Good morning, thank you for joining Cowen's conference call to discuss the results for the Fourth Quarter and Full Year 2019. By now, you should have received a copy of the company's earnings release, which can be accessed at www.cowen.com. Before we begin, the company has asked me to remind you that some of the comments made on today’s call and some of the responses to your questions may contain forward-looking statements. These statements are subject to the risks and uncertainties described in the company’s earnings release, and other filings with the SEC. Cowen has no obligation to update the information presented on the call. A more complete description of these and other risks and uncertainties and assumptions is included in the company’s filings with the SEC, which are available on the company’s website. Also on today’s call, our speakers will reference certain non-GAAP financial measures, which the company believes will provide useful information for investors. Reconciliation of those measures to GAAP is consistent with the company’s reconciliation as presented in today’s earnings release. Now, I would like to turn the call over to Mr. Jeffrey Solomon, Chairman and Chief Executive Officer.

Thank you, Joel. Good morning and welcome to Cowen’s fourth quarter and full year 2019 earnings call. This is Jeff Solomon. And joining me today on the call is our CFO, Steve Lasota. As a reminder, we made quarterly financial supplement available in the Investor Relations section of our website and we encourage you to review it in conjunction with our earnings release. Before we review our results, I'd like to talk about the work we've done over the past two years since I became CEO. Our team has taken some great steps to simplify our business, diversify our revenue streams, and to ensure that we can be consistently profitable over the long run. Early on, we adopted the mantra of simpler, fewer deeper, and we worked to put that into practice. In Cowen Investment Management, we have executed five strategies that were not scalable, and our focus on private equity style strategies, which leverage our industry expertise or what we call Cowen DNA. Those are strategies such as Cowen healthcare investments and Cowen sustainable investments. We have also taken steps to significantly reduce the volatility in our investment portfolio by refocusing our capital in dealer businesses like SPAC's and securities lending, where we can earn spreads in excess of our cost of financing. We work to provide more transparency into the earnings power of our operating business by reporting two discrete segments, Operating Company or OpCo and our non-core-Asset Company or AssetCo. This format highlights the earnings power of our core business, as well as the monetization of potential legacy investments on our balance sheet. And while we've been consistently profitable for the past eight quarters, we've also made investments funded out of operations that are designed to strengthen our firm and help fuel our future growth. We've hired…

Thank you, Jeff. For the fourth quarter of 2019, we reported GAAP net income attributable to common shareholders of $3.5 million, an increase of 145,000 from the prior year period. For the full year 2019 GAAP net income was $17.8 million versus $36 million in 2018. For the quarter, GAAP revenue was up 8% year-over-year to $281.1 million from $259.9 million and full year GAAP revenue was up 9% year-over-year to just over $1 billion. In the fourth quarter of 2019, GAAP comp and benefit expenses were $147.2 million and for the full year 2019 they were $535.8 million. Non-comp expenses which exclude comp and D&A were $106.2 million for the fourth quarter and D&A was $5.5 million. Full year 2019 non-comp expenses were $388.5 million and D&A was $20.5 million. Additionally, there was a goodwill impairment charge of $4.1 million related to the change in segments and restructuring of reporting units in the second quarter of 2019. Our income from gains on investments was $55.8 million in the fourth quarter income tax expense was $5.2 million and non-controlling interest expense was $24.1 million. For the full year 2019, other income was $138.8 million income tax expenses $14.9 million and non-controlling interest expense was $31.2 million. Now turning to our non GAAP financial measures, which we refer to as economic income. As a reminder, we use economic income to measure our performance and to make certain operating decisions. In general economic income as a pretax measure that eliminates the impact of consolidation with consolidated funds and excludes goodwill and intangible impairment certain other transaction related adjustments or reorg expenses and certain costs associated with debt. Economic income revenues also include incentive income during the period when incentive fees are not yet crystallized with GAAP reporting, investment banking retainer fees collectibles…

Thanks Steve. As I look back on the last two years and more than 10 years since the merger of Ramius and Quarton I'm proud of what we built world class investment bank and brokerage focused on key growth industries such as life sciences, TMT, consumer and industrials. We're actively extending that domain expertise to our investment management business where we can drive meaningful margin. As we think about the next decade, we've identified a number of new areas of growth and disruption such as cannabis robotics, disruptive consumer technologies, digital health and sustainability. We already though-leaders in these areas that are increasingly using our insights to drive our operating strategy. As we go to higher margin businesses like merger advisory and investment management. Overall 2019 was a solid year for Cowen, we had another full year of consistent profitability increased our revenue diversity by product and industry, made targeted investments in people and capabilities and significantly revamped our investment management division. 2020 is off to a strong start with impressive capital markets and trading activity in January and robust advisory pipeline looking ahead to the first half of the year. Our theme this year is execution, we’ll continue to focus on the investments we made over the past two years to grow the business, take share and improve profitability. We’ll also selectively look for tuck-in opportunities and team lift outs where we see opportunity to plug and play in relatively short order. I'm confident that we'll be able to execute in our plans as we help our clients strive to outperform. And with that, I will open it up for questions. Operator?

[Operator Instructions] Our first question comes from Jim Mitchell with Buckingham Research. Your line is now open.

Maybe just a question since you brought it up on trading obviously a little more a pick, you set off to a strong start. How much of that is the environment versus sort of the European business? Maybe you can update us a little bit on how that's going. And just the overall environment for trading and what you're seeing?

It's been pretty strong across the board so far in 2020. Certainly the European business, which we didn't really have last year for any meaningful amount of time is certainly adding meaningfully as we continue to add clients. We continue to do really well in areas like derivatives are listed options, trading business and event business has been doing quite well and continues to do well. So, I think it's pretty much across the board. I think it's simply a matter of overall market volumes, but the fact that we already taken share from other players.

And then on just the - it looked like invested capital in the AssetCo came down, and you had kind of a revenue loss there. Was there a small sale there that reduced capital in that business, and the loss is obviously a little - doubled I think, year-over-year is that, how do we think about the loss content and what's remaining as you sell down assets?

For the quarter on, there was a small write-down on a property that we own in the real estate business. So, but going forward as we've talked about with AssetCo - we are looking towards Jeff commented that we are looking to liquidate as much as possible.

Yes I mean, we're still moving on the path that we had outlined in previous calls, in terms of monetizing that, from time-to-time we take marks just because we do quarterly valuations. Sometimes they get marked up a little sometimes they get marked down a little based on a number of environment, a number of the assumptions that go into pricing level three assets.

And you feel any better or worse in terms of what's out there given the market environment, you feel better that you can get good valuations for what's left?

Yes I mean, I think each individual investment, it kind of stands on its own. So, we talked about them collectively, because they're in one division, but they're not correlated at all. And so, we looked at on an individual basis. Certainly for the large one, there has been some pretty good operating progress that has been made. I think Linkem made an announcement at the end of the year that they signed up a whole sale agreement, which is one of the first of its kind to basically remarket our fixed wireless capability to a number of customers who are currently using DSL, that's a huge feather in the cap for the technology and for the company. We've been talking for years about getting wholesale agreements. And so I thought that was a big step forward in terms of their ability to execute. And I think everybody probably read about the article, management made some comments in the press about seeking liquidity and financing the company through an IPO. I can't speak to that, because I'm actually a shareholder, not really on the board. And it's probably not appropriate for me to do that but that's in the public domain. So, all-in-all I think we're moving in the direction that we want to move in.

Our next question comes from Devin Ryan with JMP Securities. Your line is now open.

Doing well maybe just to follow-up on the last point just to dig in a little bit more about AssetCo and appreciating kind of the drag that it's been. And I also appreciate yes there is some lumpy investments in there. But I think that some of them maybe had some restrictions around ability to sell or timing. And so I'm just curious, are any of those investments in a position where you technically couldn't sell them today, and I appreciate - you just mentioned about Linkem and potentially moving towards a process? But even outside of that route, can you think about selling that or some these other investments. In the meantime and how are you balancing the trade-off for potentially, maybe not maximizing the fair value of the investment today. But you would obviously be able to have to bring back a lot of capital that you could do something more productive with and we can reduce that drag and obviously clean up the optics as well. So, just trying to think about it more holistically, but also specifically whether there is any restrictions - to be able to - to be opportunistic?

There aren’t restrictions like legally, but I think there's just some impediments to getting to where we want to get to, as we work with our partners. We don't have in many instances, the unilateral ability to - for example, forced Linkem to do an IPO, like we don't have that unilateral, right. We have the ability to go seek liquidity for our position, but we're pursuing I think strategies that balance that where we can get good outcomes for our shareholders. And also help the company to continue to grow, but we're working collaboratively with our partners at Jefferies to figure out how to make that happen that's probably the best that I can say there. In other instances, we're moving along the process of monetization. I can't give you specifics because there is intricacies in each of them. But we're further along in that process than we were some of them just - it takes a while for legal entanglements and partnership that we have with certain other members to get to a spot where we can seek liquidity. We're closer in some of those. And then of course, than in others and I would say, as it relates to some of our limited partnership investments there, we're waiting for the return to capital. We can certainly go out and seek liquidity in a secondary market but there hasn't been any for the assets that we own or prices that we think are attractive relative to what the earnings - relative to where we have them the value.

May be a follow up either for you or Steve around expenses and you heard the comments about kind of comp ratio range and some of the new moving parts there, but I guess - yes. What are you thinking about non-compensation levels, either the absolute level or ratios and the ability to kind of leverage some of your non-compensation costs moving forward? And just more broadly, as you look out over the next several years, how you're thinking about operating leverage, the ability to maybe drop the comp ratio lower than the current range, if there is, or even leveraging fixed costs, just kind of a broader view on the operating leverage in the model and expectations there?

So, I think - those were good questions. And I think - we've given some guidance on where we think for the near term compensation is likely to fall based on what we think the revenue mix is likely to be. I would say if we grow the advisory business, your compensation revenue ratios will go up, but you're obviously not adding meaningful non-comps as a result of those revenues. You’ll also see when we have investment income or incentive income that we don't really - there is no incremental non-comp costs associated with those either. So, the better we do in those areas, the lower our non-comp revenue ratio is going to be and frankly the better our comps revenue ratio is going to be, as it relates to investment income and incentive income. So these are - our goal is to scale businesses, and to create the lower non-comp and comp to revenue ratios by scaling the businesses. So we put some businesses on - we made some investments in businesses that we think will add meaningful margin. And out of that will fall the appropriate comp and non-comp ratios - again if it's advisory business will be probably higher comp to revenue, but lower non-comp to revenue. And as we scale some of the trading businesses and the prime brokerage business, it will be probably lower comp to revenue ratio, and higher non-comp to revenue ratio, because they're more transaction oriented businesses. And so that's really the way we think about it. The goal obviously overall is if we continue to grow revenues at the pace that we've been growing them over the course of the past few years, your fixed costs just goes down, because we're not really adding meaningful fixed costs anywhere to be in these businesses.

And then maybe just a final one from me on just the investment banking outlook, it seems that you guys have had some really good momentum to start the year just based on what we can see out there in terms of revenues and deals. I guess, you talked about a little bit on the prepared remarks, but - where are you seeing the strength at the moment and is some of the I guess early year or success year to function of kind of realizing backlog that may be delayed into the first quarter? Or are things kind of replacing what you're essentially realizing, just trying to get a sense for the tone of business because we clearly see some of these where we can see start the year on a really good note?

Yes, it's been a good first five weeks to the year, I'm not - you can see as much as anybody. But what you can't see is obviously what's happening in the M&A backlog because we haven't announced those deals yet or when we do, there may not close in the first quarter. We are definitely seeing some things that we expected to close last year that are closing in this year, and that happens, those revenues are lumpy. If we had one or two meaningful transactions closed in the year, last year, we'd be having a very different discussion around M&A. The bottom line it’s just some of them closed earlier in this year and some of them are just about to close. What I will say is, I continue to be impressed with our ability to win and so in the aggregate when you look at the scrubbed backlog and nature of that backlog, there is more transactions with higher fee potential than in any other time since we've been doing this. And, other than the Quarton acquisition, we've grown our M&A advisory business organically. And it takes couple of years for people to get up and moving on the platform. But I would say already, we're seeing wins in areas, where we made investments and those are great and so I'm fairly optimistic, as we look at our ability to convert this backlog.

Okay, great. Maybe I'll squeeze in one more, just one here. So the dividend that you initiated, how are you thinking about that now as you have more outlets to return capital to the extent you do monetize AssetCo is that an outlet or the strategy we think about is kind of going up significantly or how are you thinking about kind of analogy you've initiated that using the dividend as kind of an outlet for capital return from here?

I think - it opens up another path for us to return capital to shareholders. And I think there are some shareholders who appreciate the fact that there's a yield on the stock or and there's some new shareholders that probably would have a better look at us because there is the yield on stock - there's definitely people who just won't look at companies that don't have dividends. And so, for us it's, we're probably an outlier in our comparable group - is really the only investment bank that doesn't have some dividend yields. And so we felt we certainly have our operating businesses that are in the best position they've been in, in a decade. And so there's no reason for us to not begin returning shareholders capital in a variety of ways, and so this one adds to it. And obviously, the better we do in our operating business, still all options are on the table to increase buybacks or increase the dividend. But I think we're making a strong statement today that the operating businesses, after two full years of solid performance and what we see in the future horizon, we can certainly support this dividend or glad to be able to do it for shareholders that have been asking.

Our next question comes from Sumeet Mody with Piper Sandler. Your line is now open.

Just wanted to piggyback on Devin's investment bank question. Just wanted to maybe get an update on the fee rate trends within banking maybe talk about progress getting lead roles on deals over time against your expectations. And maybe secondly, heard the comments on DCM just wanted to get a feel for the trajectory of that - how at the yearend in that segment should be expect to see something maybe for material this year?

Yes, it's interesting we have seen meaningful increase in debt capital markets. I'll take that question first, in part because as your business is growing in advisory, they're kind of hand in glove. And so when we're pitching business, we're pitching both capital solutions, as well as outright sale. So if sponsors or clients are looking to recap their businesses or they're looking to acquire something, you need a financing attached to it. Those are great discussions to be having. And we got a team here that works really hand in glove with our industry bankers that frankly work hand in glove with our restructuring practice. There's a lot of different avenues that we have for us to scale that business. I'll also say, the acquisition of Quarton are particularly in the United States has opened us up to middle market, lower middle market sponsors. It’s an area we didn't really have extensive connectivity within and many of those portfolios need to be - the companies in those portfolios are getting refinancing. And so, the combination of what Quarton was already doing on debt advisory along with the Cowen debt capital markets team has increased our win rate. Oftentimes if we're co-pitching, and it turns into a sale that shows up in the M&A mandate, but we're pitching, multiple pads, dual track processes and solutions. And so having that there, is helping us to win an M&A and we see that pretty meaningfully. I think the interesting thing about what we're doing is, is that we're starting to see increased co-pitching with industry expertise, and middle market expertise. So, increasingly, the teams are integrating and making, I would say a really solid pitches. There are companies that Cowen would have historically looked that might have been too small, so, our historical coverage bankers wouldn't necessarily be spending time on it. And so, bringing our high quality partners who can focus on middle market and the intricacies of lower middle market deals has been extremely helpful. And so, we've been able to, work by increasing to the backlog at Quarton particularly in the United States. Europe’s a little bit of a different story, the backlog actually has, it's been pretty stable. It's just there hasn't - the amount of transaction activity has fallen off. And so I think we haven't lost deals, but the deals we have and the things we're working on, either buyers aren't ready to go ahead and buy or sellers are willing to sell at those prices. And so that market for us, just seems to be a little bit locked, but it's not that there's anything fundamentally wrong with what we're doing, it's just a slower time. And that'll turn back around again and I think we’ll certainly capture our fair share there. Is that helpful, is there other questions I'm happy to dig a little bit more.

Oh no, that's great. That's all I have for you guys. So thanks.

[Operator Instructions] Our next question comes from Chris Walsh with Wolfe Research. Your line is now open.

I just had one cleanup question. I think I heard you touch on Quarton briefly in your prepared remarks. But I couldn't quite hear whether you called out the revenue impact this past year, did I hear you say it was a $34 million contribution?

$35 million.

$35 million. Okay, and then just looking back historically to even 2018, they were at a higher level of around 50 million a year. As we look ahead, do you think that piece of business could re-approach that 50 million-ish year run rate?

For sure, I mean, again, these businesses tend to be a little bit lumpy that $50 million a year, if you look at it was probably the best year they ever had. We certainly didn't price the acquisition off of that number. So we priced it up of a more - a more reasonable number. And certainly we have earn-outs and a bunch of things in there that adjust if the numbers don't pick up. But our view is that again, we're continuing to show people what we did in the Quarton acquisition because we paid for it. But the way we pitched the businesses that are much more integrated basis, and so there is a deal that we're working on collectively, and it's a traditional industry banker who is the lead on that. And the support from the Quarton team, that may not show up in the Quarton revenue numbers. And what you can't see is, how much of the backlog actually is a function of the fact that we're working across the entirety of the platform as we integrate. I think our first goal for the first year with Quarton was first and foremost do no harm. The Quarton team is extremely talented and they know their business really well. And we don't at Cowen, I mean I think we know a lot better now, but we didn't want to be in a position where we were changing the way that they were going to market with their products. Having said that, we bring a lot of tools to those clients and to those bankers that they didn't have before and learning how to work with one another and integrate that. The wins we might be seeing in debt capital markets and things like that for Quarton clients that's not showing up in that M&A number. And so, I think we've done a really good job at actually converting particularly in the U.S. and I think we can certainly see, bumps in that number in the future that backlog would suggest that that's likely.

Great, thanks, Jeff. That's all from me. Best of luck to you guys in 2020.

Thank you. I'm not showing any further questions at this time. I would now like to turn the call back over to Jeffrey Solomon for any further remarks.

Well, thank you operator. In closing, I just want to express my gratitude to the team here at Cowen for your passion and dedication. Every day you guys remind me that our values and vision, empathy, sustainability and tenacious teamwork are meaningful part of who we are as a firm. And certainly our commitment to these values will continue to deliver results for our clients, for our shareholders and our other stakeholders over the long-term. And we look forward to doing that. Thanks for joining us today and we look forward to speaking to you again on our next call in April.

Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect