|
|
|
|
252,636
|
|
||||||
Expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Non interest expense
|
215,808
|
|
|
3,011
|
|
|
218,819
|
|
|
—
|
|
|
21,962
|
|
|
(a)(e)(h)(i)
|
|
240,781
|
|
||||||
Goodwill impairments
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4,100
|
|
|
|
|
4,100
|
|
||||||
Consolidated Funds expenses
|
—
|
|
|
—
|
|
|
—
|
|
|
2,231
|
|
|
—
|
|
|
|
|
2,231
|
|
||||||
Total expenses
|
215,808
|
|
|
3,011
|
|
|
218,819
|
|
|
2,231
|
|
|
26,062
|
|
|
|
|
247,112
|
|
||||||
Total other income (loss)
|
—
|
|
|
—
|
|
|
—
|
|
|
2,827
|
|
|
6,865
|
|
|
(c)(d)(i)
|
|
9,692
|
|
||||||
Income taxes expense / (benefit)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
5,073
|
|
|
(h)
|
|
5,073
|
|
||||||
Income (loss) attributable to redeemable non-controlling interests in consolidated subsidiaries and investment funds
|
1,448
|
|
|
235
|
|
|
1,683
|
|
|
3,478
|
|
|
(830
|
)
|
|
|
|
4,331
|
|
||||||
Income (loss) attributable to Cowen Inc.
|
16,098
|
|
|
1,083
|
|
|
17,181
|
|
|
—
|
|
|
(11,369
|
)
|
|
|
|
5,812
|
|
||||||
Less: Preferred stock dividends
|
1,341
|
|
|
357
|
|
|
1,698
|
|
|
—
|
|
|
—
|
|
|
|
|
1,698
|
|
||||||
Economic income (loss) / Income (loss) attributable to Cowen Inc. common stockholders
|
14,757
|
|
|
726
|
|
|
15,483
|
|
|
$
|
—
|
|
|
$
|
(11,369
|
)
|
|
|
|
$
|
4,114
|
|
|||
Add back: Depreciation and amortization expense
|
4,945
|
|
|
7
|
|
|
4,952
|
|
|
|
|
|
|
|
|
|
|||||||||
Economic operating income (loss)
|
$
|
19,702
|
|
|
$
|
733
|
|
|
$
|
20,435
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
Three Months Ended June 30, 2018
|
||||||||||||||||||||||||
|
|
|
|
|
|
|
Adjustments
|
|
|
|
|
||||||||||||||
|
Operating Company
|
|
Asset Company
|
|
Total
Economic Income/(Loss) |
|
Funds
Consolidation |
|
Other
Adjustments |
|
|
|
US GAAP
|
||||||||||||
|
(dollars in thousands)
|
||||||||||||||||||||||||
Revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Investment banking
|
$
|
80,042
|
|
|
$
|
—
|
|
|
$
|
80,042
|
|
|
$
|
—
|
|
|
$
|
4,784
|
|
|
(a)
|
|
$
|
84,826
|
|
Brokerage
|
113,186
|
|
|
—
|
|
|
113,186
|
|
|
—
|
|
|
(9,901
|
)
|
|
(b)
|
|
103,285
|
|
||||||
Management fees
|
10,938
|
|
|
1,548
|
|
|
12,486
|
|
|
(612
|
)
|
|
(4,501
|
)
|
|
(c)
|
|
7,373
|
|
||||||
Incentive income (loss)
|
12,321
|
|
|
(2,958
|
)
|
|
9,363
|
|
|
(8
|
)
|
|
(9,307
|
)
|
|
(c)
|
|
48
|
|
||||||
Investment income (loss)
|
18,476
|
|
|
1,478
|
|
|
19,954
|
|
|
—
|
|
|
(19,954
|
)
|
|
(d)(g)
|
|
—
|
|
||||||
Interest and dividends
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
25,109
|
|
|
(b)(d)
|
|
25,109
|
|
||||||
Reimbursement from affiliates
|
—
|
|
|
—
|
|
|
—
|
|
|
(65
|
)
|
|
401
|
|
|
(e)
|
|
336
|
|
||||||
Aircraft lease revenue
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
419
|
|
|
(g)
|
|
419
|
|
||||||
Reinsurance premiums
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
9,226
|
|
|
(f)
|
|
9,226
|
|
||||||
Other revenue
|
(811
|
)
|
|
90
|
|
|
(721
|
)
|
|
—
|
|
|
1,597
|
|
|
(f)
|
|
876
|
|
||||||
Consolidated Funds revenues
|
—
|
|
|
—
|
|
|
—
|
|
|
3,075
|
|
|
—
|
|
|
|
|
3,075
|
|
||||||
Total revenues
|
234,152
|
|
|
158
|
|
|
234,310
|
|
|
2,390
|
|
|
(2,127
|
)
|
|
|
|
234,573
|
|
||||||
Interest expense (Economic Income/(Loss)) / Interest and dividend expense (US GAAP)
|
3,134
|
|
|
990
|
|
|
4,124
|
|
|
—
|
|
|
20,182
|
|
|
(b)(d)
|
|
$
|
24,306
|
|
|||||
Total net revenues
|
231,018
|
|
|
(832
|
)
|
|
230,186
|
|
|
2,390
|
|
|
(22,309
|
)
|
|
|
|
210,267
|
|
||||||
Expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Non interest expense
|
203,684
|
|
|
2,281
|
|
|
205,965
|
|
|
—
|
|
|
14,302
|
|
|
(a)(e)(h)(i)
|
|
220,267
|
|
||||||
Consolidated Funds expenses
|
—
|
|
|
—
|
|
|
—
|
|
|
3,149
|
|
|
—
|
|
|
|
|
3,149
|
|
||||||
Total expenses
|
203,684
|
|
|
2,281
|
|
|
205,965
|
|
|
3,149
|
|
|
14,302
|
|
|
|
|
223,416
|
|
||||||
Total other income (loss)
|
—
|
|
|
—
|
|
|
—
|
|
|
23,411
|
|
|
23,737
|
|
|
(c)(d)(i)(j)
|
|
47,148
|
|
||||||
Income taxes expense / (benefit)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3,993
|
|
|
(h)
|
|
3,993
|
|
||||||
Income (loss) attributable to redeemable non-controlling interests in consolidated subsidiaries and investment funds
|
1,672
|
|
|
808
|
|
|
2,480
|
|
|
22,652
|
|
|
(525
|
)
|
|
|
|
24,607
|
|
||||||
Income (loss) attributable to Cowen Inc.
|
25,662
|
|
|
(3,921
|
)
|
|
21,741
|
|
|
—
|
|
|
(16,342
|
)
|
|
|
|
5,399
|
|
||||||
Less: Preferred stock dividends
|
1,290
|
|
|
408
|
|
|
1,698
|
|
|
—
|
|
|
—
|
|
|
|
|
1,698
|
|
||||||
Economic income (loss) / Income (loss) attributable to Cowen Inc. common stockholders
|
24,372
|
|
|
(4,329
|
)
|
|
20,043
|
|
|
$
|
—
|
|
|
$
|
(16,342
|
)
|
|
|
|
$
|
3,701
|
|
|||
Add back: Depreciation and amortization expense
|
2,913
|
|
|
46
|
|
|
2,959
|
|
|
|
|
|
|
|
|
|
|||||||||
Economic operating income (loss)
|
$
|
27,285
|
|
|
$
|
(4,283
|
)
|
|
$
|
23,002
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended June 30, 2019
|
||||||||||||||||||||||||
|
|
|
|
|
|
|
Adjustments
|
|
|
|
|
||||||||||||||
|
Operating Company
|
|
Asset Company
|
|
Total Economic Income (Loss)
|
|
Funds
Consolidation
|
|
Other
Adjustments
|
|
|
|
US GAAP Net Income (Loss)
|
||||||||||||
|
(dollars in thousands)
|
||||||||||||||||||||||||
Revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Investment banking
|
$
|
187,212
|
|
|
$
|
—
|
|
|
$
|
187,212
|
|
|
$
|
—
|
|
|
$
|
7,599
|
|
|
(a)
|
|
$
|
194,811
|
|
Brokerage
|
225,829
|
|
|
—
|
|
|
225,829
|
|
|
—
|
|
|
(16,984
|
)
|
|
(b)
|
|
208,845
|
|
||||||
Management fees
|
19,695
|
|
|
1,203
|
|
|
20,898
|
|
|
(1,066
|
)
|
|
(5,652
|
)
|
|
(c)
|
|
14,180
|
|
||||||
Incentive income (loss)
|
19,270
|
|
|
1,706
|
|
|
20,976
|
|
|
(544
|
)
|
|
(20,409
|
)
|
|
(c)
|
|
23
|
|
||||||
Investment income (loss)
|
13,001
|
|
|
4,467
|
|
|
17,468
|
|
|
—
|
|
|
(17,468
|
)
|
|
(d)
|
|
—
|
|
||||||
Interest and dividends
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
69,139
|
|
|
(b)(d)
|
|
69,139
|
|
||||||
Reimbursement from affiliates
|
—
|
|
|
—
|
|
|
—
|
|
|
(67
|
)
|
|
609
|
|
|
(e)
|
|
542
|
|
||||||
Reinsurance premiums
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
20,922
|
|
|
(f)
|
|
20,922
|
|
||||||
Other revenue
|
5,427
|
|
|
51
|
|
|
5,478
|
|
|
12
|
|
|
(3,499
|
)
|
|
(f)
|
|
1,991
|
|
||||||
Consolidated Funds revenues
|
—
|
|
|
—
|
|
|
—
|
|
|
5,808
|
|
|
—
|
|
|
|
|
5,808
|
|
||||||
Total revenues
|
470,434
|
|
|
7,427
|
|
|
477,861
|
|
|
4,143
|
|
|
34,257
|
|
|
|
|
516,261
|
|
||||||
Interest expense (Economic Income/(Loss)) / Interest and dividend expense (US GAAP)
|
10,615
|
|
|
2,655
|
|
|
13,270
|
|
|
—
|
|
|
55,342
|
|
|
(b)(d)
|
|
68,612
|
|
||||||
Total net revenues
|
459,819
|
|
|
4,772
|
|
|
464,591
|
|
|
4,143
|
|
|
(21,085
|
)
|
|
|
|
447,649
|
|
||||||
Expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Non interest expense
|
421,562
|
|
|
4,442
|
|
|
426,004
|
|
|
—
|
|
|
34,084
|
|
|
(a)(e)(h)(i)
|
|
460,088
|
|
||||||
Goodwill impairment
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4,100
|
|
|
|
|
4,100
|
|
||||||
Consolidated Funds expenses
|
—
|
|
|
—
|
|
|
—
|
|
|
3,713
|
|
|
—
|
|
|
|
|
3,713
|
|
||||||
Total expenses
|
421,562
|
|
|
4,442
|
|
|
426,004
|
|
|
3,713
|
|
|
38,184
|
|
|
|
|
467,901
|
|
||||||
Total other income (loss)
|
—
|
|
|
—
|
|
|
—
|
|
|
3,448
|
|
|
47,186
|
|
|
(c)(d)(i)
|
|
50,634
|
|
||||||
Income taxes expense / (benefit)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
8,250
|
|
|
(h)
|
|
8,250
|
|
||||||
Income (loss) attributable to redeemable non-controlling interests in consolidated subsidiaries and investment funds
|
3,250
|
|
|
1,181
|
|
|
4,431
|
|
|
3,878
|
|
|
(1,772
|
)
|
|
|
|
6,537
|
|
||||||
Income (loss) attributable to Cowen Inc.
|
35,007
|
|
|
(851
|
)
|
|
34,156
|
|
|
—
|
|
|
(18,561
|
)
|
|
|
|
$
|
15,595
|
|
|||||
Less: Preferred stock dividends
|
2,717
|
|
|
679
|
|
|
3,396
|
|
|
—
|
|
|
—
|
|
|
|
|
3,396
|
|
||||||
Economic income (loss) / Income (loss) attributable to Cowen Inc. common stockholders
|
32,290
|
|
|
(1,530
|
)
|
|
30,760
|
|
|
$
|
—
|
|
|
$
|
(18,561
|
)
|
|
|
|
$
|
12,199
|
|
|||
Add back: Depreciation and amortization expense
|
9,884
|
|
|
24
|
|
|
9,908
|
|
|
|
|
|
|
|
|
|
|||||||||
Economic operating income (loss)
|
$
|
42,174
|
|
|
$
|
(1,506
|
)
|
|
$
|
40,668
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended June 30, 2018
|
||||||||||||||||||||||||
|
|
|
|
|
|
|
Adjustments
|
|
|
|
|
||||||||||||||
|
Operating Company
|
|
Asset Company
|
|
Total Economic Income (Loss)
|
|
Funds
Consolidation
|
|
Other
Adjustments
|
|
|
|
US GAAP Net Income (Loss)
|
||||||||||||
|
(dollars in thousands)
|
||||||||||||||||||||||||
Revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Investment banking
|
$
|
173,966
|
|
|
$
|
—
|
|
|
$
|
173,966
|
|
|
$
|
—
|
|
|
$
|
8,848
|
|
|
(a)
|
|
$
|
182,814
|
|
Brokerage
|
227,257
|
|
|
—
|
|
|
227,257
|
|
|
—
|
|
|
(18,239
|
)
|
|
(b)
|
|
209,018
|
|
||||||
Management fees
|
22,217
|
|
|
3,396
|
|
|
25,613
|
|
|
(1,815
|
)
|
|
(9,008
|
)
|
|
(c)
|
|
14,790
|
|
||||||
Incentive income (loss)
|
15,360
|
|
|
(801
|
)
|
|
14,559
|
|
|
(17
|
)
|
|
(14,478
|
)
|
|
(c)
|
|
64
|
|
||||||
Investment income (loss)
|
36,710
|
|
|
(2,454
|
)
|
|
34,256
|
|
|
—
|
|
|
(34,256
|
)
|
|
(d)(g)
|
|
—
|
|
||||||
Interest and dividends
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
51,063
|
|
|
(b)(d)
|
|
51,063
|
|
||||||
Reimbursement from affiliates
|
—
|
|
|
—
|
|
|
—
|
|
|
(133
|
)
|
|
846
|
|
|
(e)
|
|
713
|
|
||||||
Aircraft lease revenue
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,134
|
|
|
(g)
|
|
1,134
|
|
||||||
Reinsurance premiums
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
17,873
|
|
|
(f)
|
|
17,873
|
|
||||||
Other revenue
|
(147
|
)
|
|
313
|
|
|
166
|
|
|
—
|
|
|
2,046
|
|
|
(f)
|
|
2,212
|
|
||||||
Consolidated Funds revenues
|
—
|
|
|
—
|
|
|
—
|
|
|
6,276
|
|
|
—
|
|
|
|
|
6,276
|
|
||||||
Total revenues
|
475,363
|
|
|
454
|
|
|
475,817
|
|
|
4,311
|
|
|
5,829
|
|
|
|
|
485,957
|
|
||||||
Interest expense (Economic Income/(Loss)) / Interest and dividend expense (US GAAP)
|
7,661
|
|
|
2,420
|
|
|
10,081
|
|
|
—
|
|
|
38,765
|
|
|
(b)(d)
|
|
48,846
|
|
||||||
Total net revenues
|
467,702
|
|
|
(1,966
|
)
|
|
465,736
|
|
|
4,311
|
|
|
(32,936
|
)
|
|
|
|
437,111
|
|
||||||
Expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Non interest expense
|
410,059
|
|
|
5,239
|
|
|
415,298
|
|
|
—
|
|
|
28,284
|
|
|
(a)(e)(h)(i)
|
|
443,582
|
|
||||||
Consolidated Funds expenses
|
—
|
|
|
—
|
|
|
—
|
|
|
5,580
|
|
|
—
|
|
|
|
|
5,580
|
|
||||||
Total expenses
|
410,059
|
|
|
5,239
|
|
|
415,298
|
|
|
5,580
|
|
|
28,284
|
|
|
|
|
449,162
|
|
||||||
Total other income (loss)
|
—
|
|
|
—
|
|
|
—
|
|
|
33,458
|
|
|
47,524
|
|
|
(c)(d)(i)(j)
|
|
80,982
|
|
||||||
Income taxes expense / (benefit)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
10,916
|
|
|
(h)
|
|
10,916
|
|
||||||
Income (loss) attributable to redeemable non-controlling interests in consolidated subsidiaries and investment funds
|
3,812
|
|
|
826
|
|
|
4,638
|
|
|
32,189
|
|
|
(1,064
|
)
|
|
|
|
35,763
|
|
||||||
Income (loss) attributable to Cowen Inc.
|
53,831
|
|
|
(8,031
|
)
|
|
45,800
|
|
|
—
|
|
|
(23,548
|
)
|
|
|
|
22,252
|
|
||||||
Less: Preferred stock dividends
|
2,581
|
|
|
815
|
|
|
3,396
|
|
|
—
|
|
|
—
|
|
|
|
|
3,396
|
|
||||||
Economic income (loss) / Income (loss) attributable to Cowen Inc. common stockholders
|
51,250
|
|
|
(8,846
|
)
|
|
42,404
|
|
|
$
|
—
|
|
|
$
|
(23,548
|
)
|
|
|
|
$
|
18,856
|
|
|||
Add back: Depreciation and amortization expense
|
5,842
|
|
|
103
|
|
|
5,945
|
|
|
|
|
|
|
|
|
|
|||||||||
Economic operating income (loss)
|
$
|
57,092
|
|
|
$
|
(8,743
|
)
|
|
$
|
48,349
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Subsidiary
|
|
Net Capital
|
|
Minimum Net Capital Requirement
|
|
Excess Net Capital
|
||||||
|
|
(dollars in thousands)
|
||||||||||
Cowen and Company
|
|
$
|
95,807
|
|
|
$
|
1,000
|
|
|
$
|
94,807
|
|
Cowen Execution
|
|
$
|
116,967
|
|
|
$
|
2,541
|
|
|
$
|
114,426
|
|
ATM Execution
|
|
$
|
5,375
|
|
|
$
|
250
|
|
|
$
|
5,125
|
|
Cowen Prime
|
|
$
|
12,091
|
|
|
$
|
250
|
|
|
$
|
11,841
|
|
Westminster
|
|
$
|
21,602
|
|
|
$
|
250
|
|
|
$
|
21,352
|
|
Cowen International Ltd
|
|
$
|
15,479
|
|
|
$
|
8,562
|
|
|
$
|
6,917
|
|
Cowen Execution Ltd
|
|
$
|
5,158
|
|
|
$
|
3,087
|
|
|
$
|
2,071
|
|
Cowen and Company (Asia) Limited
|
|
$
|
1,092
|
|
|
$
|
384
|
|
|
$
|
708
|
|
Lender
|
|
Contractual Amount
|
|
Available Amount
|
|
Maturity Date
|
|
Description
|
||||
Pledge Lines
|
|
(dollars in thousands)
|
|
|
|
|
||||||
Texas Capital Bank
|
|
$
|
75,000
|
|
|
$
|
75,000
|
|
|
None
|
|
Secured Depository Trust Company Pledge Line
|
BMO Harris Bank
|
|
75,000
|
|
|
75,000
|
|
|
None
|
|
Secured Tri-Party Pledge Facility
|
||
BMO Harris Bank
|
|
150,000
|
|
|
150,000
|
|
|
None
|
|
Secured Depository Trust Company Pledge Line
|
||
Total
|
|
300,000
|
|
|
300,000
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
||||
Revolving Credit Facility
|
|
|
|
|
|
|
|
|
||||
BMO Harris Bank
Canadian Imperial Bank
of Commerce
Texas Capital Bank
|
|
70,000
|
|
|
70,000
|
|
|
August 23, 2019
|
|
(Syndicated) Unsecured liquidity facility to cover increases in National Securities Clearing Corporation margin deposit requirements
|
||
Total Credit Lines
|
|
$
|
370,000
|
|
|
$
|
370,000
|
|
|
|
|
|
•
|
Investment performance.
Our revenues from incentive income are linked to the performance of the investment funds and accounts that we manage. Performance also affects assets under management because it influences investors' decisions to invest assets in, or withdraw assets from, the investment funds and accounts managed by us.
|
•
|
Fee and allocation rates.
Our management fee revenues are linked to the management fee rates we charge as a percentage of contributed and invested capital. Our incentive income revenues are linked to the incentive allocation rates we charge as a percentage of performance-driven asset growth. Our incentive allocations are generally subject to
|
•
|
Investment performance of our own capital.
We invest our own capital and the performance of such invested capital affects our revenues.
|
•
|
Underwriting, private placement and strategic/financial advisory fees.
Our revenues from investment banking are directly linked to the underwriting fees we earn in equity and debt securities offerings in which the Company acts as an underwriter, private placement fees earned in non-underwritten transactions, sales commissions earned in at-the-market offerings and success fees earned in connection with advising both buyers and sellers, principally in mergers and acquisitions. As a result, the future performance of our investment banking business will depend on, among other things, our ability to secure lead manager and co-manager roles in clients' capital raising transactions as well as our ability to secure mandates as a client's strategic financial advisor.
|
•
|
Commissions.
Our commission revenues depend for the most part on our customer trading volumes and on the notional value of the non-U.S. securities traded by our customers.
|
•
|
Principal transactions.
Principal transactions revenue includes net trading gains and losses from the Company's market-making activities and net trading gains and losses on inventory and other Company positions. Commissions associated with these transactions are also included herein. In certain cases, the Company provides liquidity to clients buying or selling blocks of shares of listed stocks without previously identifying the other side of the trade at execution, which subjects the Company to market risk.
|
•
|
Equity and credit research fees.
Equity and credit research fees are paid to the Company for providing its equity and credit research. The Company also permits institutional customers to allocate a portion of their commissions to pay for research products and other services provided by third parties. Our ability to generate revenues relating to our equity and credit research depends on the quality of our research and its relevance to our institutional customers and other clients.
|
•
|
Investment performance of our own capital.
Investment income in the investment bank business includes gains and losses generated by the capital the Company invests in private capital raising transactions of its investment banking clients. Our revenues from investment income are linked to the performance of the underlying investments.
|
•
|
Liquidity.
As a clearing broker-dealer in the U.S., we are subject to cash deposit requirements with clearing organizations, brokers and banks that may be large in relation to our total liquid assets.
|
•
|
Our investment bank business has been, and may continue to be, adversely affected by market conditions. Increased competition continues to affect our investment banking and capital markets businesses. The same factors also affect trading volumes in secondary financial markets, which affect our brokerage business. Commission rates, market volatility, increased competition from larger financial firms and other factors also affect our brokerage revenues and may cause these revenues to vary from period to period.
|
•
|
Our investment bank business focuses primarily on small to mid-capitalization and private companies in specific industry sectors. These sectors may experience growth or downturns independent of general economic and market conditions, or may face market conditions that are disproportionately better or worse than those impacting the economy and markets generally. In addition, increased government regulation has had, and may continue to have, a disproportionate effect on capital formation by smaller companies. Therefore, our investment bank business could be affected differently than overall market trends.
|
•
|
Our investment management business can be adversely affected by unanticipated levels of requested redemptions. We experienced significant levels of requested redemptions during the 2008 financial crisis and, while the environment for investing in investment management products has since improved, it is possible that we could intermittently experience redemptions above historical levels, regardless of investment fund performance.
|
•
|
The Op Co segment consists of four divisions: Cowen Investment Management
(“CIM”)
, Investment Banking, Markets, and Research. Each of Op Co’s four divisions leverage the Research division’s core domain expertise to drive harmonized repeatable revenue for the segment.
|
–
|
The CIM division offers innovative investment products and solutions across the liquidity spectrum to institutional and private clients. CIM offers investors access to a number of strategies to meet their specific needs including merger arbitrage, activism, healthcare royalties, private healthcare investing and private sustainable investing which leverage the content and domain expertise that are aligned with the Company's core areas of expertise ("Cowen DNA").
|
–
|
The Investment Banking division includes public and private capital raising transactions and providing strategic advisory services.
|
–
|
The Markets division includes trading equity and equity-linked securities on behalf of institutional investors as well as a full-service suite of prime brokerage services, cross-asset trading, securities finance, global execution, clearing and commission management businesses.
|
–
|
The Research division provides the thought leadership and domain expertise that drives Cowen DNA. The research content that is created helps to facilitate brokerage revenue in the Markets division, drive deal flow in the Investment Banking division and facilitate investor relationships and investing within CIM’s innovative investment products and solutions.
|
•
|
The Asset Co segment consists of certain of the Company’s private investments, private real estate business and other legacy multi-strategy funds. While the Asset Co segment is not a reportable segment, the Company will provide segment level information for Asset Co.
|
•
|
Compensation and Benefits.
Compensation and benefits is comprised of salaries, benefits, discretionary cash bonuses and equity-based compensation. Annual incentive compensation is variable, and the amount paid is generally based on a combination of employees' performance, their contribution to their business segment, and the Company's performance. Generally, compensation and benefits comprise a significant portion of total expenses, with annual incentive compensation comprising a significant portion of total compensation and benefits expenses.
|
•
|
Reinsurance claims, commissions and amortization of deferred acquisition costs.
Reinsurance related expenses reflect loss and claim reserves, acquisition costs and other expenses incurred with respect to our insurance and reinsurance operations.
|
•
|
General, Administrative and Other.
General, administrative and other expenses are primarily related to professional services, occupancy and equipment, business development expenses, communications, expenses associated with our reinsurance business and other miscellaneous expenses. These expenses may also include certain one-time charges and non-cash expenses.
|
•
|
Consolidated Funds Expenses.
The Company's
condensed consolidated
financial statements reflect the expenses of the Consolidated Funds and the portion attributable to other investors is allocated to a redeemable non-controlling interest.
|
Strategy
|
Net Value
|
|
% of Stockholders' Equity
|
||
|
(dollars in millions)
|
|
|
||
Op Co
|
|
|
|
||
Broker dealer capital and related trading
|
$
|
400.3
|
|
|
49%
|
Public and Private Healthcare
|
57.3
|
|
|
7%
|
|
Liquid Alternative Trading
|
71.4
|
|
|
9%
|
|
Asset Co
|
|
|
|
||
Private Investments
|
128.6
|
|
|
16%
|
|
Private Real Estate
|
20.4
|
|
|
2%
|
|
Total
|
678.0
|
|
|
83%
|
|
Stockholders' Equity
|
$
|
817.4
|
|
|
100%
|
|
Condensed Consolidated Statements of Operations
|
|||||||||||||
|
(unaudited)
|
|||||||||||||
|
Three Months Ended June 30,
|
|
Period to Period
|
|||||||||||
|
2019
|
|
2018
|
|
$ Change
|
|
% Change
|
|||||||
|
(dollars in thousands)
|
|||||||||||||
Revenues
|
|
|
|
|
|
|
|
|||||||
Investment banking
|
$
|
114,705
|
|
|
$
|
84,826
|
|
|
$
|
29,879
|
|
|
35
|
%
|
Brokerage
|
111,382
|
|
|
103,285
|
|
|
8,097
|
|
|
8
|
%
|
|||
Management fees
|
7,039
|
|
|
7,373
|
|
|
(334
|
)
|
|
(5
|
)%
|
|||
Incentive income
|
8
|
|
|
48
|
|
|
(40
|
)
|
|
(83
|
)%
|
|||
Interest and dividends
|
40,047
|
|
|
25,109
|
|
|
14,938
|
|
|
59
|
%
|
|||
Reimbursement from affiliates
|
254
|
|
|
336
|
|
|
(82
|
)
|
|
(24
|
)%
|
|||
Aircraft lease revenue
|
—
|
|
|
419
|
|
|
(419
|
)
|
|
(100
|
)%
|
|||
Reinsurance premiums
|
14,331
|
|
|
9,226
|
|
|
5,105
|
|
|
55
|
%
|
|||
Other revenues
|
930
|
|
|
876
|
|
|
54
|
|
|
6
|
%
|
|||
Consolidated Funds revenues
|
3,468
|
|
|
3,075
|
|
|
393
|
|
|
13
|
%
|
|||
Total revenues
|
292,164
|
|
|
234,573
|
|
|
57,591
|
|
|
25
|
%
|
|||
Interest and dividends expense
|
39,528
|
|
|
24,306
|
|
|
15,222
|
|
|
63
|
%
|
|||
Total net revenues
|
252,636
|
|
|
210,267
|
|
|
42,369
|
|
|
20
|
%
|
|||
|
|
|
|
|
|
|
|
|||||||
Expenses
|
|
|
|
|
|
|
|
|||||||
Employee compensation and benefits
|
135,984
|
|
|
131,845
|
|
|
4,139
|
|
|
3
|
%
|
|||
Reinsurance claims, commissions and amortization of deferred acquisition costs
|
10,782
|
|
|
9,924
|
|
|
858
|
|
|
9
|
%
|
|||
Operating, general, administrative and other expenses
|
89,063
|
|
|
75,304
|
|
|
13,759
|
|
|
18
|
%
|
|||
Depreciation and amortization expense
|
4,952
|
|
|
3,194
|
|
|
1,758
|
|
|
55
|
%
|
|||
Goodwill impairment
|
4,100
|
|
|
—
|
|
|
4,100
|
|
|
NM
|
|
|||
Consolidated Funds expenses
|
2,231
|
|
|
3,149
|
|
|
(918
|
)
|
|
(29
|
)%
|
|||
Total expenses
|
247,112
|
|
|
223,416
|
|
|
23,696
|
|
|
11
|
%
|
|||
Other income (loss)
|
|
|
|
|
|
|
|
|||||||
Net gains (losses) on securities, derivatives and other investments
|
3,910
|
|
|
16,719
|
|
|
(12,809
|
)
|
|
(77
|
)%
|
|||
Gain/(loss) on debt extinguishment
|
—
|
|
|
(556
|
)
|
|
556
|
|
|
NM
|
|
|||
Consolidated Funds net gains (losses)
|
5,782
|
|
|
30,985
|
|
|
(25,203
|
)
|
|
(81
|
)%
|
|||
Total other income (loss)
|
9,692
|
|
|
47,148
|
|
|
(37,456
|
)
|
|
(79
|
)%
|
|||
Income (loss) before income taxes
|
15,216
|
|
|
33,999
|
|
|
(18,783
|
)
|
|
(55
|
)%
|
|||
Income tax expense (benefit)
|
5,073
|
|
|
3,993
|
|
|
1,080
|
|
|
27
|
%
|
|||
Net income (loss)
|
10,143
|
|
|
30,006
|
|
|
(19,863
|
)
|
|
(66
|
)%
|
|||
Net income (loss) attributable to redeemable non-controlling interests in consolidated subsidiaries and investment funds
|
4,331
|
|
|
24,607
|
|
|
(20,276
|
)
|
|
(82
|
)%
|
|||
Net income (loss) attributable to Cowen Inc.
|
5,812
|
|
|
5,399
|
|
|
413
|
|
|
8
|
%
|
|||
Preferred stock dividends
|
1,698
|
|
|
1,698
|
|
|
—
|
|
|
—
|
%
|
|||
Net income (loss) attributable to Cowen Inc. common stockholders
|
$
|
4,114
|
|
|
$
|
3,701
|
|
|
$
|
413
|
|
|
11
|
%
|
|
Condensed Consolidated Statements of Operations
|
|||||||||||||
|
(unaudited)
|
|||||||||||||
|
Six Months Ended June 30,
|
|
Period to Period
|
|||||||||||
|
2019
|
|
2018
|
|
$ Change
|
|
% Change
|
|||||||
|
(dollars in thousands)
|
|||||||||||||
Revenues
|
|
|
|
|
|
|
|
|||||||
Investment banking
|
$
|
194,811
|
|
|
$
|
182,814
|
|
|
$
|
11,997
|
|
|
7
|
%
|
Brokerage
|
208,845
|
|
|
209,018
|
|
|
(173
|
)
|
|
—
|
%
|
|||
Management fees
|
14,180
|
|
|
14,790
|
|
|
(610
|
)
|
|
(4
|
)%
|
|||
Incentive income
|
23
|
|
|
64
|
|
|
(41
|
)
|
|
(64
|
)%
|
|||
Interest and dividends
|
69,139
|
|
|
51,063
|
|
|
18,076
|
|
|
35
|
%
|
|||
Reimbursement from affiliates
|
542
|
|
|
713
|
|
|
(171
|
)
|
|
(24
|
)%
|
|||
Aircraft lease revenue
|
—
|
|
|
1,134
|
|
|
(1,134
|
)
|
|
(100
|
)%
|
|||
Reinsurance premiums
|
20,922
|
|
|
17,873
|
|
|
3,049
|
|
|
17
|
%
|
|||
Other revenues
|
1,991
|
|
|
2,212
|
|
|
(221
|
)
|
|
(10
|
)%
|
|||
Consolidated Funds revenues
|
5,808
|
|
|
6,276
|
|
|
(468
|
)
|
|
(7
|
)%
|
|||
Total revenues
|
516,261
|
|
|
485,957
|
|
|
30,304
|
|
|
6
|
%
|
|||
Interest and dividends expense
|
68,612
|
|
|
48,846
|
|
|
19,766
|
|
|
40
|
%
|
|||
Total net revenues
|
447,649
|
|
|
437,111
|
|
|
10,538
|
|
|
2
|
%
|
|||
Expenses
|
|
|
|
|
|
|
|
|||||||
Employee compensation and benefits
|
266,172
|
|
|
266,985
|
|
|
(813
|
)
|
|
—
|
%
|
|||
Reinsurance claims, commissions and amortization of deferred acquisition costs
|
16,944
|
|
|
18,655
|
|
|
(1,711
|
)
|
|
(9
|
)%
|
|||
Operating, general, administrative and other expenses
|
167,064
|
|
|
151,523
|
|
|
15,541
|
|
|
10
|
%
|
|||
Depreciation and amortization expense
|
9,908
|
|
|
6,419
|
|
|
3,489
|
|
|
54
|
%
|
|||
Goodwill impairment
|
4,100
|
|
|
—
|
|
|
4,100
|
|
|
NM
|
|
|||
Consolidated Funds expenses
|
3,713
|
|
|
5,580
|
|
|
(1,867
|
)
|
|
(33
|
)%
|
|||
Total expenses
|
467,901
|
|
|
449,162
|
|
|
18,739
|
|
|
4
|
%
|
|||
Other income (loss)
|
|
|
|
|
|
|
|
|||||||
Net gains (losses) on securities, derivatives and other investments
|
42,994
|
|
|
32,688
|
|
|
10,306
|
|
|
32
|
%
|
|||
Gain/(loss) on debt extinguishment
|
—
|
|
|
(556
|
)
|
|
556
|
|
|
NM
|
|
|||
Consolidated Funds net gains (losses)
|
7,640
|
|
|
48,850
|
|
|
(41,210
|
)
|
|
(84
|
)%
|
|||
Total other income (loss)
|
50,634
|
|
|
80,982
|
|
|
(30,348
|
)
|
|
(37
|
)%
|
|||
Income (loss) before income taxes
|
30,382
|
|
|
68,931
|
|
|
(38,549
|
)
|
|
(56
|
)%
|
|||
Income tax expense (benefit)
|
8,250
|
|
|
10,916
|
|
|
(2,666
|
)
|
|
(24
|
)%
|
|||
Net income (loss)
|
22,132
|
|
|
58,015
|
|
|
(35,883
|
)
|
|
(62
|
)%
|
|||
Net income (loss) attributable to redeemable non-controlling interests in consolidated subsidiaries and investment funds
|
6,537
|
|
|
35,763
|
|
|
(29,226
|
)
|
|
(82
|
)%
|
|||
Net income (loss) attributable to Cowen Inc.
|
15,595
|
|
|
22,252
|
|
|
(6,657
|
)
|
|
(30
|
)%
|
|||
Preferred stock dividends
|
3,396
|
|
|
3,396
|
|
|
—
|
|
|
—
|
%
|
|||
Net income (loss) attributable to Cowen Inc. common stockholders
|
$
|
12,199
|
|
|
$
|
18,856
|
|
|
$
|
(6,657
|
)
|
|
(35
|
)%
|
|
(unaudited)
|
|||||||||||||||||||||||||||||
|
Three Months Ended June 30,
|
|
Total
Period-to-Period |
|||||||||||||||||||||||||||
|
2019
|
|
2018
|
|
||||||||||||||||||||||||||
|
Operating Company
|
|
Asset Company
|
|
Total
|
|
Operating Company
|
|
Asset Company
|
|
Total
|
|
$ Change
|
|
% Change
|
|||||||||||||||
|
(dollars in thousands)
|
|||||||||||||||||||||||||||||
Economic Income Revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Investment banking
|
$
|
104,216
|
|
|
$
|
—
|
|
|
$
|
104,216
|
|
|
$
|
80,042
|
|
|
$
|
—
|
|
|
$
|
80,042
|
|
|
$
|
24,174
|
|
|
30
|
%
|
Brokerage
|
120,672
|
|
|
—
|
|
|
120,672
|
|
|
113,186
|
|
|
—
|
|
|
113,186
|
|
|
7,486
|
|
|
7
|
%
|
|||||||
Management fees
|
9,968
|
|
|
500
|
|
|
10,468
|
|
|
10,938
|
|
|
1,548
|
|
|
12,486
|
|
|
(2,018
|
)
|
|
(16
|
)%
|
|||||||
Incentive income (loss)
|
2,633
|
|
|
1,596
|
|
|
4,229
|
|
|
12,321
|
|
|
(2,958
|
)
|
|
9,363
|
|
|
(5,134
|
)
|
|
(55
|
)%
|
|||||||
Investment income (loss)
|
(3,141
|
)
|
|
3,626
|
|
|
485
|
|
|
18,476
|
|
|
1,478
|
|
|
19,954
|
|
|
(19,469
|
)
|
|
(98
|
)%
|
|||||||
Other income (loss)
|
4,304
|
|
|
15
|
|
|
4,319
|
|
|
(811
|
)
|
|
90
|
|
|
(721
|
)
|
|
5,040
|
|
|
(699
|
)%
|
|||||||
Total economic income revenues
|
238,652
|
|
|
5,737
|
|
|
244,389
|
|
|
234,152
|
|
|
158
|
|
|
234,310
|
|
|
10,079
|
|
|
4
|
%
|
|||||||
Interest expense
|
5,298
|
|
|
1,408
|
|
|
6,706
|
|
|
3,134
|
|
|
990
|
|
|
4,124
|
|
|
2,582
|
|
|
63
|
%
|
|||||||
Total net revenues
|
$
|
233,354
|
|
|
$
|
4,329
|
|
|
$
|
237,683
|
|
|
$
|
231,018
|
|
|
$
|
(832
|
)
|
|
$
|
230,186
|
|
|
$
|
7,497
|
|
|
3
|
%
|
|
Three Months Ended June 30,
|
|
Period-to-Period
|
|||||||||||
|
2019
|
|
2018
|
|
$ Change
|
|
% Change
|
|||||||
|
(dollars in thousands)
|
|||||||||||||
Non-compensation expenses—fixed:
|
|
|
|
|
|
|
|
|||||||
Communications
|
$
|
7,692
|
|
|
$
|
7,105
|
|
|
$
|
587
|
|
|
8
|
%
|
Professional, advisory and other fees
|
7,413
|
|
|
5,280
|
|
|
2,133
|
|
|
40
|
%
|
|||
Occupancy and equipment
|
10,113
|
|
|
9,923
|
|
|
190
|
|
|
2
|
%
|
|||
Service fees
|
5,653
|
|
|
4,809
|
|
|
844
|
|
|
18
|
%
|
|||
Expenses from equity investments
|
2,097
|
|
|
2,781
|
|
|
(684
|
)
|
|
(25
|
)%
|
|||
Reimbursement from affiliates
|
(270
|
)
|
|
(401
|
)
|
|
131
|
|
|
(33
|
)%
|
|||
Other
|
5,717
|
|
|
4,967
|
|
|
750
|
|
|
15
|
%
|
|||
Total
|
$
|
38,415
|
|
|
$
|
34,464
|
|
|
$
|
3,951
|
|
|
11
|
%
|
|
Three Months Ended June 30,
|
|
Period-to-Period
|
|||||||||||
|
2019
|
|
2018
|
|
$ Change
|
|
% Change
|
|||||||
|
(dollars in thousands)
|
|||||||||||||
Non-compensation expenses—Variable:
|
|
|
|
|
|
|
|
|||||||
Brokerage and trade execution costs
|
$
|
26,860
|
|
|
$
|
28,310
|
|
|
$
|
(1,450
|
)
|
|
(5
|
)%
|
Healthcare Royalty Partners syndication costs
|
132
|
|
|
132
|
|
|
—
|
|
|
—
|
%
|
|||
Expenses related to Luxembourg reinsurance companies
|
669
|
|
|
924
|
|
|
(255
|
)
|
|
(28
|
)%
|
|||
Marketing and business development
|
11,044
|
|
|
7,556
|
|
|
3,488
|
|
|
46
|
%
|
|||
Other
|
1,244
|
|
|
315
|
|
|
929
|
|
|
295
|
%
|
|||
Total
|
$
|
39,949
|
|
|
$
|
37,237
|
|
|
$
|
2,712
|
|
|
7
|
%
|
|
(unaudited)
|
|||||||||||||||||||||||||||||
|
Six Months Ended June 30,
|
|
Total
Period-to-Period
|
|||||||||||||||||||||||||||
|
2019
|
|
2018
|
|
||||||||||||||||||||||||||
|
Operating Company
|
|
Asset Company
|
|
Total
|
|
Operating Company
|
|
Asset Company
|
|
Total
|
|
$ Change
|
|
% Change
|
|||||||||||||||
|
(dollars in thousands)
|
|||||||||||||||||||||||||||||
Economic Income Revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Investment banking
|
$
|
187,212
|
|
|
$
|
—
|
|
|
$
|
187,212
|
|
|
$
|
173,966
|
|
|
$
|
—
|
|
|
$
|
173,966
|
|
|
$
|
13,246
|
|
|
8
|
%
|
Brokerage
|
225,829
|
|
|
—
|
|
|
225,829
|
|
|
227,257
|
|
|
—
|
|
|
227,257
|
|
|
(1,428
|
)
|
|
(1
|
)%
|
|||||||
Management fees
|
19,695
|
|
|
1,203
|
|
|
20,898
|
|
|
22,217
|
|
|
3,396
|
|
|
25,613
|
|
|
(4,715
|
)
|
|
(18
|
)%
|
|||||||
Incentive income (loss)
|
19,270
|
|
|
1,706
|
|
|
20,976
|
|
|
15,360
|
|
|
(801
|
)
|
|
14,559
|
|
|
6,417
|
|
|
44
|
%
|
|||||||
Investment income (loss)
|
13,001
|
|
|
4,467
|
|
|
17,468
|
|
|
36,710
|
|
|
(2,454
|
)
|
|
34,256
|
|
|
(16,788
|
)
|
|
(49
|
)%
|
|||||||
Other income (loss)
|
5,427
|
|
|
51
|
|
|
5,478
|
|
|
(147
|
)
|
|
313
|
|
|
166
|
|
|
5,312
|
|
|
3,200
|
%
|
|||||||
Total economic income revenues
|
470,434
|
|
|
7,427
|
|
|
477,861
|
|
|
475,363
|
|
|
454
|
|
|
475,817
|
|
|
2,044
|
|
|
—
|
%
|
|||||||
Interest expense
|
10,615
|
|
|
2,655
|
|
|
13,270
|
|
|
7,661
|
|
|
2,420
|
|
|
10,081
|
|
|
3,189
|
|
|
32
|
%
|
|||||||
Total net revenues
|
$
|
459,819
|
|
|
$
|
4,772
|
|
|
$
|
464,591
|
|
|
$
|
467,702
|
|
|
$
|
(1,966
|
)
|
|
$
|
465,736
|
|
|
$
|
(1,145
|
)
|
|
—
|
%
|
|
Six Months Ended June 30,
|
|
Period-to-Period
|
|||||||||||
|
2019
|
|
2018
|
|
$ Change
|
|
% Change
|
|||||||
|
(dollars in thousands)
|
|||||||||||||
Non-compensation expenses—fixed:
|
|
|
|
|
|
|
|
|||||||
Communications
|
$
|
15,394
|
|
|
$
|
14,653
|
|
|
$
|
741
|
|
|
5
|
%
|
Professional, advisory and other fees
|
14,184
|
|
|
11,033
|
|
|
3,151
|
|
|
29
|
%
|
|||
Occupancy and equipment
|
19,691
|
|
|
19,404
|
|
|
287
|
|
|
1
|
%
|
|||
Service fees
|
11,308
|
|
|
9,975
|
|
|
1,333
|
|
|
13
|
%
|
|||
Expenses from equity investments
|
3,620
|
|
|
5,657
|
|
|
(2,037
|
)
|
|
(36
|
)%
|
|||
Reimbursement from affiliates
|
(600
|
)
|
|
(844
|
)
|
|
244
|
|
|
(29
|
)%
|
|||
Other
|
9,693
|
|
|
8,821
|
|
|
872
|
|
|
10
|
%
|
|||
Total
|
$
|
73,290
|
|
|
$
|
68,699
|
|
|
$
|
4,591
|
|
|
7
|
%
|
|
Six Months Ended June 30,
|
|
Period-to-Period
|
|||||||||||
|
2019
|
|
2018
|
|
$ Change
|
|
% Change
|
|||||||
|
(dollars in thousands)
|
|||||||||||||
Non-compensation expenses—Variable:
|
|
|
|
|
|
|
|
|||||||
Brokerage and trade execution costs
|
$
|
52,292
|
|
|
$
|
56,936
|
|
|
$
|
(4,644
|
)
|
|
(8
|
)%
|
HealthCare Royalty Partners syndication costs
|
264
|
|
|
264
|
|
|
—
|
|
|
—
|
%
|
|||
Expenses related to Luxembourg companies
|
1,498
|
|
|
1,695
|
|
|
(197
|
)
|
|
(12
|
)%
|
|||
Marketing and business development
|
22,047
|
|
|
15,447
|
|
|
6,600
|
|
|
43
|
%
|
|||
Other
|
1,523
|
|
|
882
|
|
|
641
|
|
|
73
|
%
|
|||
Total
|
$
|
77,624
|
|
|
$
|
75,224
|
|
|
$
|
2,400
|
|
|
3
|
%
|
•
|
pay our operating expenses, primarily consisting of compensation and benefits, interest on debt and other general and administrative expenses; and
|
•
|
provide capital to facilitate the growth of our existing business.
|
Entity
|
|
Unfunded Commitments
|
|
Commitment term
|
||
|
|
(dollars in thousands)
|
|
|
||
Real estate (a)
|
|
$
|
23,749
|
|
|
(a)
|
HealthCare Royalty Partners funds (b)
|
|
5,665
|
|
|
2 years
|
|
Eclipse Ventures Fund I, L.P. (formerly Formation8 Partners Hardware Fund I, L.P.)
|
|
119
|
|
|
5 years
|
|
Lagunita Biosciences, LLC
|
|
500
|
|
|
3 years
|
|
Eclipse Fund II, L.P.
|
|
225
|
|
|
6 years
|
|
Eclipse Continuity Fund I, L.P.
|
|
210
|
|
|
7 years
|
|
Cowen Healthcare Investments II LP
|
|
6,891
|
|
|
2 years
|
Subsidiary
|
|
Net Capital
|
|
Net Capital Requirement
|
|
Excess Net Capital
|
||||||
|
|
(dollars in thousands)
|
||||||||||
Cowen and Company
|
|
$
|
95,807
|
|
|
$
|
1,000
|
|
|
$
|
94,807
|
|
Cowen Execution
|
|
$
|
116,967
|
|
|
$
|
2,541
|
|
|
$
|
114,426
|
|
ATM Execution
|
|
$
|
5,375
|
|
|
$
|
250
|
|
|
$
|
5,125
|
|
Cowen Prime
|
|
$
|
12,091
|
|
|
$
|
250
|
|
|
$
|
11,841
|
|
Westminster
|
|
$
|
21,602
|
|
|
$
|
250
|
|
|
$
|
21,352
|
|
Cowen International Ltd
|
|
$
|
15,479
|
|
|
$
|
8,562
|
|
|
$
|
6,917
|
|
Cowen Execution Ltd
|
|
$
|
5,158
|
|
|
$
|
3,087
|
|
|
$
|
2,071
|
|
Cowen and Company (Asia) Limited
|
|
$
|
1,092
|
|
|
$
|
384
|
|
|
$
|
708
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
|
(dollars in thousands)
|
||||||||||||||
Lease Cost
|
|
|
|
|
|
|
|
||||||||
Finance Lease Cost:
|
|
|
|
|
|
|
|
||||||||
Amortization of finance lease right-of-use assets
|
$
|
299
|
|
|
$
|
363
|
|
|
$
|
667
|
|
|
$
|
715
|
|
Interest on lease liabilities
|
56
|
|
|
52
|
|
|
118
|
|
|
97
|
|
||||
Other Information
|
|
|
|
|
|
|
|
||||||||
Cash paid for amounts included in the measurement of lease liabilities:
|
|
|
|
|
|
|
|
||||||||
Operating cash flows from finance leases
|
|
|
|
|
118
|
|
|
97
|
|
||||||
Financing cash flows from finance leases
|
|
|
|
|
$
|
668
|
|
|
$
|
1,133
|
|
Location
|
|
Amount
|
|
Maturity
|
||
|
|
(dollars in thousands)
|
|
|
||
Boston
|
|
$
|
390
|
|
|
March 2020
|
New York
|
|
$
|
356
|
|
|
April 2020
|
New York
|
|
$
|
71
|
|
|
October 2019
|
New York
|
|
$
|
398
|
|
|
October 2019
|
New York
|
|
$
|
1,687
|
|
|
October 2019
|
New York
|
|
$
|
1,617
|
|
|
November 2019
|
San Francisco
|
|
$
|
711
|
|
|
October 2025
|
|
Total
|
|
< 1 Year
|
|
1-3 Years
|
|
3-5 Years
|
|
More Than
5 Years |
||||||||||
|
(dollars in thousands)
|
||||||||||||||||||
Equipment, Aircraft, Service and Facility Leases
|
|
|
|
|
|
|
|
|
|
||||||||||
Real Estate and Other Facility Rental
|
$
|
122,752
|
|
|
$
|
11,893
|
|
|
$
|
47,506
|
|
|
$
|
37,428
|
|
|
$
|
25,925
|
|
Service Payments
|
42,673
|
|
|
11,827
|
|
|
15,744
|
|
|
8,771
|
|
|
6,331
|
|
|||||
Operating Equipment Leases
|
544
|
|
|
202
|
|
|
337
|
|
|
5
|
|
|
—
|
|
|||||
Aircraft Lease
|
105
|
|
|
105
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Total
|
166,074
|
|
|
24,027
|
|
|
63,587
|
|
|
46,204
|
|
|
32,256
|
|
|||||
Debt
|
|
|
|
|
|
|
|
|
|
||||||||||
Convertible Debt
|
149,175
|
|
|
2,025
|
|
|
8,100
|
|
|
139,050
|
|
|
—
|
|
|||||
Notes Payable
|
504,930
|
|
|
10,868
|
|
|
43,472
|
|
|
43,472
|
|
|
407,118
|
|
|||||
Finance Lease Obligation
|
4,788
|
|
|
571
|
|
|
2,716
|
|
|
1,501
|
|
|
—
|
|
|||||
Term Loan
|
29,897
|
|
|
863
|
|
|
29,034
|
|
|
—
|
|
|
—
|
|
|||||
Other Notes Payable
|
1,214
|
|
|
1,214
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Total
|
$
|
690,004
|
|
|
$
|
15,541
|
|
|
$
|
83,322
|
|
|
$
|
184,023
|
|
|
$
|
407,118
|
|
|
Convertible Debt
|
|
Notes Payable
|
|
Term Loan
|
|
Other Notes Payable
|
|
Finance Lease
Obligation |
||||||||||
|
(dollars in thousands)
|
||||||||||||||||||
2019
|
$
|
2,025
|
|
|
$
|
10,868
|
|
|
$
|
863
|
|
|
$
|
1,214
|
|
|
$
|
571
|
|
2020
|
4,050
|
|
|
21,736
|
|
|
29,034
|
|
|
—
|
|
|
1,358
|
|
|||||
2021
|
4,050
|
|
|
21,736
|
|
|
—
|
|
|
—
|
|
|
1,358
|
|
|||||
2022
|
139,050
|
|
|
21,736
|
|
|
—
|
|
|
—
|
|
|
1,127
|
|
|||||
2023
|
—
|
|
|
21,736
|
|
|
—
|
|
|
—
|
|
|
374
|
|
|||||
Thereafter
|
—
|
|
|
407,118
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Subtotal
|
149,175
|
|
|
504,930
|
|
|
29,897
|
|
|
1,214
|
|
|
4,788
|
|
|||||
Less (a)
|
(32,902
|
)
|
|
(223,386
|
)
|
|
(1,697
|
)
|
|
(25
|
)
|
|
(431
|
)
|
|||||
Total
|
$
|
116,273
|
|
|
$
|
281,544
|
|
|
$
|
28,200
|
|
|
$
|
1,189
|
|
|
$
|
4,357
|
|
(a)
|
Amount necessary to reduce net minimum payments to present value calculated at the Company's implicit rate at inception. This amount also includes capitalized debt costs and the unamortized discount on the convertible debt.
|
i.
|
Portfolio funds
—Portfolio funds include interests in private investment partnerships, foreign investment companies and other collective investment vehicles which may be managed by the Company or its affiliates. The Company follows US GAAP regarding fair value measurements and disclosures relating to investments in certain entities that calculate net asset value (“NAV”) per share (or its equivalent). The guidance permits, as a practical expedient, an entity holding investments in certain entities that either are investment companies as defined by the American Institute of Certified Public Accountants ("AICPA") Audit and Accounting Guide, Investment Companies, or have attributes
|
ii.
|
Real estate investments
—
Real estate debt and equity investments are valued at fair value. The fair value of real estate investments is estimated based on the price that would be received to sell an asset in an orderly transaction between marketplace participants at the measurement date. Real estate investments without a public market are valued based on assumptions and valuation techniques used by the Company. Such valuation techniques may include discounted cash flow analysis, prevailing market capitalization rates or earnings multiples applied to earnings from the investment, analysis of recent comparable sales transactions, actual sale negotiations and bona fide purchase offers received from third parties, consideration of the amount that currently would be required to replace the asset, as adjusted for obsolescence, as well as independent external appraisals. In general, the Company considers several valuation techniques when measuring the fair value of a real estate investment. However, in certain circumstances, a single valuation technique may be appropriate. Real estate investments are reviewed on a quarterly basis by the Company for significant changes at the property level or a significant change in the overall market which would impact the value of the real estate investment resulting in unrealized appreciation or depreciation.
|
Period
|
|
Total Number of Shares Purchased
|
|
Average Price Paid per Share
|
|
Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs
|
|
Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs
|
||||||
|
|
|
|
|
|
|
|
|
||||||
Month 4 (April 1, 2019 – April 30, 2019)
|
|
|
|
|
|
|
|
|
||||||
Common stock repurchases(1)
|
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
$
|
25,000,000
|
|
Employee transactions(2)
|
|
8,961
|
|
|
14.65
|
|
|
—
|
|
|
—
|
|
||
Other (3)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||
Total
|
|
8,961
|
|
|
$
|
14.48
|
|
|
—
|
|
|
|
||
|
|
|
|
|
|
|
|
|
||||||
Month 5 (May 1, 2019 – May 31, 2019)
|
|
|
|
|
|
|
|
|
||||||
Common stock repurchases(1)
|
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
$
|
25,000,000
|
|
Employee transactions(2)
|
|
8,903
|
|
|
15.87
|
|
|
—
|
|
|
—
|
|
||
Other (3)
|
|
4,737
|
|
|
15.40
|
|
|
—
|
|
|
—
|
|
||
Total
|
|
13,640
|
|
|
$
|
15.71
|
|
|
—
|
|
|
|
||
|
|
|
|
|
|
|
|
|
||||||
Month 6 (June 1, 2019 – June 30, 2019)
|
|
|
|
|
|
|
|
|
||||||
Common stock repurchases(1)
|
|
461,830
|
|
|
$
|
15.93
|
|
|
461,830
|
|
|
$
|
17,643,131
|
|
Employee transactions(2)
|
|
201,353
|
|
|
15.57
|
|
|
—
|
|
|
—
|
|
||
Other (3)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||
Total
|
|
663,183
|
|
|
$
|
15.82
|
|
|
461,830
|
|
|
|
||
|
|
|
|
|
|
|
|
|
||||||
Total (April 1, 2019 – June 30, 2019)
|
|
|
|
|
|
|
|
|
||||||
Common stock repurchases(1)
|
|
461,830
|
|
|
$
|
15.93
|
|
|
461,830
|
|
|
$
|
17,643,131
|
|
Employee transactions(2)
|
|
219,217
|
|
|
15.55
|
|
|
—
|
|
|
—
|
|
||
Other (3)
|
|
4,737
|
|
|
15.40
|
|
|
—
|
|
|
—
|
|
||
Total
|
|
685,784
|
|
|
$
|
15.80
|
|
|
461,830
|
|
|
|
(1)
|
The Company's Board of Directors have authorized the repurchase, subject to market conditions, of up to
$198.3 million
of the Company's outstanding common stock.
|
(2)
|
Represents shares of common stock withheld in satisfaction of tax withholding obligations upon the vesting of equity awards or other similar transactions.
|
(3)
|
Represents shares of common stock distributed to the Company from an escrow account established to satisfy the Company’s indemnification claims arising under the terms of the purchase agreement entered into in connection with the Company’s acquisition of Convergex Group, LLC.
|
Exhibit No.
|
|
Description
|
|
|
|
|
||
|
||
|
||
|
||
101.INS
|
|
XBRL INSTANCE DOCUMENT
|
101.SCH
|
|
XBRL TAXONOMY EXTENSION SCHEMA DOCUMENT
|
101.CAL
|
|
XBRL TAXONOMY EXTENSION CALCULATION LINKBASE DOCUMENT
|
101.DEF
|
|
XBRL TAXONOMY EXTENSION DEFINITION LINKBASE DOCUMENT
|
101.LAB
|
|
XBRL TAXONOMY EXTENSION LABEL LINKBASE DOCUMENT
|
101.PRE
|
|
XBRL TAXONOMY EXTENSION PRESENTATION LINKBASE DOCUMENT
|
|
|
|
|
COWEN INC.
|
|
|
|
|
|
|
By:
|
/s/ JEFFREY M. SOLOMON
|
|
|
|
|
|
Name:
|
Jeffrey M. Solomon
|
|
|
|
|
|
Title:
|
Chief Executive Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
By:
|
/s/ STEPHEN A. LASOTA
|
|
|
|
|
|
Name:
|
Stephen A. Lasota
|
|
|
Date:
|
August 1, 2019
|
|
Title:
|
Chief Financial Officer (principal financial officer and principal accounting officer)
|
|
1.
|
I have reviewed this
Quarterly
Report on Form
10-Q
of Cowen Inc:
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c)
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d)
|
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
|
5.
|
The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
|
a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
Date:
|
August 1, 2019
|
|
/s/ JEFFREY M. SOLOMON
|
|
|
|
|
Name: Jeffrey M. Solomon
Title:
Chief Executive Officer
(principal executive officer)
|
|
1.
|
I have reviewed this
Quarterly
Report on Form
10-Q
of Cowen Inc:
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c)
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d)
|
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
|
a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
Date:
|
August 1, 2019
|
|
/s/ STEPHEN A. LASOTA
|
|
|
|
|
Name: Stephen A. Lasota
Title: Chief Financial Officer (principal financial officer and principal accounting officer) |
|
1.
|
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
2.
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
Date:
|
August 1, 2019
|
|
/s/ JEFFREY M. SOLOMON
|
|
|
|
|
Name: Jeffrey M. Solomon
Title: Chief Executive Officer
(principal executive officer)
|
|
|
|
|
|
|
|
|
|
/s/ STEPHEN A. LASOTA
|
|
|
|
|
Name: Stephen A. Lasota
Title: Chief Financial Officer (principal financial officer and principal accounting officer) |
|