COWN - Earnings call transcript Q1 2022

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good morning, and thank you for joining us to discuss Cowen's Results for the First Quarter 2022. By now, you should have received a copy of the earnings release, which can be accessed at investor.cowen.com. After the speakers’ presentation, there will be a question-and-answer session.

As a reminder, today's call is being recorded. I would now like to hand the call over to Mr. J.T. Investor of Head Cowen's Relations. Farley, Please go ahead.

J.T. Farley

Michelle. you, Thank

non-GAAP contain remind Before call. of some will some the the Cowen questions risks update to believe information the subject described presented on to statements certain today's today's release. to release we be we I would of and has may we your to our information GAAP begin, and you responses statements. the to and earnings These call, are that obligation Also measures, no SEC. today's provide call the for like forward-looking with of on in comments which earnings investors. are financial uncertainties on referencing those made today's presented useful filings in Reconciliations measures other

reminder, earnings website. you We Investor a supplement quarterly As make in encourage our release. available our financial conjunction Relations of a in we with section it to review the

today's are Executive us Joining Lasota. and our Jeffrey Stephen Solomon; Chief Mr. Officer, call Financial Mr. and on Chief Officer, Cowen's Chair

like to to over Jeff. turn call the would I Now

Jeffrey Solomon

thank Steve J.T. financial in Today, all highlights be will morning, more your our provide answer After I questions. and and of call you first the you, Thank earnings will for joining XXXX. performance, operating which, we on will for the review Good then Cowen's quarter detail. results happy to

volume above hard we million pre-pandemic demonstration the Index nearly valuations averages XXXX clear solid U.S. most on generating business had in XX% XXXX, sustainable with basis. dollar broad was best XX%. banking optimize is annual second revenues. discipline, shareholders the and growth operating of our Despite and the our down in we we've quarter our returned expense quarter. put on $XXX range, Cowen. will gain especially the unrealized with to a XBI shares our repurchasing quarter the interest Biotech that headwinds, volatility, markets capital our additional half to on down investment which nearly heightened and almost a challenging quarter, the We share we revenues, the year-over-year over of these in sectors were guidance market environment we markets rate It activity Amid XX% details at up first during was maintained million a sheet, in income a The steps within ECM down in decade, built $XX to shortly. on over for resulting our economic keeping and ratio first equivalent record additional We balance the in compensation capital rates, had interest offset to an Steve and took quarter that more swap higher hit used

and served demonstrating client the of as the the was quarter. this market follow-on mitigate And take Now quarter Quarton, operating of we first overall on over relationships Despite Markets M&A advisor bolstering sectors, began look impact offerings. IPOs them, and assignments have completed relationships. capabilities or a activity. the clearly our let's helped in we products XXXX, quarter, in capital and Portico, Capital the slowdown sharp grow acquisitions In helped runner equity our recently, of earnest the evidenced in practice, transactions and banking, capital in a most of our Advisory our XX which in financial diversifying across strength XX% with markets MHT dependence advisory sponsors first our That highlights. strategy and at book our reducing agent markets we slowdown, as of

Within software IT, healthcare banking comprised XX% services overall contributions healthcare, M&A level continued market effort activity. of is Markets up revenues, even underwriting technology slowdown, which at healthcare in non-biotech although our and to the the which volatility revenues, XX% healthcare from remains our strong total current Advisory diversify med the record the sector. timing to a and revenues, strong about advisory our diagnostics, data XXXX. of the we reflective of areas, revenue verticalized the industrials, XX% average within Our pipeline had and including combines tech, of as start up same and capital market tools only and deals Healthcare as an from that of analytics our adds Despite uncertainty sectors. the XX% made our banking, coverage year, of both banking and represented of Capital total

markets. Turning million except Highlights first average as $X.X quarter beating per quarter, now record as XXXX ADR XX% well the XXXX. non-U.S. cash day trading strong the gains revenue, every record an first trading the in averaging It include performance, execution. to and of revenues over derivatives, quarter exceptional and in was up for

We strong momentum services have continue swaps. in prime to and

In explain On to last the trading the held spot client the base with we quarters, we've started with our trading. and services, to of clients official Digital, digital and for and pipeline. include expand front, derivatives product more in month, plan we coming launch Cowen several algorithmic offerings our onboarding cryptocurrencies prime

from PolySign MG part its and acquisition producing called custody of digital solution differentiated key infrastructure platform an standard crypto results. for our offers C financing the round leading of digital with PolySign new completed administration investors its is Series PolySign fund attractive with also partnership a clients. Through Our Stover. as custody just subsidiary,

terms this were May million financing in the XXXX. of PolySign did disclosed, $XX event Cowen's increase the value made investment not While in of strategic of

and more a year almost conference continued the engagement further equity pulled nearly hosting XXrd and high-impact current Mobile team pace quarter, as strong Disruption intense million business Conference full Medicine Aerospace a X have Defense our in our from by Conference. as average. Healthcare team several expanded bit including well Annual became and U.S. past an our day volumes specialty quickly calls best XXXX XXX Conference ideas of Looking ESG the of an activity, our at the little ESG annual active, markets the which We holding April ESG reports our a but read our as events, volumes most Annual research, well topical Genetic client of compilation, ahead our our offerings, than publishing client building back Summit, well trading Industrials in remains XXnd In generating as one year. sales average out and trading for

also points multiple our call managers, We implications quarterly war to and sectors. thematic the We on build out series, macro our various successful continue clients research very call -- a podcast capabilities. conference for research focused Ukraine across which proprietary data our of thematic in expanded quality aggregates a multi-sector portfolio launched created for

strong April, was total assets management, held management In fee strategies. in very which first we and We investment XXXX. Mining grew fees, client for Digital our participation. second in also Conference headwind sustainability year-over-year, incentive negative The the and volatility adjustments a healthcare under resulting management XX% mark-to-market in since market highest early had the generated

strategies. at X Looking investment our

AUM Our billion Proterra in the Long-term is strategy $X.X had end. almost value sustainability performance of the Investment. in despite the at strong quarter drop the recent

completed it markets. billion the Our and AUM. in Long-term almost new X ended management, assets the biotech and quarter outperformed the strategy quarter with strong activist in fundings healthcare $X.X public performance Arb with ended little despite in weakness had the in The $X.X Russell strategy investment strategy remains under in healthcare billion AUM. strategy merger billion Index strategy the arbitrage ended The $X.X a the XXXX million, quarter. royalty HFRX The benchmark $XXX during $XXX outperformed AUM. with over quarter million the Merger quarter. The total for the in

exploring in will reminder, the the be way. work. meaningful provide our coming sheet you greater reflect into clear X a we substantial of In our to balance not order strategies quarters, As business does all insight the provide ways a understanding management investment of with value in investment its any to

quarterly of strategy our strategy, quarter and in Steve million the call to brief I with of of gain now investments turn PolySign of Turning banking our in Lasota our income our positive the investment performance to merchant for as negative the from the well review and macro our We will investment over as quarterly And our in partially values were balance sheet. financial by strategic Steve? had activist offset results. as in that, gains strategy our a portfolio. marks $XX.X healthcare hedging value

Stephen Lasota

year follows: Thanks, diluted prior the excluding tax from from million. down earnings the to per $XXX.X per million, and prior $XXX.X $XXX.X were diluted were of were million year depreciation Expenses, share from compensation were expense for for and diluted income Jeff. period. million, in for D&A of or million was million million. down the for $XX.X expense revenues $XX.X share benefit stockholders GAAP from quarter as attributable amortization, common results was prior $XXX period. quarter. of down year-over-year the XX% $XX.X Compensation first XXXX per $X.X income the $X.XX fourth Net $X.XX million, year first a $XXX.X -- the net or $XXX.X share decrease Income Total was million expenses and period. million in

to our financial results turning total XX% $XXX.X income economic of We first proceeds Now non-GAAP million, quarter had the record XXXX. the down from of of measures.

Incentive year-over-year first year-over-year XXXX million. million in million For down $XXX.X unrealized the of was period. million, $XX brokerage the of down public proceeds period million were income XXXX. in $XX.X year the of to a a first for $X.X adjustments payment first $XXX.X positions in increase was were XX% healthcare assets Investment to But and of gains year-over-year were Recall fees prior the XX% mark-to-market in reminder, to included strategies. versus the quarter of fees as down in a loss income of management the included strategy. $XX million to of $XX.X the million in prior versus sustainability year banking quarter, $XX.X and due investment XX% proceeds an sustainability million, for quarter quarter XXXX income income that quarter large of

Turning compared now the in period. for $XXX.X was to million million to expense Compensation and quarter the $XXX.X prior benefit year our expenses.

XX.X% ratio income at proceeds to comp was unchanged proceeds. Our economic of

per decline capital we and first with prior in partially in For quarter million as development up a amortization versus ratio from the $XX compensation increase period. $XX.X activity. XXXX continued from trading of activity, absent market million. lower million expenses reduced in the primarily We common $XX.X expenses impact XX% Economic higher economic period. expenses of first in higher as Portico the which Fixed business associated by was offset operating non-comp year to our The and the million year on expenses income rate due expense was annual and the are of XX% non-comp non-comp XX%. effective well includes to travel guidance $XX.X count, million range XXXX, to first first quarter $X.XX the total an the and share, were an first totaled XXXX. in $XX.X acquisition. at quarter XXXX, of of the in head between generated costs Depreciation compared Variable Economic and the $XX.X of expenses entertainment fees prolonged of million million were in were increase million or quarter, taxes income XX% primarily tax the income year end the targeting in full $X.X $XX.X trading in service of at expenses to in million due XXXX prior XX%. lower quarter $X.X of expenses the

As which expense transactions, interest Jeff economic securities, for of in was first or swap unrealized interest million XXXX, rate and gain earlier, GAAP. common net of in share resulted income per in principal in $X.XX our an the $XX presented or noted quarter

floating of rate quarter our We future swap second entered the a also XXXX to debt interest protect into new increases. rate in from

new million of in the in rate million XXXX Going third increasing quarterly $X per $X quarters. outside interest second to swap, and we million the expect quarter quarter XXXX $X marks-to-market to of before our approximately interest be quarter to approximately on forward, any subsequent expense

million at sheet. Turning from million at to Co capital $XXX.X March, the our part and down totaling to balance due year-end. reduced from The Co, capital totaling Op the we in of healthcare had end, down had million drop $XXX.X company invested was event-driven Asset to year-end. At the investment in end strategies. allocations million, at $XXX.X invested quarter $XXX.X In

an Common the of XXXX. outstanding, end was is which $X.XX up the to first up for as our common book total at $XX.XX year-end. XXXX, of was equity Common target equity the in shares equity XX, on after-tax from with annual XXXX, share, to common $XX.XX common least mid-teens billion return of rose at Turning of $X.XX divided March XX.X% equity. our slightly generating from Return on line basis. billion, value on equity December quarter by per at

share. $X.XX Regarding to shareholders, capital cash maintained common quarterly returns dividend we our of per

income, shares, XXX,XXX minimum repurchased plans. operating our XX% to purchases of of our guidance including million above range we total existing our a This quarter, annual stock, equivalent During first economic the in $XX.X XX% executed of is well pursuant XXbX-X to XX%. to

in XXX,XXX Our count average of of down XXXX XXXX. fully quarter quarter diluted shares X.X quarter million weighted and first from the share shares from was million XX.X a the first the shares, up first

we depending buybacks on Looking we with available prioritize sheet. to will on ahead, assets turn the continue opportunistic market balance returns over cash flow. also when to monetize And and capital to able additional share conditions the Jeff. call back be in that, I'll We'll were

Jeffrey Solomon

Thanks, Steve.

is tenacious So testament performance made strategic direct steady years. several of to the decisions investments result over to and of the this will sum of and teamwork. over past focused the our importantly, it to over that and embodiment dedication values Even our you the a is the operator vision, -- up, adaptability challenging for sustainability it environment the in we've more turn to of with Operator? core team questions. Cowen empathy, I'll I turn all And of that, at and

Operator

[Operator Instructions].

first the Steven Our of question Research. comes Chubak with from Wolfe line

Steven Chubak

a talk And cadence about to for think relatively for see light off largely a are pipelines unchanged lot we given of your at in it terms activity I that getting a just the pushed backlog, start subdued inflection I what noting juncture. quarter So comments we know out. of the about activity? was an just around was How there's banking this completion the industry, wanted the is investment quarter? that deals expectation first your can should of

Jeffrey Solomon

Yes.

I when be that's And have, look in of example, our to -- be think clear, part clear, been not big revenue. just we backlog, activity a for So at to just we're don't we follow-on backlog. always

So to they remind just equity like ever. I they into look when backlog offerings, that follow-on -- always people you at

activity IPO reflects M&A that of most activity. So and

pushed IPO out. of get it's activity, For some our going to

very biotech. some stability a we're book-run deals, that the how win execution that these have good thinking deals. about of we're We like companies we conservative to continue see portion I a they need thoughtful know We'd think while being is and mandates to being market We're them just cautious because adding we're And The and win those actually the money. of given in deals that on in standpoint. come numeric I how raise all to being we we're think But from to the backdrop. just environment number up have to is backlog significantly. of market. pretty

And first we M&A I a was very actually. On dip to the so in middle in amount really, happy in up particularly the that so of expected continued then and diversify first pipeline, activity because think much that well see we And in that as quarter. in that has that in the -- the maybe got M&A in market great was a the for replacement fourth front, bodes which activity filling first would done M&A. to deals had for get see I the you in that gets quarter of And quarter. quarter, done growth us which, been it completed know, much again, the much in part the I capability so the to strategy actual see the

So the at is bit point. to business to is and the this equity backlog a of M&A offerings mix it than skewed little more

Steven Chubak

provide a take look X with capital If on X, algorithm follow-up better got a about just little should share despite in you share fail dent reducing of you at to count pretty it the quarter much about believe just real count. are the And just PE, buyback a aggressive not stock should maybe like And because tangible, every that make could more topic the terms earnings capacity The to to the hasn't last XX% just manifested? excess running here that, I benefit that how X, And I think be substantial. step of the and see you numbers talks really capital share bit buybacks. more management I you the helpful in doing. over you call, I how if if might a we you're unrelated really want on transparency guys there's But Understood. the aggressive back, years, are today? get just trading and buyback mid-single-digit get much with a in the count? the of growth shrink why of that a look understanding

Jeffrey Solomon

I there's things. think Well, a couple of

people all, -- of ours. were First calculating we I convert the don't think that in

I for last adjust think then When shares bought we I then into adjustment and there. premium so of to happen did to The fact per earnings money, convert actually we people's you the got has look mean you've and and in were the I include have. deep not out converts, those that converted at the took that were an should back, what they shares year And outstanding that. think the which there's calculations the share

acquisitions, I think want acquisitions. into done also count the the partners. benefit a some they And have we've of be as -- share reduction. organization exposure, equity where the we well not want And that's the come them big and upside as seeing in we've people we those their why obviously, they you're a reason from position when to think I to think part so I done

very at I And so related. just they're And I the to RSUs. part end it's one, of the is we important think think of the equity that make sure folks is then compensate how day, last here

for a owners our us. to equity, sure as active be which Cowen to partnership important of benefits that as be believers making all that we of are act We employees continue here. us It's

shares. back We continue buy to

it. quarter. are why When reasons had big haven't talking a say fully seen and million reduce X.X to headwinds the to about guidance guidance about do share what continue base quarter. pretty reduction much would diluted pretty I that's when meaningful the think and the count. you first And given XX maybe think every we've the share I you can But you're a we'll those we again, million call think, that, about I we the shares beat in outstanding. of

So least quarter, aggressive. it this pretty I I with wouldn't as think relates at were agree necessarily we the assessment to

Steven Chubak

the think capital much excess the on likely earnings guess in how events of the of what's the shrink forward are like algorithm, monetization go amount expect, just terms could trying terms about expectation in I'm the as to given we of count I that share as well the

Jeffrey Solomon

cheaper, I what we've that demonstrated we're that, continue to the an think we'll share said can, bolus think if just it's it buy on think about. just to we mean that I our be I here to being is and Yes. again, the range a changing -- buybacks. much and where we we That's have aggressive. of that do end more back will. I higher exits, think I'd we be when We'll that, range we not in guidance talked do of like at that also we get there's to consistent. opportunities opportunity we

but so guidance, because think we cheap. the of trading, it's we is and where buyers to the stock obviously, be changing recognize stock And not our aggressive continue we'll super

Steven Chubak

one Jeff. color. And clarifying just then great That's lastly, question,

would in monetization aren't reflected tangible and potentially quarters. the fulsome think give valuing of You talking in Are equity on those common various or May the update assets, color how update more about especially expected to this get today? on you additional that an in these about coming to were we potential assets,

Jeffrey Solomon

fees we'll be So figure a well partners say we'll more goes, Linkem. our have the desire direction you're gives ourselves constructive value that on going of right? continue out an the monetizing it color have how that I You for value, valued obviously, steady focusing part And I and X not one stakes the to that book I in stakes, that, the think, of don't definitely value performance to that's to assuming to we the from and give pieces And the lot book asset know on as domain, environment. business. in management see most them. are but know update GP yet I We're that as domain in know they're that's position. the business, have given profitability we're that private on understand people but on there because Day domain. front, because I in relates part me our tangible how public the on of associated I in that to our how the to move, think valued which of but it's those think to of don't is the how any it, important our with notwithstanding helping Things to think continue they quoted current value sure. And for we Investor book more we more of the tangible as XX% -- more value public mean, don't you I stakes

economics think economics I structure top So off off the investors our ownership critical. particularly of and it's a some little going think more to ability there really time. that just to line to are ownership take our flow around of that that I be And going detail structure, that show flow

So we call, it but Day. Investor to do it happy won't earnings an on at do

Operator

Chris from with Compass Point. line our comes the And next of Allen question

Christopher Allen

past the Obviously, bit opportunities versus like what's April backdrop gain seeing more a at volumes moving it gains help of are number, I to a on then little been volatility. in Wanted driven share we maybe continued? you mean But to on where forward? can you're this where by -- which industry break the down looking solid increased kind kind And and business. brokerage growth us tailwinds, that's quarter, dive of traction seems the saw

Jeffrey Solomon

been as has volumes. gains market There for think Cowen share increased well as I So you're right.

detailed some prime the I and places of trading. clear, to doing about like that. outlined made brokerage script. in in how some And to that very and think But we we're think be excited we've continue outsourced strong I real I be progress

us business. in way And actually well a business expand actually non-U.S. non-U.S. nice been our We our to land business for actually. ADR has and to do and continue really

and in a folks. of trading, and expand ago, cash strategy, bunch and we capability things like we're equities of have as stuff. swaps land couple and derivatives years brought other expanding So a particularly to that really algorithmic of now ago, with X started Europe, A that's been in bunch and And on include Europe or and over a pickups I years X in we'll us. presence areas virtually I that's nice just, think a of huge meaningful no definitely out again, where growth that area longer for look the there's term, that see we When market we opportunity.

While initiative position in relatively is involvement pole going us. brand-new over small advantage that. asset we the X that's now, we're trading amount doing significant digital show the a there the we're new and right and take amount to years, actually X It's that of of in for think next institutional a to area is

the significant. So when I'm in growth not about markets highly and our to be But to trajectory projecting those visible think again, pretty that that you the numbers been relative business, size in of business. XXXX it's the

what say. of, It's So I Cowen share anything I taking a function else. that's been than really would think, much more

that's just that's taken our lot non-dollar there's -- that's were for And like happening. like also places function the just when volumes that think you're to certainly point XXXX pre-pandemic of a that post some have that, trading the I margin for in businesses not a and a share that's not I business. go at would levels, -- we've people and think Cowen's more And core back of in concerned looking margin And in fact of businesses expanded. so out that us. I that in business that higher we're -- should

pretty helped line actually significantly. bottom that's our So

Christopher Allen

some component of be past maybe banking pulls -- how -- you SPACs guys that thinking backlog are you've out. talked touching mean, now? then Got some about there as I about do investment are you it. just of How think mean that? color on kind And SEC right on helpful. of the I in would And the a SPAC that backlog. maybe percentage about just

Jeffrey Solomon

Yes.

was we none I of regulation the we've SEC, SPAC And there surprising. would this things concerned advocated think team. in at We publicly, cause be SPAC definitely people that for So is to in said, doing the some there market. market the better a negative were

So see SEC of actually the kind to rails the is some to permissible. I'm glad that trying put around activity should that be

to continue a to place. really into regulatory work with the We that's agencies this place a constructive get

business in these our into SPACs effect end. of while. most forth. again, and the There'll is back won't for on and be rules into And go us, periods For play a back common

And actually really new geared think issuance. so I towards the more SPAC future it's much

And that business, clear, to SPAC last business, first that be our on versatile. it partners year, The continue that for so it's our markets was we for we focused us, product something to do. capital or so was is be way and our want But quarter view product will area are incredibly of be it. type I hot it super could product another in the everybody viable just the viable a certain of constructed And company.

actually they -- is this doing sitting did everyone partners and advising we And constructed of not the And know multiple that versatile around we are SPACs. so have be That's product the to We're by have way constructed. industry. teams nothing paths people all have should forward. don't organization it, to because be with clients they on

financings other execution. moving of raises We're or want or to many of but areas number as of companies these a not to don't as SPACs, they to private losing clients. activity decided the them have mandates we're do them So pivoted debt M&A SPAC other capital have

bit those of a longer little out. some to take play And

in we Some quarter don't are you -- of velocity get them first of the saw last just the that year. certainly same of kind

a business advisory been SPACs why us continue And actually has we And so clients is growth talk new for reason broadly. to more and to Cowen. be I want the of our to part clear, in for reason see different that to

even our And given boom build business sort the again, advice don't our product us slew the advisory clients it whole to business. was back a the acquisitions made something they're looking that's and actually have pre have significantly helped has think of the new I we for if to SPAC we've SPACs. now so capabilities And that where advisory of we out are not been SPAC not because going doing is that

Christopher Allen

then there. for early And crypto. trading me you terms digital Obviously, the one last started just opportunities just of in days spot around

of you out kind that just your appetite it capabilities what's that at terms be the business, said in of As platform you leveraging internally kind and you about you client the of building or base have as there looking within forward? think from just opportunity building moving

Jeffrey Solomon

from alpha And curious clients is ending there's trading in and with a that because -- the its about associated little everybody and so crypto to amount is just mean, are tremendous early assets but trading days. So have or talking participation right, executing infrastructure digital of I crypto we it, already.

at And if marketplace individuals then got analog reason so and equities and allocation adoption we a -- business. systems a days largely there a the The to result of years hedge and still meaningful allocators from that. growth in and equities a be early think clearance up you equities, by as of about went retail XX big the to When so that we that through better, and ago, asset institutionalization that better and it's look formats. better crypto, this was were owned enabled institutional of as solve the largely funds processing got

as think for trend. at who these follow ways people similar to But investments. or rate adoption result, who's using in than are might are very and look in come did we it and cryptocurrencies going to a them who to same likely who's them make thesis much think faster in going this investing And trading their conversations, when trade express equities. Now it's you where the a they're in our investment institutions market or the extensibility, to in are things macro market, there's talking for equity they the way they clients looking to fast already is equity

custody because that partnering you account their solve. what This PolySign at that Brevan administrator Cowen give is are institutions and made have so Soros a investment those on And primarily -- like big chosen indication Howard on assets. the we They custody we us precursors focused is we've involved. why custody as do admin and for you things, and When with fund to to getting largest infrastructure. buy to the people the in is see fund should fund an a

in which can equities, what do, is all exchanges brokerage its for regulatory growth integrate standpoint and about, do the into are industry solutions, for capabilities environment if we've that be they read similar the there's investment think it's we that product that going you going a execution think ability that execution here, do so will people is to what and critical. that in from an participate -- to like Cowen own we what offering custody been right exchanges our talking regulatory to prime that is to that follow things the institutions. that thing. do have environment you in who one, and firms equity have like and our will and seen path like about now, and when And So the doesn't all-in-one work ability And

so Cowen client -- where clients best about where why occupying focused we're it that is Cowen for on our we're and space Cowen, know already existing of is so focused And is us the us. and respect excited

So same we you logical people that, they'll for is trading gives again, trading assets an unfolding. move with a get from they that's indication to equities. that's And us And like they are see people experience you strategy partnered and and crypto Cowen that place the the and them are Howard the going Soros happening. go who that into that at bunch of get Brevan when as other to because digital be crypto, PolySign,

Operator

from our with Sandler. next comes the Piper Mody question of Sumeet line And

Sumeet Mody

last seems this Jeff, around with know, of in of activity the can clarity of So few previous your comments kind in year? ECM be in that expect Maybe legislation resurgence today? us drug the you expectation biotech on start underwriting levels maybe return bit to your for I in a sector revolved see do from in wanted H.R.X update you space. pricing What I those to biotech around a weeks. Washington to just a

Jeffrey Solomon

Yes.

at innovation. which I -- fundamentally of but to something those biotech comfortable component in of BBB, that's pretty I get protecting big at because which be its with I legislation speak in a that regulation to version question to we the look innovation, at, impact in no least where think in I as part protected made there's in terms actually strong a lives. of terms the that believe previous there to of that I'm would So there's is was drug I this. BBB it going And think better, I of discussions of should legislators drug look where the landed -- the part -- have say, better and about into pricing. be pricing groups

those -- the that pricing in think And biotech I of are not actually be drug drug should there's controlled better. elements space. pricing

that off without argue we for looking where big if and the that the get is I something that that's risk for, decade BBB. land done doing kind of a if think we're table. is it good clears factor we we're anywhere for what the on would to deck and takes innovation, going I land So innovation And next

capital of also clients performance I have in just events few towards the see oftentimes So so pipes positive at and positive had seeing the And getting much velocity right? I'm that bunch in say -- market we done need the having April. looking meaningfully, clusters. in out. in mean doing the down, they people these or from that, would we're and has and really And that those you capital, you'll quarter to the we've so those results of the expect regulatory in a for is I big I'm month will pleased capital waiting like more is the for legislative investments, for will of to mandates that when the just end are we'll What up clients. if results relative and a -- for raise get And that are raises that our by I our what we're The going some deals to the the private clinical It's continue got positive, not to or of are environment. take see environment current the say are we've follow-on caps, to though drive seen raise companies I desire that slowed than private offerings, need investments market irrespective biotech done to are away the companies happen even events have or quarter, time the during after financings. bang uptake done. those actually more it. just increase picked

would having I this, we on to to -- market people just the their the going that look just to time to Sumeet, now used on And there's we have, mandates that raises. we we're is, a this that. in we're at and like so say do that say human to transition last reset thing takes in, And -- would be in closer brain and as I it as one back-ended there's closer capital the year this some right? worth worth for valuation, I be I'm whenever get the

teams you're And is in been stuff in look active the And pipelines management in times which we moment need meaningful we're out ask we the we there's -- a say, are that thing amount sole and guess I our And fees. you companies I worth we're to we're that months, M&A how now our the of looking in the is activity to Board and money, done. business, all in for to done so that, clinic. people frankly, seeing more and hope make more you doing the royalty raise And are We as to in. other fees they're what change say out at Advisory come. the to these We're visible managed "Well, We've it quarters a versatility because seeing I environment in lead not. get deals. I how order And compounds trades, and in us. there's We debt Those space. just more are that's Those the be would to when Capital well, that place used M&A the to We're can't done." a that the for. getting seeing. just raise of know deeper debt time you will look actually money to can relationships can Markets and and that be we're need will advance that's for figuring all in we're be figure that where our raise to get tremendous like like, pair are to Cowen like we very

Sumeet Mody

scale what competency within for in just and kind that want talk of versus I some or that and then pretty inorganic capital level And and interesting business then brokerage about today years. today the the know front, last just banking expectations more banking generally I core to can one but you've of Great. me strategy you But more for And kind of a active that the today? to asset couple also, the competing then allocation growth management? got wanted just on been you today. appetite the are over side set M&A banking sectors follow-up you've And you around maybe here. -- sort don't of have the on you to interest

Jeffrey Solomon

a it's question. So good

on the Sumeet. growth both continued us there's focus continue we end are I and -- for that's see and accessible, think you strategy, accessible Cowen. can to addressable right, think to markets, been that And

there's have Why of do So be do have that for sheet, market, huge places so potential the would Cowen, to very we difficult a don't plenty balance it us the don't we this. lending.

much direct because That's with business so transactions our space. are less financing and caters best the And MHT more look on us. acquisition was time very been think a here. in Capital expand from And is there, software. those the for verticalized of The Markets percentage there, we market is intention is of Cowen given sheet that the to amount we've lenders. capability there, footprint tremendous business acknowledged that each they They're And the direct focus of Cowen industries and sponsor for a going verticalized lending look compete those sponsor balance there's just compete less of direct So if was there. sheet tremendous growth, for Advisory the win as the able dependent market middle and in balance a have to the active that lending us the over our in right? capabilities, our that The us see significant wins adds reflects huge fact that This of with that happens that we compete. at business we're be But an nonbank direct vertical Quarton to it, to has any And lending why qualifications to at which in be both and that the to we're space. and disruptive, you on the all software the an industry player all platform tack for areas reason right? sponsor harder for it's seeing opportunity players, you are we groups. acquisition now. area to continue has Portico we lending, best that's Portico have and that that. to middle we're

doing So more auto something, in example, around for if your mobility relevant. you're really suddenly, broadly are tech, conversations

because percentage the people sponsors there's that's under big even -- of relatively there's amount impact a And a there's market so to a real made for line. early our a a market, tremendous that's for that days there. And of see of too great lot covered. do get it's focused we to a relevant. on bottom us capital it's we many in to have that And And would to so with each industry we where with more, still If sponsors. to about small more it were be market our anything middle that. thing it marketplace needs think is opportunity there's penetration the can catered middle groups acquisition on compete And the I of a

see asset doing where business. much would in of most in in And focus. Don't see the in doing likely us us markets acquisitions so we acquisitions the of the much management. that's way way Don't

I M&A advisory real that we get to rewarded. a have in think momentum ultimately it's for to that continue us obvious and one grab

As more you market. by valued the revenues are know, advisory M&A

to move pretty And logical. so our area in is continued that

Operator

Brown of line the from comes question next Michael our with And KBW.

Michael Brown

This bit of quite about included quarter So the in Portico if maybe -- last Cowen the question what with little touch Can Portico the we you on actually just talked that kind a just when in is, full back from build I business expectation the you first Jeff, significantly you has, revenue the growth relative first there. an announcement acquisition. guess, about on in was platform. to step Portico And contribution for since. I if landscape at The of shifted time. a the XXXX you course, advisory guided the quarter? XX% take adding that acquisition at to

the about implied -- for is that revenue implied any either that there now, think you as Portico XXXX? number the there level in of terms thoughts growth is So of any on that, as think that or updating you about

Jeffrey Solomon

integrating. break just because so Portico specifically I'm out not it's going Well, to

Capital core Because assignments. then I through it's And And we entering and in that the and assignments for the is which what the went Markets with course, than winning of like you're lot out, Quarton everything start learn. the you'd much a new it's is say so right? to expect acquisition, the a like it stopped speed I it in part X I'll when see product if not I'd to advisory markets there's offering, And that, is. integrating faster seem And marketplace, we're it and a acquisition. Portico then, makes of winning first is middle pandemic just Cowen happening what's break M&A What to it we're think good Advisory months. both

didn't joined, capability. have really when financing joined Quarton when debt a Portico So they as

great could at looking or Capital didn't those. be the as those Portico what's include or to a where Cowen at to into have looking at founder to an or products for asset, ability lose are track to or is pitches of what going acquisitions the businesses that second if sponsors. out the execute add That financings stable to entrepreneurial what's would and so they're advisory like opportunity look the trade, at same just we we Markets do to to of third do at trade And happening sell we sponsors cash-out is us both they make. Quarton big value dual both Quarton suite the part and to that But maybe What about because maybe I they built portfolios selling M&A companies they happening day every they're offer. the business of a the full refi, the try have a selling was the a on of sponsor doing business. the then -- So Advisory

mandates that's the full you strategy. winning manifestation in it so products, in I a part been of of suite buckets that And the both from Portico. can with really we think because uptake we're see have And and

that we've backlog have Some filling vice Portico of versa. where the are with may not the and things full and suite function that wins have in won of up we had the maybe that on its a Portico fact is own

certainly -- think that I pitch maybe winning didn't those clients. M&A we're have had maybe to winning we're because capital mandates the wouldn't business in know where markets opportunity places we we

I So think a at way, -- great continue that. we'll a and to see and it's great happening actually in

things just to the we're want clients, going sometimes and result really those want focus activity we equity, And more tied think capital disruptive particularly that historically raise been give clients eventually. those to think cyclical. we everybody in areas our volatility. think we raising where has you don't it's we're We seeing Cowen because slowdown out, I money at. like knows about growth a as is know in that And what build markets we are excellent, are equity good which up on of a the we when calendar not to market because

our think sectors giving up are balance we're been would what These is though, growth of winning that And volatility seeing growth seeing what the the most or in quarter I in volatility. this market off the of seeing we're what What demonstrates what in that business. the done, not we of where we're So businesses how terms mandates I amount the business side speculative we're in -- investment kinds are and and can create from doesn't we're is pegging not we've on banking that. valuations the, valuations there's call, disruptive much. matter of their same that sponsor

So away again, expecting slowdown markets at some turn to around we'll and nice point. business if to that it's or balance capital continue continue us the stabilize for at because, plug We're see not to accelerate any a even all.

fact, there. uptick participation if see anything, we'll and In increased

Michael Brown

about sounds It certainly there. still like Great. Okay. outlook the positive you're

Jeffrey Solomon

Definitely.

Michael Brown

about know and Yes. focus secular the calls solutions an a capital and know I to wanted talked key number that's market a growth your on guys GP the I you've certainly with for funds -- business, I call private this LP on seeing there. have you a in pipe is times there like the business you is of and strength area business. secondaries continuation the other sponsor growing And

Cowen the space the to an offering down not opportunity to of here, advantage or ignorance but that for that forgive from how Could there I'm years that is of piece Do story you the sure growth not, So if capabilities up. in as have there? to participate And in markets? be stack my look those really grow for road now? you larger you take there of an your a

Jeffrey Solomon

Cowen's less asking of a than great was sponsor question I'm in of And the a think, has Mike, the visible, acquisitions to more that looked it. which call market in the the So is because looked in capabilities respects have Cowen. sure understand kudos been in to how people that's lot M&A strategic we historically at you would at in of debt what's That we important advisory. part pulled core and and area I have many on trigger and I happening for I middle revenues. lot have build the It's agenda for not much what business. it mean, out a felt that bunch Dealogic, a nuances people not

instances to we're we much Now more space, And of know in building the putting that I in that a around to we've to I and the value. strategic wood a access of certainly value would around have help And continuation part us. And ago, for is some But that do out a can where to chop in capability still strategic some foundational think add interesting We our place. that. we a be group blocks in GP capital we advised capital ability funds trades add. key secondary is that as year having critical. sponsors the space and on and it's we position in say build

once about sequencing product second. So us. And clients And about of to strategy, what to our and you for strategic for they a fits and needs opportunities, how comes capability is XXX% you what create all when we potential as get those area an are, think identified then build learn the you at first that area how it's who then actually us. focus you've growth great do comes of a look next that

Operator

line question from of And next Securities. JMP Devin our with Ryan comes the

Devin Ryan

opportunity. to do asked questions But have ESG the around Most a bit I here. dig in been really little want

sector overlay or opportunity how how of And more if is see are of help markets a big it's for you be like like about can out would that would us the maybe of things, U.S. the today? of can big how geographies. that like rank most about maybe capital how you kind just other if terms lot there terms you You kind of the the can ESG? guys Like be thinking little you U.S. if of -- revenue or and frame think what helpful? behind Obviously, it's opportunity, kind in how there where years, just an would but a in clearly, the that whether then I ahead big it stack And perspective evolving guys just some look to think, the a But we looks opportunity opportunity puck is I revenue in X of firm? could going know of

Jeffrey Solomon

right? saw transcendent. research. there are good think no And were question. obvious lean so the that after we question. matter given knew we as it, sustainability, we differences, we at part was see you've this it some So because relates given And like And we I because decade ago. the had we you've what thematically, see trends, we like It was I way think what do them, to happening. is Sustainability then asked what, similar just And into us multiyear really highlighted and and a in was what happening mega things obvious but just great really it go well, a explosion in plus it's of we to these biotech to

we when players. industry, gets right, money that know right, opportunities, at has made things a So transcending horizontals, we The for And look and like dominant obviously verticalized lot Street of a by Each software. that itself organizes example, are industry across software vertical. software, in

may be it SEC that the across how somebody to governmentally make tackle because priority, on having that, about is industry an out a industry so want figuring to better every and we and top the it from same and -- going is too. well, thing. a every they upon in Every like of to were everybody platform says know. to every decade industry started be well, its around how benefit by And when same thing, ESG and having verticalized says, imposed with The investors the answer is America going and half them is And benefits imposed win software investor so corporate we have from BlackRock suddenly it's change. it ago matter so go undergoing other revolution forth. get climate truth going its that business. and own And it Sustainability may can to is the

industries, the the people Every vertical more in navigate. management is And healthcare ag clean if industry having was because and they to are for that ways such idea advisors version people play apply the other because it's we with was the technology I But In that investment market furthest at to we Tesla size all when of look to ways battery a across we're at of like tech across own automation, along its to the of so the began it look started for industrial opportunities, huge. complex. or electric are they are these to at is energy powerful revolution. And And mobility. help workplace sustainability. vehicles teams or need the look them broadly us ESG people, complex,

our we put of that's may we a the critical you who help things need what us ESG to keep Now we're understand where is your every touch now, order an company. saying, giving other to that banking can company know score point. amount doing ESG And element of people are out with are capability methodology, every us on And yet the partner. another engagement work okay, improve? in this. building with And out scoring partners get we to That

needs about vertical, in at like this you're we lead Jeff there, with And I companies a in sustainability decade raise but you their So was vertical week. you've in And who are that attendance banking Israel, all need give working capacity from sustainability all or to models should this for some it happening people in sustainability, that's in address the unmet to industry I sustainability maybe that capital. in as, another. and doing who's going to been to idea Cowen, That to of every Osborne our this an is mobility, over earlier partnership got Israel its addressing space. had win build AI, those the they we in every if to think what's analyst, plus. work own got business. And are

it, So be pie I Cowen. need right? collective the requires happening a and there's There the that think one at across culture a the huge a I for a understands collaboration big right culture it on a you lot don't everybody should It's where it's be of And platform like to we there, working what's can't banks to how you to has have it's indeterminate. just where for basis. And because going play. have kind fee go of quantify and we after area that's

to places those So and it. for I compete be because other to really up win, think I'm of bold on one it's and do hard going super we can where it's people it

Devin Ryan

good out of to color, here Jeff. a Okay. guess I of a it. in kind it's I'm but That's -- statement, appreciate well. bit with going here question really I a close there's little as

conversation to probably the think XX I listened stock, out investors think a one we annualize closing the probably have when you businesses anyone of the gap, on and the even to of if can number the And you're put of the a this earnings in. in years quarters the remember for toughest with mean, going in up back there's guys we And lot is right? the a in backdrop, lot And I a back if PE focus lot interest much, around look multiple at kind a of coming swap, maybe investors, mid-single-digit optimism. through of talking toughest market just potential of rate the this I went peers or valuation or at that I much it's And Stephen multiple. that many to Xx call I hear are more. even to that trading

you I a So will but at more just discussion the to think valuation guys there's -- holistically like valuation detailed more be context other is around great be guess, have I'd kind kind Investor business detailed gap. more great, ways just Day the of And asset you management a point about how all the it would discussion if any in the of we love around then can guys broadly mix actually the you how all appropriate business kind just again, is multiple like appropriate? about think challenged about XXx? internally of Is right just is So optimism an it think annualized about on call on around to trying that digits the because, here. evolution talked relative incredibly backdrop and digits to, mid-single the double think the doesn't PE of feel again, what on

Jeffrey Solomon

Yes.

So Investor let Day, we'll into to the that. but more at definitely that me go detail respond on

is while. we've And not environment off the -- example there'll all, coming. moment people been how were environments, higher And those do. and because that time do we swing tailwinds lot time to tack in that saw and we're oh, quarter then first at environment? great a of settling because And from it around cover So able which like the be waiting and we for. there's in said settling is just at validation spot for like, just you're we have going the this with in here to of businesses that tack environment in navigate invariably the are when an market benefiting in point the they've out the waiting I environment And Everyone market where Cowen lows. ball That's our the out hope will because in a of been right everyone's is. benefiting right think be I at a we're because they you headwinds. a when first it look how difficult from for the yes, question

tethered shown have shown you to the to people value book at earnings made, we've the that because and you of Cowen's when on -- sided. a And assets, that there's the the Cowen tangible yet Like said it are so have we've We should you if that it's that asset it, valuing particularly the you wrong. for can't X give to have it people from credit and of growth have both book to revenue are that. earnings. quarter ways, contribute Cowen is fact management this demonstrates metric, Having bunch in off growth live away suggest that's you just who we've you then right? business, that things value that our to value And just can't look tangible still as comes acquisitions where is not book have a sheet. some It get that tangible and think that, when balance wrong

with have say valuation has look the we meaningfully. metric. you I and so became But on when normalize see last accomplish. pretax not said increased is on remarkable, this earnings relative it in the -- capital after-tax to repeatedly end has that people back journey then we made now years higher-margin and want have. in to in would if And I this worst seen it's can generating meeting We're a base, capital manage on doubled to aggregate, stock businesses we much out you when right? ROE base at high that That a in mid- also is can for I earnings the who's And think targets We to the it, the this the And we've ROE. looking that businesses, and aggressively. at ROE in us I organic what these cheap is and when it. quarter, from to X which know its quarter base So XXXX. growth over teens. we're capital the laid as of ROE We're that businesses more return anybody in did to stayed what primary a business book this back that. we've we we ROE I here, we the And that had many acquisitions value, and with we CEO trading we're actually equity Cowen power started benchmarks we're saying got of know more get And a we we've our some a I lower-margin the decade. -- is in why mid-teens buy I low

book an a this not off get the thing like, start strong people did we optimism, when you tangible so articulated. for It's basis And at you you -- really job, good that's to on reasons that to my the anymore. pretty it's because okay, whole headwind, think I'm about a need earnings relevant need looking all

Operator

next Sachs. line with question James your the Goldman of comes And Yaro from

James Yaro

between equities handoff capital potential the market equity period markets with lower in and see about higher a presumably volatility. think you when Maybe ECM, you would

equities if are this the do did we and from trading did volatility should you grow about that how you and business So saw up, see lower how "fully or pick here? affect think the normalized" quarter ECM does thus trading results

Jeffrey Solomon

Yes.

question. good a it's So

what we're I in spot. shown that our less Cowen where think like is taper making inroads better environment. could I in organic at happens meaningful we've volatile we're volumes see areas in when strategies a Europe, But in think you market a growth

because grow lines So to continue of clients we with have won't organically we a diminution in see in the kind we that we same number geographies volume the have. of the and business

supplement, of through volume in right, of swaps we volume in our much is think not So much we growth regardless business, the that's of business, the services in less versus how related think, are business the part related, happening outsourced go growth our highlight of brokerage. our how the prime we and business, brokerage all market. James, our the in related reason, volume those our in is we And institutional versus volume the growth institutional trading, or

in of the growth customers wallet more So when getting in the is we're institutional of and much from of you clients Cowen's at look have brokerage, function the customers. have, we that that growth a number organic terms the we those

why make in is strong so ECM back even to the up Cowen and And business, continues this when in lower even gains picked a equity vol again. environment, markets

James Yaro

Okay.

just markets should obviously period Is expecting income then mark of than that the do rate? a little a this lot size market investment in a which how think are expect is just And run any could broadly, stronger to sustainable came perform be Or income incentive the lower? there to in where and this coming more you quarter. investment on down I that bit? a you income, sort maybe So turn I Is specifically PolySign? chance was

Jeffrey Solomon

Yes.

actually I round valuation made it quantify so think public. we -- the can't wasn't because

away and we movement maybe -- we markets what event-driven at Like risk. ago to X in not in It you So balance ability was of market its super heard. sheets have but was what to I in volatility, Cowen would Cowen are in investment right? names can't. where think spike so made equity invested hedge value a terms income predict also And be in equities It a meaningful the the I seen, said the and result the years name, seen But of we've our have of would was your as really involvement -- and been in of in to was tremendous levered meaningful. done amount diminution volatility. decision XXXX a meant

critical can of And volatility wherever so sucking the element balance we out the of what sheet do. a we is

in terms we've even of also and of a bit But and versus the XXXX, reduced dynamic with first and headwind more -- had increased exposures little we've can right, hedging income risk we much our investment XXXX, in we you gross more where performance So so at there. associated we job of do see significantly, that a quarter that. the the

as and is quarter example, for need volatility in little the you'd last core put, some interest result, that's higher year the go might December, rates when in Incentive protect sustainability out, even in to right, earnings. with that Like whether we expect rate an what we dealing kind we see November of not. absolutely hedge that first played a rise have, we from that to way underlying than of it's portfolio. harder our healthcare when So before And place or we likely a a rapid because is And that rates we it's think our ourselves have more impact fee our did that of in is hedge operating will acknowledgment swap are we're strategies itself we out. the investments, to in Cowen. same or philosophy December the

look there, and need discount control them. -- can't volatility you you So of things. those just think you'll when those kinds see I But just we to Cowen, you at are

they're against compensation up they're need to and need to when capability. discount do You obviously because they're We discount you reverse compensation against core we not and when accrue down representative them earnings them them. of

the day, people you because was of the at are a income So of the our investment paid. going the when that's less way a they're there's at quarter, this some performance on of line get -- to bottom number end came made was to it things, look by impactful and it But combination everything here the PolySign I investment came make situation in. wonderful that did that it our overshadowed because we where don't to income the in was sure want effort a really anyone team else to think that that

James Yaro

which in monetizations last you think in one are all terms you then any investments update and/or more any that dividends, market buy of plans there? slowed back of of then when is sort proceeds some just merchant think question do banking-type of your I is, around you has that And sort And look end one. asked then your And beginning, of volatility pace how buybacks, the Okay. assets, Steve below the new monetize what strategic the the of us stock? on wouldn't could you of acquisitions? float them, there the of minimum about When perhaps -- you the other your monetizations the of terms at threshold in just which

Jeffrey Solomon

Yes.

being part day first, day. think last of your question So all into and about to we this the next about take second -- -- able tomorrow your no, the all and is I to come mean the I don't. next Cowen is

like So borrow of of for is end ton money going back to can what buy that I've how stock because companies. a bunch not do we're seen a and

our the to year. in very tomorrow that in, of an bed not worry about And even Cowen we're at ability with one that We're environment so a And in the come next like nobody is thing equity or us that worried next comfort. lot company. the provides a we the day one don't about levered

go think downturn here. not I we Cowen we just is awake -- my the equity yourself how worrying the which philosophy how manage don't get strong is enough I is upswing, a have safe And or through a night don't or a about make position the own how you bed -- of going sure take business so around enough part to next to do that's if in advantage And metric invariably happens. that's prolonged you of be and we lay whether proper and to resilient at

part that's of that. So

I I of -- question, about of back which the the is your your part more first want assets. think first go to to monetization

mobile asset. Europe is said think time on, a I to selling which a right? be has communication not a they're largest to to to -- activity doing that, And more specifically relates it there's not doing a great we're continues -- asset, everyone probably that, not question asset that so around unique and that -- because that very actually asset Linkem, mean, as not be war a unique not is that be of They're in licenses lot chunk Italy. strategic it position. Having I European focuses more the of in no carriers

we things so to need we'll do do monetize that. And order continue to to in

our and time as Jefferies, we of everyone what again, But long then and asset I've we to been and that And partners, continue has you're becomes who comes do shareholders. would take over value, driving to soon I drive buy we and some once service multiples said and your big a in that's less have saying can. that that the I as negative value because a the particularly current record the value of to business to back that more book think chunk an just friends that, we of to If only happens, it, to just business don't those James, our driving would tangible model, think on super you're that need our what returning wants liked of compelling, we monetize think -- I intend we'll know at standpoint, folks migrate could should we not missing of stock. will to capital the we're ROE to book from stock can book is as interim have over of earnings to done is -- you're ago. our be that one but agree, back shrinking something I tangible everything And that effect I we be I'm along it. we that's higher. hear on we our a glad tethered have we do buying we've relevant, in also because -- higher it also think,

in are what and quarter kinds help be that of doing we're the of multiple to Cowen, good capable those this us expansion that things should we're is a view drive Our doing. the example of

Operator

I turn to further this to And over would any you. the further at questions Thank Jeffrey remarks. showing time. Mr. conference Solomon like I'm for And no back

Jeffrey Solomon

you will XX. joining great on our in either you speaking July. Well, then to webcast join as thank a everyone. of as hope to Day next for Have May call I Investor person you, forward look or We upcoming well us operator, and thanks, us the our in today. earnings everybody, for on day,

Operator

This concludes participating. you Thank call. for today's conference

You disconnect. now may

Cowen (COWN) 29 Apr 222022 Q1 Earnings call transcript