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Investments of Operating Entities and Consolidated Funds
 12 Months Ended
Dec. 31, 2020
Investments, Debt and Equity Securities [Abstract]  
Investments of Operating Entities and Consolidated Funds Investments of Operating Entities and Consolidated Funds
a.    Operating entities
Securities owned, at fair value
Securities owned, at fair value are held by the Company and are considered held for trading. Substantially all equity securities, which are not part of the Company's self-clearing securities finance activities, are pledged to external clearing brokers under terms which permit the external clearing broker to sell or re-pledge the securities to others subject to certain limitations.
As of December 31, 2020 and 2019, securities owned, at fair value consisted of the following:
As of December 31,
 20202019
 (dollars in thousands)
Common stock$1,770,451 $1,546,484 
Preferred stock69,358 12,656 
Warrants and rights27,701 22,109 
Government bonds19,721 15,916 
Corporate bonds86,503 25,500 
Convertible bonds6,040 2,500 
Term loan (*)12,623 1,067 
Trade claims (*)9,205 7,320 
$2,001,602 $1,633,552 
(*)The Company has elected the fair value option for securities owned, at fair value with a fair value of $8.8 million and $8.4 million, respectively, at December 31, 2020 and 2019.
Receivable on and Payable for derivative contracts, at fair value
The Company's direct involvement with derivative financial instruments includes futures, currency forwards, equity swaps, credit default swaps and options. The Company's derivatives trading activities expose the Company to certain risks, such as price and interest rate fluctuations, volatility risk, credit risk, counterparty risk, foreign currency movements and changes in the liquidity of markets.
The Company's long and short exposure to derivatives is as follows:
Receivable on derivative contractsAs of December 31,
20202019
 Number of contracts / Notional ValueFair valueNumber of contracts / Notional ValueFair value
 (dollars in thousands)
Currency forwards$4,902 $15 $— $— 
Swaps$944,544 64,634 $383,752 6,151 
Options other (a)371,188 49,102 550,188 60,066 
Netting - swaps (b)(62,269)(3,240)
$51,482 $62,977 
Payable for derivative contracts
As of December 31,
20202019
 Number of contracts / Notional ValueFair valueNumber of contracts / Notional ValueFair value
 (dollars in thousands)
Futures$— $— $10,224 $217 
Currency forwards$123,346 3,067 $77,790 851 
Swaps$896,863 43,560 $607,717 26,409 
Options other (a)198,320 66,566 306,306 36,524 
Netting - swap (b)(37,033)(3,240)
$76,160 $60,761 
(a) Includes the volume of contracts for index, equity, commodity future and cash conversion options.
b) Derivatives are reported on a net basis, by counterparty, when a legal right of offset exists under an enforceable netting agreement as well as net of cash collateral received or posted under enforceable credit support agreements. See Note 2g for further information on offsetting of derivative financial instruments.
The following tables present the gross and net derivative positions and the related offsetting amount, as of December 31, 2020 and 2019. This table does not include the impact of over-collateralization.
Gross amounts offset on the Consolidated Statements of Financial Condition (a)Net amounts included on the Consolidated Statements of Financial ConditionGross amounts not offset in the Consolidated Statements of Financial Condition
Gross amounts recognizedFinancial instruments (a)Cash Collateral pledged (a)Net amounts
(dollars in thousands)
As of December 31, 2020
Receivable on derivative contracts, at fair value$113,751 $62,269 $51,482 $691 $169 $50,622 
Payable for derivative contracts, at fair value113,193 37,033 76,160 691 3,174 72,295 
As of December 31, 2019
Receivable on derivative contracts, at fair value$66,217 $3,240 $62,977 $— $2,911 $60,066 
Payable for derivative contracts, at fair value64,001 3,240 60,761 — 24,020 36,741 
(a)Includes financial instruments subject to enforceable master netting provisions that are permitted to be offset to the extent an event of default has occurred.
The realized and unrealized gains/(losses) related to derivatives trading activities were $(146.9) million, $(13.0) million and $14.3 million for the years ended December 31, 2020, 2019, and 2018, respectively, and are included in other income in the accompanying consolidated statements of operations. The net gains (losses) on derivative contracts in the table above are one of a number of activities comprising the Company's business activities and are before consideration of economic hedging transactions, which generally offset the net gains (losses) included above.
Pursuant to the various derivatives transactions discussed above, except for exchange traded derivatives and certain options, the Company is required to post/receive collateral. These amounts are recognized in receivable from brokers, dealers and clearing organizations and payable to brokers, dealers and clearing organizations respectively. As of December 31, 2020 and 2019, all derivative contracts were with major financial institutions.
Other investments
As of December 31, 2020 and 2019, other investments included the following:
As of December 31,
 20202019
 (dollars in thousands)
Portfolio funds, at fair value (1)$133,454 $114,504 
Carried interest (2)82,892 30,360 
Equity method investments (3)38,681 40,858 
$255,027 $185,722 
(1) Portfolio Funds, at fair value
The Portfolio Funds, at fair value as of December 31, 2020 and 2019, included the following:
As of December 31,
20202019
(dollars in thousands)
Starboard Value and Opportunity Fund LP (c)(*)$42,519 $37,895 
Formation8 Partners Fund I, L.P. (f)31,894 33,613 
Cowen Healthcare Investments II LP (i) (*)26,186 14,652 
Lagunita Biosciences, LLC (d)3,850 4,802 
Eclipse Ventures Fund I, L.P. (b)4,457 3,960 
HealthCare Royalty Partners II LP (a)(*)1,588 1,781 
RCG Longview Debt Fund V, L.P. (g)(*)— 1,732 
HealthCare Royalty Partners LP (a)(*)1,072 1,326 
Starboard Leaders Fund LP (e)(*)2,020 1,560 
Eclipse SPV I, LP (j)(*)1,708 1,447 
Ramius Merger Fund LLC (m)(*)2,197 — 
TriArtisan ES Partners LLC (k)(*)1,657 1,082 
Cowen Healthcare Investments III LP (i)(*)5,714 1,398 
TriArtisan PFC Partners LLC (l)(*)691 909 
Starboard Value and Opportunity Fund Ltd (c) (*)2,364 — 
Eclipse Ventures Fund II, L.P. (b)1,733 1,330 
Eclipse Continuity Fund I, L.P. (b)1,101 823 
Difesa Partners, LP (h) (*)848 508 
BDC Fund I Coinvest 1, L.P. (n) (*)1,250 — 
Other private investment (o)(*)326 4,448 
Other affiliated funds (p)(*)279 1,238 
$133,454 $114,504 
* These Portfolio Funds are affiliates of the Company.
The Company has no unfunded commitments regarding the Portfolio Funds held by the Company except as noted in Note 22.
(a)HealthCare Royalty Partners, L.P. and HealthCare Royalty Partners II, L.P. are private equity funds and therefore distributions will be made when cash flows are received from the underlying investments, typically on a quarterly basis.
(b)Each of Eclipse Ventures Fund I, L.P., Eclipse Ventures Fund II, L.P. and Eclipse Continuity Fund I, L.P. are venture capital funds which invests in early stage and growth stage hardware companies. Distributions will be made when the underlying investments are liquidated.
(c)Starboard Value and Opportunity Fund LP and Starboard Value and Opportunity Fund Ltd permits quarterly withdrawals upon 90 days' notice.
(d)Lagunita Biosciences, LLC, is a healthcare investment company that creates and grows early stage companies to commercialize impactful translational science that addresses significant clinical needs, is a private equity structure and therefore distributions will be made when the underlying investments are liquidated.
(e)Starboard Leaders Fund LP does not permit withdrawals, but instead allows terminations with respect to capital commitments upon 30 days' prior written notice at any time following the first anniversary of an investor's initial capital contribution.
(f)Formation8 Partners Fund I, L.P. is a private equity fund which invests in early stage and growth transformational information and energy technology companies. Distributions will be made when the underlying investments are liquidated.
(g)RCG Longview Debt Fund V, L.P. is a real estate private equity structures. The timing of distributions depends on the nature of the underlying investments and therefore will be made either quarterly or when the underlying investments are liquidated.
(h)Difesa Partners, LP permits semi-annual withdrawals occurring on or after the anniversary of initial contribution upon 90 days written notice.
(i)Cowen Healthcare Investments II LP and Cowen Healthcare Investments III LP are private equity funds.  Distributions are made from the fund when cash flows or securities are received from the underlying investments. Investors do not have redemption rights.
(j)Eclipse SPV I, L.P. is a co-investment vehicle organized to invest in a private company focused on software-driven automation projects.  Distributions will be made when the underlying investments are liquidated.
(k)TriArtisan ES Partners LLC is a co-investment vehicle organized to invest in a privately held nuclear services company. Distributions will be made when the underlying investment is liquidated.
(l)TriArtisan PFC Partners LLC is a co-investment vehicle organized to invest in a privately held casual dining restaurant chain. Distributions will be made when the underlying investment in liquidated.
(m)Ramius Merger Fund LLC permits monthly withdrawals on 45 days prior notice.
(n)BDC Fund I Coinvest 1, L.P. is a private equity fund focused on investing in growth companies in industries disrupted by digitization. Distributions will be made when the underlying investments are liquidated.
(o)Other private investment represents the Company's closed end investment in a Portfolio Fund that invests in a wireless broadband communication provider in Italy.
(p)The majority of these investment funds are affiliates of the Company or are managed by the Company and the investors can redeem from these funds as investments are liquidated.
(2)Carried interest
The Company applies an accounting policy election to recognize incentive income allocated to the Company under an equity ownership model in other investments in the accompanying consolidated statements of financial condition (see Note 2w). Carried interest allocated to the Company from certain Portfolio Funds represents Cowen's general partner capital accounts from those funds. These balances are subject to change upon cash distributions, additional allocations or reallocations back to limited partners within the respective funds. All carried interest balances are earned from affiliates of the Company.
A portion of the Company's carried interest is granted to employees through profit sharing awards designed to more closely align compensation with the overall realized performance of the Company. These arrangements enable certain employees to earn compensation based on performance revenue earned by the Company and are recorded within compensation payable in the accompanying consolidated statements of financial condition and employee compensation and benefits expense in the accompanying consolidated statements of operation based on the probable and estimable payments under the terms of the awards. 
The carried interest as of December 31, 2020 and 2019, included the following:
As of December 31,
20202019
(dollars in thousands)
Cowen Healthcare Investments II LP$62,112 $23,759 
Cowen Healthcare Investments III LP11,520 — 
TriArtisan TGIF Partners LLC3,361 — 
TriArtisan ES Partners LLC3,152 — 
TriArtisan PFC Partners LLC1,455 — 
Ramius Multi-Strategy Fund LP734 — 
Ramius Merger Fund LLC 368 — 
Other private investment (a)— 4,737 
RCG IO Renergys Sarl190 1,251 
Ramius Multi-Strategy Fund LP — 613 
$82,892 $30,360 
(a)Other private investment represents the Company's closed end investment in a Portfolio Fund that invests in a wireless broadband communication provider in Italy.
(3) Equity method investments
Equity method investments include investments held by the Company in several operating companies whose operations primarily include the day-to-day management of a number of real estate funds, including the portfolio management and administrative services related to the acquisition, disposition, and active monitoring of the real estate funds' underlying debt and equity investments. The Company's ownership interests in these equity method investments range from 15% to 55%. The Company holds a majority of the outstanding ownership interest (i.e., more than 50%) in RCG Longview Partners II, LLC and 40% in Surf House Ocean Views Holdings, LLC (which is a joint venture in a real estate development project). The operating agreement that governs the management of day-to-day operations and affairs of these entities stipulates that certain decisions require support and approval from other members in addition to the support and approval of the Company. As a result, all operating decisions made in these entities requires the support of both the Company and an affirmative vote of a majority of the other managing members who are not affiliates of the Company. As the Company does not possess control over any of these entities, the presumption of consolidation has been overcome pursuant to current Accounting Standards and the Company accounts for these investments under the equity method of accounting. Also included in equity method investments are the investments in (a) HealthCare Royalty Partners General Partners and (b) Starboard Value (and certain related parties) which serves as an operating company whose operations primarily include the day-to-day management (including portfolio management) of several activist investment funds and related managed accounts.
The Company completed assessments of the recoverability of the Company's equity method investments and determined that the carrying value of the investment in Surf House Ocean View Holdings, LLC exceeded the estimated fair value of the Company's interest, which was other than temporary. Accordingly, an other than temporary impairment charge of $11.3 million, $2.6 million, and $7.1 million, for the years ended December 31, 2020, 2019 and 2018, respectively, was recognized to reduce the carrying value of the investment to fair value. Impairment charges are included in net gains (losses) on securities, derivatives and other investments on the accompanying consolidated statements of operations.
The Company elected to use the cumulative earnings approach for the distributions it receives from its equity method investments. Under the cumulative earnings approach, any distributions received up to the amount of cumulative earnings are treated as return on investment and classified in operating activities within the cash flows. Any excess distributions would be considered as return of investments and classified in investing activities.
The following table summarizes equity method investments held by the Company:
As of December 31,
20202019
(dollars in thousands)
Starboard Value LP$31,528 $24,292 
Surf House Ocean Views Holdings, LLC— 7,804 
HealthCare Royalty GP III, LLC 2,213 2,230 
RCG Longview Debt Fund V Partners, LLC— 2,889 
RCG Longview Management, LLC268 583 
HealthCare Royalty GP, LLC 920 108 
HealthCare Royalty GP II, LLC 269 302 
RCG Longview Debt Fund IV Management, LLC331 331 
RCG Longview Equity Management, LLC105 105 
HCR Stafford Fund GP, LLC1,025 880 
Liberty Harbor North222 292 
Other1,800 1,042 
$38,681 $40,858 
The Company's income (loss) from equity method investments was income of $18.9 million, $24.6 million and $6.4 million for the years ended December 31, 2020, 2019, and 2018, respectively, and is included in net gains (losses) on securities, derivatives and other investments on the accompanying consolidated statements of operations.
Securities sold, not yet purchased, at fair value
Securities sold, not yet purchased, at fair value represent obligations of the Company to deliver a specified security at a contracted price and, thereby, create a liability to purchase that security at prevailing prices. The Company's liability for securities to be delivered is measured at their fair value as of the date of the consolidated financial statements. However, these transactions result in off-balance sheet risk, as the Company's ultimate cost to satisfy the delivery of securities sold, not yet purchased, at fair value may exceed the amount reflected in the accompanying consolidated statements of financial condition. As of December 31, 2020 and 2019, securities sold, not yet purchased, at fair value consisted of the following:
As of December 31,
 20202019
 (dollars in thousands)
Common stock$699,894 $425,448 
Corporate bonds11,358 5,933 
Government bonds1,500 1,950 
Preferred stock6,589 3,686 
Warrants and rights8,774 14,819 
$728,115 $451,836 
Securities purchased under agreements to resell/securities sold under agreements to repurchase and securities lending and borrowing transactions
The following tables present the contractual gross and net securities borrowing and lending agreements and securities sold under agreements to repurchase and the related offsetting amount as of December 31, 2020 and 2019.
Gross amounts not offset on the Consolidated Statements of Financial Condition
Gross amounts recognized, net of allowanceGross amounts offset on the Consolidated Statements of Financial Condition (a)Net amounts included on the Consolidated Statements of Financial ConditionAdditional Amounts AvailableFinancial instrumentsCash Collateral pledged (b)Net amounts
(dollars in thousands)
As of December 31, 2020
Securities borrowed$1,908,187 $— $1,908,187 $— $1,809,399 $— $98,788 
Securities loaned2,476,414 — 2,476,414 — 2,383,342 — 93,072 
Securities purchased under agreements to resell191 — 191 — 204 — (13)
Securities sold under agreements to repurchase5,036 — 5,036 — 5,544 — (508)
As of December 31, 2019
Securities borrowed$754,441 $— $754,441 $— $751,913 $— $2,528 
Securities loaned1,601,866 — 1,601,866 — 1,585,036 — 16,830 
Securities sold under agreements to repurchase23,244 — 23,244 — 27,384 — (4,140)
(a)Includes financial instruments subject to enforceable master netting provisions that are permitted to be offset to the extent an event of default has occurred.
(b)Includes the amount of cash collateral held/posted.
    The following tables present gross obligations for securities loaned and securities sold under agreements to repurchase by remaining contractual maturity and class of collateral pledged as of December 31, 2020 and 2019:
Open and OvernightUp to 30 days31 - 90 daysGreater than 90 daysTotal
(dollars in thousands)
As of December 31, 2020
Securities loaned
    Common stock$2,232,687 $— $— $— $2,232,687 
    Corporate bonds243,726 — — — 243,726 
Securities sold under agreements to repurchase
    Corporate bonds— — 5,036 — 5,036 
As of December 31, 2019
Securities loaned
    Common stock1,343,478 — — — 1,343,478 
    Corporate bonds258,388 — — — 258,388 
Securities sold under agreements to repurchase
    Common stock$— $— $23,244 $— $23,244 
Variable Interest Entities
The total assets and liabilities of the variable interest entities for which the Company has concluded that it holds a variable interest, but for which it is not the primary beneficiary, are $8.0 billion and $1.3 billion as of December 31, 2020 and $6.1 billion and $617.5 million as of December 31, 2019, respectively. The carrying value of the Company's exposure to loss for these variable interest entities as of December 31, 2020 was $210.7 million, and as of December 31, 2019 was $241.2 million, all of which is included in other investments, at fair value in the accompanying consolidated statements of financial condition. Additionally, the Company's maximum exposure to loss for the variable interest entities noted above as of December 31, 2020 and 2019, was $326.0 million and $261.7 million, respectively.  The maximum exposure to loss often differs from the carrying value of exposure to loss of the variable interests. The maximum exposure to loss is dependent on the nature of the variable interests in the VIEs and is limited to the notional amounts of certain commitments and guarantees.
b.    Consolidated Funds
Securities owned, at fair value
As of December 31, 2020 and 2019, securities owned, at fair value, held by the Consolidated Funds consisted of the following:
As of December 31,
 20202019
 (dollars in thousands)
     Preferred stock$— $4,393 
     Common stock4,816 200,306 
     Government bonds— 161,607 
     Corporate bonds — 3,405 
     Warrants and rights5,806 5,567 
$10,622 $375,278 
Receivable on derivative contracts
As of December 31, 2020 and 2019, receivable on derivative contracts, at fair value, held by the Consolidated Funds are comprised of:
As of December 31,
20202019
(dollars in thousands)
Currency forwards$— $3,302 
Equity swaps— 927 
Options— 1,604 
$— $5,833 
Payable for derivative contracts
As of December 31, 2020 and 2019, payable for derivative contracts, at fair value, held by the Consolidated Funds are comprised of:
As of December 31,
20202019
(dollars in thousands)
Currency forwards$— $88 
Equity swaps— 3,931 
Options— 750 
$— $4,769 
Other investments, at fair value
Investments in Portfolio Funds, at fair value
As of December 31, 2020 and 2019, investments in Portfolio Funds, at fair value, included the following:
As of December 31,
20202019
(dollars in thousands)
Investments of Enterprise LP$104,475 $99,153 
Investments of Merger Fund— 76,616 
Investments of Cowen Sustainable Investments I LP88,195 — 
$192,670 $175,769 
Consolidated portfolio fund investments of Enterprise LP    
On May 12, 2010, the Company announced its intention to close Enterprise Master. Enterprise LP operated under a "master-feeder" structure up until January 1, 2019, when Enterprise Master distributed its capital to each feeder and was
liquidated. As of December 31, 2020 and 2019, the consolidated investments in Portfolio Funds include Enterprise LP's investment in RCG Special Opportunities Fund, Ltd which is a portfolio fund that invests in a limited number of private equity investments directly as well as through affiliated portfolio funds.
Consolidated portfolio fund investments of Merger Fund    
The Merger Fund, which was deconsolidated during the second quarter of 2020 (See Note 2b), operates under a "master-feeder" structure, whereby Merger Master shareholders are Merger Fund and Ramius Merger Fund Ltd. The consolidated investments in Portfolio Funds include Merger Fund's investment of $76.6 million in Merger Master as of December 31, 2019. The Merger Master's investment objective is to achieve consistent absolute returns while emphasizing the preservation of investor capital. The Merger Master seeks to achieve these objectives by taking a fundamental, research-driven approach to investing, primarily in the securities of issuers engaged in, or subject to, announced (or unannounced but otherwise anticipated) extraordinary corporate transactions, which may include, but are not limited to, mergers, acquisitions, leveraged buyouts, tender offers, hostile takeover bids, sale processes, exchange offers, and recapitalizations. Merger Master invests in the securities of one or more issuers engaged in or subject to such extraordinary corporate transactions. Merger Master typically seeks to derive a profit by realizing the price differential, or "spread," between the market price of securities purchased or sold short and the market price or value of securities realized in connection with the completion or termination of the extraordinary corporate transaction, or in connection with the adjustment of market prices in anticipation thereof, while seeking to minimize the market risk associated with the aforementioned investment activities. Merger Master will, depending on market conditions, generally focus the majority of its investment program on announced transactions. If the investment manager of Merger Master considers it necessary, it may either alone or as part of a group, also initiate shareholder actions seeking to maximize value. Such shareholder actions may include, but are not limited to, re-orienting management's focus or initiating the sale of the company (or one or more of its divisions) to a third party.
Consolidated portfolio fund investments of Cowen Sustainable Investments I LP
Cowen Sustainable Investments I LP ("CSI I LP") is a private investment fund making debt and equity investments in companies and real assets that are accelerating the global transition to a sustainable economy. The fund primarily focuses its investments around four themes: (i) renewable energy and battery storage; (ii) clean transportation; (iii) sustainable agriculture and food production; and (iv) resource and industrial efficiency. CSI I LP has made investments in ecoATM, LLC, a manufacturer and owner of automated kiosks that allow consumers to sell back unwanted smart phones, and Proterra, Inc, a designer and manufacturer of zero-emission electric transit vehicles and electric vehicle technology solutions for commercial applications. CSI I LP is a private equity-style vehicle that does not permit redemptions; proceeds realized from the fund’s investments are expected to be distributed after the end of the fund’s investment period.

Indirect Concentration of the Underlying Investments Held by Consolidated Funds
From time to time, either directly held by the Company, indirectly through the Company's consolidated entities or indirectly through its investments in the Consolidated Funds, the Company may maintain exposure to a particular issue or issuer (both long and/or short) which may account for 5% or more of the Company's equity. Based on information that is available to the Company as of December 31, 2020 and 2019, the Company assessed whether or not its interests in an issuer for which the Company's pro-rata share exceeds 5% of the Company's equity. There was one indirect concentration that exceeded 5% of the Company's equity as of December 31, 2020 and 2019, respectively.
Through its investments in a Consolidated Fund and combined with direct Company investments, the Company maintained exposure to a particular investment which accounted for 5% or more of the Company's equity.
Investment's percentage of the Company's stockholders' equity
IssuerSecurity TypeCountryIndustryPercentage of Stockholders' EquityMarket Value
(dollars in thousands)
As of December 31, 2020Linkem S.p.A.Equity, loans and warrantsItalyWireless Broadband9.07 %$87,944 
As of December 31, 2019Linkem S.p.A.Equity, loans and warrantsItalyWireless Broadband9.53 %$77,142 
Underlying Investments of Unconsolidated Funds Held by Consolidated Funds
During the second quarter of 2020, the Company deconsolidated the Merger Fund due to a partial redemption of the Company’s direct portfolio fund investment in Merger Fund. The Company continues to hold a direct retained portfolio fund investment in the Merger Fund.
Merger Master
As of December 31, 2019, Merger Fund's investment in Merger Master represented Merger Fund's proportionate share of Merger Master's net assets; as a result, the investment balances of Merger Master reflected below may exceed the net investment which Merger Fund has recorded. The following tables present summarized investment information for the underlying investments and derivatives held by Merger Master as of December 31, 2019:
Merger Master
 As of December 31, 2019
Securities owned by Merger Master, at fair value
(dollars in thousands)
Common stock$76,531 
Warrants and rights748 
Corporate bonds2,074 
$79,353 
Securities sold, not yet purchased, by Merger Master, at fair value
Common stock$29,623 
Exchange traded funds38,527 
$68,150 
Receivable on derivative contracts, at fair value, owned by Merger Master
 As of December 31, 2019
Description(dollars in thousands)
Options$2,047 
Equity swaps406 
$2,453 
Payable for derivative contracts, at fair value, owned by Merger Master
As of December 31, 2019
Description(dollars in thousands)
Options$1,158 
Equity swaps268 
$1,426