Cowen Inc.

Good morning. Thank you for joining us to discuss Cowen's results for the second quarter of 2021. By now, you should have received a copy of the earnings release, which can be accessed at investor.cowen.com. After this speaker's 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. Farley, Cowan's Head of Investor Relations.

Thank you, operator. Before we begin, I would like 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 our earnings release and other filings with the SEC. Cowan has no obligation to update the information presented on today's call. Also on today's call, we will be referencing certain non-GAAP financial measures which we believe 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. As a reminder, we make available a quarterly financial supplement in the investor relations section of our website. We encourage you to review it in conjunction with our earnings release. Joining us on today's call are Cowen's Chair and Chief Executive Officer, Mr. Jeffrey Solomon, and our Chief Financial Officer, Mr. Stephen Lasoda. Now, I would like to turn the call over to Jeff.

Thank you, JT. Good morning, everyone, and thank you for joining us on Cowen's second quarter 2021 earnings call. Today, I am happy to share details on our strong performance this quarter. Then, Steve will review the financial results of the quarter. After that, we would be happy to answer your questions. The second quarter of 2021 was a clear demonstration of Cowen's core earnings power. and the growing breadth and depth of our capabilities across the platform. It was the third best quarter ever for investment banking and markets, and the fourth best quarter overall in terms of both revenues and profitability. We delivered this standout performance despite the slowdown in capital markets issuances and the impact of negative mark-to-market changes in some of our funds, which impacted our incentive income. This quarter builds upon our record results over the past year, It also demonstrates the consistent earnings power we have established over the past several years through strategic investments in our capabilities and our team. Over the past four quarters, we have generated nearly $1.9 billion in revenues and generated over $10 per share in economic operating income. While Cowen's stock is among the best performers in the financial sector this year, we believe that our valuation is still compelling and there is opportunity for additional upside. Operationally, We are returning to the office in greater numbers across the firm and will continue to do so in the coming months, mindful, as always, that safety and health of our team remains a priority. Our team continues to operate at a very high level to deliver results for our clients, regardless of where we are located. While we clearly see the benefits of beginning to gather again in the office, we know our future will be filled with more workplace flexibility. At Cowen, we are proud to be in a position where we can rethink what the future of work will look like, in order to address the needs of our clients, colleagues, and communities. Here are some of the operating highlights from the quarter. In investment banking, it was an impressive quarter, even with the slowdown in healthcare capital markets activity and SPAC IPOs. Banking revenues were up 13% year over year, and it was the second strongest quarter on record for M&A revenues. It was also the first quarter ever in which advisory, which combines our M&A and capital markets advisory revenues, comprise the majority of total banking revenues at nearly 60%. This quarter was also a clear demonstration of our progress on sector diversification. Sectors outside of healthcare generated 55% of banking revenues with strong contributions from consumer and technology-enabled services. Our healthcare business is also increasingly diversified, with 40% of our healthcare revenues coming from areas such as tools and diagnostics, medtech, and healthcare IT. And M&A revenues were $85 million, nearly triple of the level of a year ago. While SPAC IPO activity fell sharply compared to the first quarter, total second quarter SPAC-related revenue was just 10% of total banking revenues, including underwriting, pipes, and merger fees. Demand for advisory and capital markets issuance remains strong, looking out to the remainder of the year. Our pipeline ended the quarter at a new record level and is up over 80% versus the level a year ago. It is worth noting that SPAC mandates make up just over one-third of our current deal backlog. We have added a number of hires at all levels to our banking team in recent months, and Cowen has emerged as an employer of choice for professionals who want to accelerate their careers. In markets, we had another strong quarter with $2.82 million in average daily revenues. That's a 5% year-over-year increase, outperforming a 15% decline in U.S. equity trading volumes. It is also an exceptional result given how much trading activity in recent months was driven by retail investors who are not a part of our client base. Highlights for the quarter included a 48% increase in prime services revenues, cash trading was up 22%, and non-U.S. execution was up 32%. Securities finance in special situations both rebounded strongly compared to last year, with revenues in both groups up well over 200% versus the second quarter of 2020. We have clearly gained share in our markets business and are seeing promising early growth in newer opportunities such as ADR trading and international prime brokerage. We are attracting new talent, adding fixed income expertise to our outsourced trading offering, bolstering our capital introduction team, and building out a leading event-driven trading desk in Europe. We're also making progress on our digital assets initiative, following on the $25 million investment in PolySign, which we announced in May. While there is still a lot of work to be done, we're developing capabilities to meet emerging client demand for trading in custody of a range of digital assets. Looking at the current quarter, although equity volumes have slowed modestly in July compared to the second quarter, we're off to a good start. with average daily revenues in excess of $2.4 million. We are seeing both higher highs and lower lows in our markets business. Sorry, let me repeat that. We are seeing both higher highs and higher lows in our markets business and believe that our competitive position has never been stronger. In research, we added to our already formidable bend strength with plans to bring on additional analysts in the back half of this year. During the second quarter, we onboarded new senior analysts in life science and tools and diagnostics, managed care and facilities, and food and healthy living. We also launched coverage in the cybersecurity sector. Our focus on ESG, sustainability, and energy transition also continues to flourish. We have one of the largest coverage footprints on the street in these areas. We published 14 of our flagship Ahead of the Curve series. reports in the quarter, and launched a new thematic library. Clients continued to value our thoughtful and differentiated research, and during the quarter, our team saw meaningful gain in brokerage votes from our institutional clients. In investment management, we had a negative mark-to-market charge in economic incentive fees, totaling $31 million, nearly all from positions in the Cowan Healthcare Investment Strategy. While we are still up for the year, so first half, 2021 economic incentive fees were almost $78 million. Just for perspective, that number is over 90% of total economic incentive fee income for the entire year of 2020. Economic management fees were up 26% year-over-year. Due largely to higher AUM in the sustainability and activist strategies, total AUM was $14.4 billion, which is up 25% year-over-year. Looking at our five investment strategies. Our sustainability strategy had just over $1.5 billion in AUM at quarter end. The strategy completed a follow-on investment in EcoATM and also saw the completion of Proterra's merger with the ArcLight SPAC. Our healthcare investment strategy completed one new investment and two follow-on financings and ended the quarter with $833 million in AUM. Long-term performance remains strong despite the declines in value of several public positions during the second quarter. The activist strategy had positive performance in the second quarter and grew assets to $7.2 billion. The merger arbitrage strategy had $311 million in assets under management. At quarter end, the strategy had positive performance for the quarter, beating the HFRX merger ARB index. The healthcare royalty strategy ended the quarter with $3.7 billion in total AUM, which is up $200 million year over year. Worth noting, healthcare royalty has filed for an initial public offering and we intend to provide more details on our ownership stake and what it means for Cowen financially and economically when we are able to do so. Turning to Assetco, which as a reminder includes non-core investments that we intend to monetize, the value of our investment in the Italian wireless internet company Linkum was $8.3 million, $7.7 million higher than in the second quarter of 2020. Year-over-year gain was due to a favorable foreign exchange adjustment and improved business metrics. The net asset value of our LP investments in Formation 8 and Eclipse rose $2.7 million to $41.6 million. And now, I will turn the call over to Steve Lasoda for a brief review of our financial results for the quarter.