2017 Annual Report
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ANNUAL Cowen Inc. is a diversifi ed fi nancial services fi rm and, together with its consolidated subsidiaries, provides investment management, investment banking, research, sales and trading, prime brokerage, global clearing and commission management through its two REPORT business segments: Cowen Investment Management and its affi liates make up the Company’s investment management segment, while Cowen and Company, a member of FINRA and SIPC, and its affi liates make up the Company’s investment bank segment. Cowen Investment Management provides investment management solutions to a global client base and manages a signifi cant portion of Cowen’s proprietary capital. Cowen and its affi liates offer industry focused investment banking for growth-oriented companies, domain knowledge-driven research, a sales and trading platform for institutional investors, global clearing and commission management services and also a comprehensive suite of prime brokerage services. Founded in 1918, the fi rm is headquartered in New York and has offi ces worldwide. To download Cowen’s investor relations app, which offers access to SEC fi lings, news releases, webcasts and presentations, please visit the App Store for iPhone and iPad or Google Play for Android mobile devices. ©2018 COWEN INC. ALL RIGHTS RESERVED. COWEN.COM COWEN INC. COWEN COWENRESEARCH 2017COWEN.COM COWEN INC. COWEN COWENRESEARCH LOCATIONS UNITED STATES Los Angeles Cowen and Company, LLC Cowen Inc./Cowen Execution Series LLC/ New York 10250 Constellation Blvd. Cowen and Company, LLC/ Suite 2300 Algorithmic Trading Management, LLC/ Los Angeles, CA 90067 ATM Execution LLC/Cowen Prime Services LLC TEL: 310 356 4620 599 Lexington Avenue New York, NY 10022 Los Angeles Cowen and Company, LLC TEL: 212 845 7990 2301 Rosecrans Ave Suite 4195-B New York Cowen Inc. El Segundo, CA 90245 1345 Avenue of the Americas TEL: 310 773 9070 3rd Floor New York, NY 10105 Los Angeles Cowen Prime Services LLC TEL: 646 562 1660 2041 Rosecrans Ave Suite 350-B New York TriArtisan Capital Advisors LLC El Segundo, CA 90245 830 Third Avenue TEL: 310 773 9070 4th Floor New York, New York 10022 www.cowen.com Orlando Cowen Execution Services LLC TEL: 212 609 0620 3501 Quadrangle Boulevard Suite 200 New York Cowen Prime Services LLC Orlando, FL 32817 1010 Franklin Ave TEL: 407 608 1900 Suite 303 Garden City, NY 11530 San Francisco Cowen and Company, LLC (Branch) TEL: 516 746 5757 1 Maritime Plaza 9th Floor New York Cowen Inc./Cowen Execution Services LLC/Westminster San Francisco, CA 94111 Research Associates LLC TEL (Toll Free): 800 858 9316 1633 Broadway, 48th Floor New York, NY 10019 Stamford Cowen and Company, LLC TEL: 646 690 3292 262 Harbor Drive Stamford, CT 06902 New Jersey Cowen Execution Services LLC TEL: 646 616 3000 75 Lincoln Highway 3rd Floor Iselin, NJ 08830 Washington D.C. Cowen and Company, LLC TEL: 732 855 4000 2900 K Street, NW Suite 520 Greenwich Cowen Prime Services LLC Washington D.C. 20007 10 Glenville Street TEL: 202 868 5300 3rd Floor Greenwich, CT 06831 TEL: 203 588 3300 INTERNATIONAL Atlanta Cowen and Company LLC (Branch) Corporate Office Centers Northern Ireland Cowen International Limited (Branch) 3399 Peachtree Road NE Suite 417 Centrepoint, 1st Floor Atlanta, GA 30326 24 Ormeau Avenue TEL (Toll Free): 866 544 7009 Belfast, BT2 8HS Northern Ireland Atlanta Cowen Prime Services LLC 13010 Morris Road London Cowen International Limited/ 6th Floor, Building 1 Cowen Execution Services Limited/ Alpharetta, GA 30004 Ramius UK Ltd TEL: 770 576 1759 1 Snowden Street - 11th Floor London Boston Cowen and Company, LLC (Branch) Two International Place EC2A 2DQ Boston, MA 02110 England TEL: 617 946 3700 TEL: (+44) 20 7071 7500 TEL (Toll Free): 800 343 7068 Luxembourg RCG International Opportunities S.á.r.l./ Chicago Cowen and Company, LLC (Branch) Hollenfels Re SA 181 West Madison Street, Suite 3135 97, rue Jean-Pierre Michels Chicago, IL 60602 L-4243 Esch-Sur-Alzette TEL: 312 577 2240 Luxembourg TEL: +352 26 17 35 Cleveland Cowen and Company, LLC (Branch) 20006 Detroit Road, Suite 100 Rocky River, OH 44116 TEL: 440 331 3531 Houston Cowen and Company, LLC (Branch) 600 Travis, Suite 1970 Houston, TX 77002 TEL: 440 331 3531 Dear Shareholders, Partners, Colleagues and Friends: In 1918, the world looked quite different than it does today. It was the end of the Great World War and the beginning of what would become known as the American Century. It was also the year that Cowen was founded. The past 100 years have brought tremendous global change economically, politically and socially. There were booms and busts, wars and revolutions, the rise and fall of despots, horrible pandemics followed by miracle cures, and there was the invention of the semiconductor which underpinned an increase in the rate of technological change unlike any other in the history of humanity. Markets changed too, in ways that no one could possibly have predicted back in 1918. And through it all, Cowen has not only survived, but we have prospered. We did so by attracting amazing, team-oriented people who have worked tirelessly to deliver positive outcomes for clients regardless of market conditions. We did so by anticipating the needs of our clients as they evolved. We did so by creating an empathetic culture that recognizes the value of long- term partnership with each other and with our clients. We have a long Cowen tradition of thinking ahead, anticipating new challenges and sensing new opportunities. We have often said that change is the only constant in our business. Change is what motivates us to think about who we are, what we stand for, what role we play in the lives of our clients and what we need to do to stay Ahead of The Curve™. Many of the decisions we have made in recent years laid the groundwork for the growth we have experienced. In 2017 revenue expanded 42% from the prior year to $666 million. Economic income was $15.8 million, a $44.5 million improvement from the economic income loss reported in the prior year. These results move us closer towards our goal of sustainable profitability and set us up for a stronger 2018. COWEN OUTPERFORMTM Leading Cowen is a tremendous responsibility and a mission that we have embraced with a deep sense of commitment since we merged Ramius into Cowen in 2009. We take tremendous pride in making a difference in the lives of our clients and partners every day by helping them do better than they would otherwise do without us. Our OutperformTM brand speaks to who we are as a team and who we aspire to be as individuals on that team and it crystallizes our mission: to promote an empathetic and collaborative culture that advises and connects aspirational providers and users of capital. The bar for consistently achieving outperformance is a high one. Everything we do as an organization has to be exceptional because the pressure on our clients to outperform their peers has never been greater. Whether it is active managers trying to outperform passive managers, companies aiming to outperform their peer groups, or investors looking to identify investment strategies to meet their long term outperformance objectives, Cowen has superior solutions driven from our market position as the pre-eminent content network. At the center of our excellence is original, creative thought combined with the power of human collaboration and interaction. Our responsibility at Cowen is to foster a sharing environment that encourages and enables our talented professionals to flourish under that ideal. Aided by intelligent technology, we believe in these uniquely human traits that cannot be automated or replicated. In addition, our long term success has been built around trust, transparency and insight, none of which ever go out of style. Whether we are advising corporate clients on strategic mergers and acquisitions or connecting them to providers of capital to finance their growth, providing active portfolio managers with sophisticated research or independent, non-conflicted trade execution, and other alpha generating tools, or offering clients access to differentiated alternative investment products, we do so with one thing in mind: helping our clients Outperform. FORWARD THINKING AND FORWARD LOOKING In order to appreciate our view of Cowen’s role in the future, we want to take a moment to review the opportunities and decisions we made over the last eight years that have enabled us to capture the opportunities that are now upon us. Markets and Research Over the past decade, as we recognized the rise of passive investing and considered its impact on those who believe in the value of active management, we made strategic decisions to scale our markets business and deepen our research capabilities. Well before the implementation of MiFID II, a European regulation with global implications to research and trading firms worldwide, we recognized that our clients were moving towards a separation of payments between research and trading commissions. In this “unbundled” environment, we believed that the winners would be those firms that provide differentiated capabilities in both research and trade execution. As a result, over the last 5 years, we transformed our platform to become a leader in independent, non-conflicted cash and electronic trading as well as a premier research platform. In addition to the organic changes we made, the transformation began with the acquisition of Algorithmic Trading, a broker neutral electronic trading platform. At the time we were a cash equities business in a world where a growing percentage of clients were seeking high quality, independent electronic execution. This was followed by the 2013 acquisition of Dahlman Rose which provided us with additional research and markets expertise as well as greater connectivity with clients.