Cowen Inc.
Q1 2017 Earnings Call Transcript

Published: 28 Apr 2017

[Operator:]

Good afternoon ladies and gentlemen and thank you for joining Cowen Group Incorporated’s conference call to discuss financial results for the 2017 first quarter. By now, you should have received a copy of the Company’s earnings release, which can be accessed at Cowen Group Incorporated’s Web site 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 risks and uncertainties described in the Company’s earnings release and other filings with the SEC. Cowen Group Incorporated has no obligation to update this 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 Web site and on the SEC Web site at www.sec.gov. Also on today’s call, our speakers will reference certain non-GAAP financial measures which the Company believes will provide useful information for investors. A reconciliation of those measures to GAAP is consistent with the Company’s reconciliation as presented in today’s earnings release. Now I'll turn the call over to Mr. Peter Cohen, Chairman and Chief Executive Officer.

[Peter Cohen:]

Thank you, Operator. Good afternoon, everyone. Thank you for joining Cowen’s first quarter earnings call. With me as always Jeff Solomon, President of the firm, and Steve Lasota, our CFO. In our last earnings call, we said that in 2017 we will begin to see the benefits from the investment we made in 2016. We look to grayscale organically in through acquisitions and opportunistically deploy capital towards opportunities that support our core businesses. We are definitely making progress in each of those fronts. The investment management business continues to attract new assets and we’re incubating new capabilities by cross-pollinating expertise across Cowen. Merchant banking activity rebounded and we're continuing to see the revenue and diversification benefit from newer banks. Newer bankers added to the platform and the brokerage business perform well in a very difficult environment for equities. And with the Convergex acquisition, which we announced in April, we expect that our increased scale will unlock significant economic benefits by providing greater top line resilience and financial performance through market cycles and improve profitability from cost synergies. Investment income had a productive quarter as our various strategies performed well in the quarter. And the announcement in March of a strategic partnership with China Energy Limited, known as CEFC China, which includes a $275 million contribution of capital to the firm is expected to accelerate growth in our core areas of expertise, banking, equities, research, and investment management. CEFC China's investment is subject to approval from the committee on foreign investment in the U.S and certain of the customary regulatory approvals, which will take some months to achieve as there is a process that has to be gone through. Now for a summary of our first quarter results. Cowen reported economic income of $5.5 million or $0.19 per diluted share compared to economic income loss of $4.9 million or $0.18 per diluted share in the prior period last year. Economic income revenue was $129 million, which compared to $106 million in the first quarter of 2016. Now reviewing the results of the investment management division, general appears that outflows from hedge funds which reached $106 billion in 2016, have slowed a bit in the first quarter. According to industry data, investors were gained approximately $5 billion in January 2017 compared to $19 billion in January of 2016. The HFRI Equity Index was up 3.8% for the first quarter of 2017. In the first quarter 2017 our investment management business grew total assets on the management by a $170 million, $10.7 billion as of April 1 last year. That number excludes the assets which were sold when we sold our solutions business RASL to Sanford Bernstein. Our Longshore equity fund focus initially on the communications technology meeting consumer sectors, continues to gain traction from investors just after the end of the first quarter. The fund was approved and became available on the Morgan Stanley and Merrill Lynch Wealth Management platforms with a combined capacity that we’ve lauded them of over $300 million between the two firms. The merger arbitrage we delivered strong results and saw modest inflows in the quarter. Real estate has its first close in February of a 6 mezzanine debt fund offer and we expect the second close in second quarter of this year. Our healthcare royalties business had a record quarter for the amount of capital committed to new deals, putting them in a position to probably raise a substantial amount of new money next year, which will grow their business substantially. Our consumer focused loan for equity strategy is developing a separate managed account business even as we close the combing of fund due to a lack of interest. And during the quarter, we exit our partnership with State Street, which is really a managed futures platform that had literally no assets under management, so made no sense to continue with. We are unable to gain traction on the State Street platform, so we exited the business. In coming weeks you’re going to -- you will see us rebrand the firm from Cowen Group to Cowen Inc. You'll see us change the ramius to Cowen Investment management and the purpose behind all of the rebranding we’re going to do is to unify the view of the firm, integrate investment management into the broader Cowen organization and utilize a lot of the resources that are available more efficiently. We really want to put forth the one brand concept here. We believe this effort will better reflect opportunities among all of our business is, especially as we develop capabilities and investment offerings that leverage the expertise and resources with some of the group. Moving to the investment management part of our business, investment forms part of our business for the quarter. We generated $21.6 million in investment income, compared to $1.9 million in the year ago period. And this was achieved kind first of grow the course of all our strategies. If you have been following us for a while, you’ve seen or platform grow organically and through acquisition over the last few years. Something we said we will try and do. In 2015, we acquired constant capital, kind of the securities. It's great. Cowen Prime services. In 2016 we acquired CRT's credit products, credit research in special situation is that merging market units which are doing very well under the Cowen platform. And in additional last year we welcomed the team from the washing research group. And the merchant banking and investment banking teams from Morgan Joseph TriArtisan to the platform. And thus far in 2017, we announced the acquisition of Convergex as well as the strategic partnership with CEFC China. With this brought a large platform we are focused now. And driving profitability and cost effectiveness, we think that we’ve substantially enhanced the critical mass of the firm. Before I turn the call over to Jeff. before I turn the call over to Jeff, as always none of this will happen without the hard work and dedication of our colleagues. And I want to thanks them. As I always feel for what they do to help make a big difference in Cowen, a place we all love to work. So with that, Jeff.

[Jeffrey Solomon:]

Thanks, Peter. Following a need in capital raising environment in 2016, investor appetite for new issue was much improved in the first quarter of this year. The increased activity largely centered around follow ons, while IPO activity outside of a few market public deals with still relatively model. Total equity proceeds raised in the United States for IPO, it's a follow on than our core sectors is about $25 billion, which does 68% increase in the prior year period. 134 transactions were completed across these sectors compared to 63 in the prior year period. And with the generally improved market conditions or ACM business was up 42% year-over-year. The recording of best quarters since the third quarter of 2015. In total we closed 23 transactions compared to 12 in the prior year quarter. We were a book runner on 61% of those transactions compared to 50% in the year-ago period. Our revenue mix, which is waited towards follow-on operating reflects the current environment. And in addition, our clients are utilizing continued shelf offering as an avenue to raise capital opportunistically, and we’ve seen revenue growth meaningfully in this areas. Our mergers and acquisition business continue to experience good moment, and the bankers that we’ve invested on over the past few years are beginning to season on our platform and are contributing to 2017 revenues, especially as we head into the second quarter. To give you a sense of the momentum, in late March and early April, we advised two M&A transactions totaling $1.3 billion, ensuring the action value and these are the two largest scales we’ve provided in many years and will represent significant fees for the firm when they close later this year, so there is not any -- in the first quarter numbers. Our M&A backlog remains quite strong and we’ve replenished -- more replenished our execution over the past month and we need to obviously convert those -- that backlog into fees, but remains very upbeat for the remainder of the year. Turning to our institutional brokerage business, which includes equities, prime services, and credit. With respect to the general environment for equities volumes have been lower across the industries and they were in total 2016. For a point of reference, New York Stock exchange and NASDAQ composite volumes for the first quarter were down 18% year-over-year. In the preliminary figures for the first quarter of '17 from a leading market research firm, point to double-digit year-over-year declines in commission for the entire industry. And we’ve been seeing for a while that we expect it to be continued fall out for smaller competitors and they clearly has been. We are aware of at least four research providers who have acted at the business thus far in 2017 and we estimate collectively that they represented about $100 in annual commissions. Our platform which is a fully scale of research focused business, providing active managers with sophisticated insight and domain expertise has translated our brokerage business into a brokerage business that has performed much better than the industry average. Our total brokerage revenue declined only 1% year-over-year aided by contributions in some credit and research trading businesses required last year. Our core equities revenue business which includes cash equities, special situations, electronic trading options and converts only decreased by about 8% in the quarter versus 18% for the listed volume decline I mentioned earlier. This environment reinforces our rationale for the Convergex transaction which will provide us not only with meaningful scale, but a platform where we will have created a unique equity franchise, offering high quality research and sophisticated. Non-research based agency execution capabilities in the same platform. There are very few firms our size that offer similar value proposition to clients. As the buy side continues to consolidate their broker commissions towards the most important providers, we believe we will be a major beneficiary given our strong research capabilities as well as our position as an important liquidity provider. Our strategy is playing out as expected as we continue to gain share with key accounts. In many instances we’re already a top broker firm for important buy side accounts based on our research footprint, we do have room to grow with them on the trading wallet, in which Convergex will be in a position to further penetrate existing new accounts, if there is very little overlap in our existing client base. In prime services, client assets in custody in clearing firm's exceeded $7.5 billion and our newly launched international prime brokerage already has begun to show some traction as we've gotten important client wins. This credit rating business through acquired last year and it specializes primarily in distressed emerging markets and special situations and trade claims remains episodic in nature, but its performing well in this environment. It is something that we think will be continue to improve as we see increase in volatility. I mean as we approach the one-year anniversary of the acquisition of these businesses from CRT is clearly been accretive to our operating performance as we’ve been able to eliminate costs meaningfully. I think it's important as we look forward to the consolidation of Convergex into our organization. This is clearly a management team that understands that in an environment, which we don't expect the markets in which we operate to expand meaningfully, we have to be acquiring growth in organically and taking out cost structure. Certainly we will be doing that with the acquisitions to date and I think with Convergex being our largest one to date we have a significant amount of opportunity to create margin through synergies. So, I’m going to turn the call over to Steve, who will review our financials and I will close out at the end of the call.

[Stephen Lasota:]

Thank you, Jeff. In the first quarter of 2017, we reported GAAP net income attributable to common shareholders of $1.3 million or $0.05 per diluted common share compared to a GAAP net loss attributable to common shareholders of $5.4 million or negative $0.20 per diluted common share in the prior year period. First quarter 2017 GAAP revenue was $115 million, comp and benefits expense was $76.7 million, non-comp expenses excluding interest expense were $48.8 million, net gain on investments and net gain from consolidated funds were $39.4 million. Income tax expense was $1.9 million and income attributable to non-controlling interest of $9.1 million. In addition to our GAAP results, management utilizes non-GAAP financial measures which we refer to as economic income. Management uses economic income to measure our performance and to make certain operating decisions. In general, economic income is a pre-income tax measure that excludes the impact of accounting rules that require us to consolidate certain of our funds, certain other acquisition related adjustments and reorganization expenses, goodwill and intangible impairment and preferred stock dividends. The remainder of my comments will be based on these non-GAAP financial measures. In the first quarter of 2017, the Company reported economic income of $5.5 million or $0.19 per diluted share. This compares to an economic income loss of $4.9 million or $0.18 per diluted share in the prior year period. First quarter 2017 economic income revenue was $128.6 million compared to $105.6 million in the prior year period. Investment banking revenue was $36.6 million compared to $26.1 million in the first quarter of '16. Quarterly brokerage revenue declined 1% year-over-year to $52.3 million. Management fees was $13.9 million compared to $16.9 million from the prior year period. Incentive income was $3.1 million compared to $6.9 million in the prior year. Investment income was $21.6 million compared to $1.9 million in the prior year period. Other revenue was $1.1 million compared to $1 million in the prior year period as well. Comp and benefits expense for the quarter was 58% of economic income revenue compared to 59%. Variable non-comp expenses in the first quarter of '17 were $16.4 million compared to $15.2 million in the prior year period. The increase was primarily related to higher floor brokerage and trade execution costs and increased marketing and business development expenses. Fixed non-comp expenses, excluding depreciation and amortization totaled $23.8 million in the first quarter of '17 compared to $24.4 million in the prior year period. Depreciation and amortization expenses were $2.6 million in the quarter compared to $2.8 million in the first quarter of '16. The decrease is primarily related to a decrease in depreciation expense from fully depreciated fixed assets, partially offset by an increase in amortization of intangible assets related to acquisitions during late '15 and during -- in '16. GAAP stockholders equity increased by $5.6 million to $778 million at March 31 '17 from $773 million at 12/31/16. Common equity, which is stockholders equity less the preferred stock was $677 million compared to $671 million at 12/31/16. Book value per share, which is common equity divided by shares outstanding was $24.79 per share compared to $25.11 at 12/31/16. Tangible book per share, which is common equity less goodwill and intangible assets was $21.67 per share compared to $21.88 at 12/31/16. Invested capital was $645 million as of March 31 versus $657 million at December 31 '16. I will now turn the call back over to Jeff for closing remarks.

[Jeffrey Solomon:]

Thanks, Steve. In our business as you all know is about intellectual capital and our ability to provide high-quality services to clients who are really looking to outperform. And I think it remains our primary mission and goal to cater to active managers and that’s what we do best here at Cowen. We remain steadfast in our commitment to maintain a healthy capital base, which provides us with a strong foundation for our platform, enables us to do what we do best. With a $1 billion in total capital, we’ve the flexibility to optimize that capital later on and -- but we do believe that it will fuel our shareholder value whether its investing in our existing businesses, acquiring businesses or buying back stock. In our core business, our investments in 2016 are really beginning to manifest themselves and we’ve newer activities underway such as the development of a security finance business and self clearing for certain portions of our prime services business, all of which will be augmented by the Convergex acquisition. And of course that acquisition, as we mentioned earlier, really scales our platform by leveraging our cost structure and generate significant operating efficiencies for us as well as scale. The partnership with CEFC China will facilitate future growth in our core competencies by providing us some capital to scale businesses that are more capital intensive like securities lending and eventually leveraged finance. It will also provide us long-term initiatives such as asset management distribution in China and more opportunities for us to bring to bear ARPU [ph] that we have here in the United States to an audience that’s really in the fastest-growing economy in the world. So we’ve great confidence in our ability to scale in a more diverse way by elevating the revenue capabilities in the organization and by driving margin expansion, and that's where it's going to be our focus for the remainder of 2017. We really do think that we created something special account and we got a lot more to do, and obviously we want to thank our colleagues for that. You all do an incredible job and we could not be more proud of the team that we've built here at Cowen. So with that, I will turn it back over to the operator and we can open it up for questions.

[Operator:]

Thank you. [Operator Instructions] Our first question comes from Devin Ryan with JMP Securities. Your line is open.

[Brian McKenna:]

Hey, guys. This is Brian McKenna for Devin. How are you doing?

[Peter Cohen:]

Hi, Brian.

[Jeffrey Solomon:]

Hey, Brian. How are you?

[Brian McKenna:]

Doing well. Thanks. So, I guess, just on M&A advisory I know it sounded like the backlog was up significantly at the same time a year-ago, but does it still feel as good today and then just how are you thinking about the timing of the completion of it?

[Jeffrey Solomon:]

So I think it feels pretty good actually from our standpoint. We think that the backlog and our ability to closing that backlog has -- it is still very high. We did close on -- we signed a record number of engagement letters in the first quarter. Some of those are buy side as well as sell side opportunities that obviously those transactions have to close, but just being able to see the efforts of the backlog and the conversion rates we saw from last year. If we do on a percentage basis anywhere close to what we've done historically based on where we were at the first quarter our numbers will be up pretty significantly and we did announce two pretty significant transactions I mentioned, both in the semiconductor states right at the beginning of April. One of them is likely to close in this quarter, the other one is subject to CFIUS approvals later in the year, but these are the kinds of things you work on for a really long periods of time and then they happen. So I’m just pleased to see that even though we’ve deals that are closing and coming off backlog at M&A that the backlog at M&A has been bigger and with higher quality stuff. Some of the areas also are worth noting. It's -- the M&A backlog is primarily in technology and in consumer, and we got a few things that are in healthcare as well. So it's a much more diverse industry mix than our equity capital markets business, and that’s I think a function of the fact that the bankers we have in those areas are more focused on M&A, because the ECM opportunity in those sectors is more limited and more -- and less robust. And so, I think -- again, we've opted to build our M&A business organically as opposed to do acquisition and those things will take time, so I think I'm pleased with where we ended the first quarter, which is improvement over last year in the first quarter and I look out at the rest of the year and see that we can make meaningful progress over year-over-year numbers there as well.

[Brian McKenna:]

Okay, great. I appreciate all that color. And then, just a quick follow-up. How much of the [technical difficulty] income was from the Lincoln [ph] investment? And could you remind us where that investment stands right now?

[Peter Cohen:]

In the first quarter there was no gain from the Lincoln [ph] investment.

[Stephen Lasota:]

Very little, yes.

[Peter Cohen:]

Very little. When you say where the investment stands, the Company continues to grow very rapidly. With what's going on broadly around the world in the appetite to spectrum, we get a lot of inquiry. It's a Company about partnering, joint venturing, distribution arrangements, because we have the vast majority, about 70% or 65% of all of the 3.5 GHz spectrum in Italy. And we think that the outlook for Lincoln is quite good.

[Brian McKenna:]

Okay, got it. That’s it for me. Thanks for taking my questions.

[Peter Cohen:]

Sure.

[Operator:]

Thank you. Our next question comes from Sharon Leung with Nomura Infinite. Your line is open.

[Sharon Leung:]

Hey, guys. I’m filling in for Steven today. So my first question is just on the ECM outlook. Obviously, you had a really strong quarter, this quarter. Looking forward like what are we seeing in terms of the backlog right now? Is the strength expected to persist or like just looks shallow from here?

[Jeffrey Solomon:]

So, on ECM I actually feel really good on that as well. I think the lack of volatility in the marketplace as we -- has certainly encouraged people to come to market. We certainly see that we’re in the right sectors, being in healthcare sector is a great spot to be. Those companies need to raise money no matter what so, even if you have a period of time in which they may wait because of some market volatility and variably they come back to market and raise money. So, we certainly are the beneficiary there, because we got a bunch of clients that we done really well by over the course of the past half a decade plus and so that backlog is -- actually continues to be robust. There's a bunch of new IPOs that were actually on the road, but a few of them as we speak. We’ve actually landed a few IPOs outside of healthcare, which I think is encouraging. Some of those are lead-left IPOs for consumer and few others -- a few other areas. To me, we're doing -- we’re positioning our self like extremely well to take advantage of the places where we should be winning and where the wallet is available to us and making sure that we're sized appropriately from a staffing standpoint to execute on as well as again. So, I still remain very bullish as long as we have the kind of environment where the market does seem to care too much about geopolitical challenges. The markets are open and investors are actually sitting on a fair amount of cash and many active managers have missed the run-up in equities that usually makes for an environment in which they will chase those returns through new issue, which is I think still the best and easiest way for active managers to outperform their benchmarks, if you bring companies to public -- into the public market and investors get a chance to participate in the leg up after an offering that -- that’s usually a pretty good and healthy sign. So, so far so good into the second quarter and we will see how things continue, but that’s why we’re pretty bullish about it.

[Sharon Leung:]

Okay. That’s really helpful. And then, on your 10% ROT target that you’ve talked about in the past, given some of the actions that you’ve taken especially with the upcoming Convergex deal and the China Equity Investment. What should we think about is a reasonable timeline to getting to that 10% target?

[Jeffrey Solomon:]

So I think that we try to do is balance both the need to create scale in the businesses, as well as through revenue growth, as well as drive cost reductions. I think we’ve done a very good job at making sure that we got a robust enough platform to both businesses on. And so our challenge has been the infrastructure of the organization is built to be a much bigger revenue number and organic growth has been slow. So when we start to look at the numbers, particularly, post the Convergex integration and we always give ourselves a couple of quarters to get that right. Our view is that we should be a much better position to achieve those targets on a more consistent basis as we head into 2018. Now, we always have the optionality associated with the performance of the balance sheet and investment management with a performance fees were we could be driving ROE. If we have positive investment performance in our funds, which have either seem to me an exposure in capital or significant exposure to investment performance or invested income. So I think we’re going to certainly be achieving those, that target prior to 2018. But I think our goal here has been to take this great infrastructure that we have and scale meaningfully or built it, so that we can bolt on businesses as meaningful on size as Convergex and eliminate duplicative costs, so over time we can be more consistent in our ability to provide those targeted return. So totally possible for us to be hitting those numbers at any time in 2017. But I think the way we think about it is how can we make sure that we’re getting that kind of consistency and without having to rely on investment performance outside the investment performance on the balance sheet or investment performance in the fund to drive that margin. So that, when that actually happens, the margins will should expand to greater than that. Does that make sense?

[Sharon Leung:]

Yes, that’s perfect. And then just one final quick one. Can you give us an update on the gains embedded in healthcare royalty partners got in your P&L right now?

[Stephen Lasota:]

Yes, I mean, they still fund one is still tied up in a couple of investments and it's still we won't book those incentive fees until the capital is returned to the investors plus the preferred return, and then we get to book that incentive base, so it's just when those two investments are realized.

[Jeffrey Solomon:]

I think, so one of the things that we -- frankly I hadn't focused on just to be clear several years ago we started to talking about this. This just never really occurred to us that a 100% of RK will be 100% of our current would be tied up in the last two or three investments in the fund. I mean, I will just say, at somebody who grew up in the hedge fund business and really didn’t focused on the GAAP accounting associated with private equity. I know just -- we can see the gains. We know they’re there, but the realization of those is all depending on in the last few names in your private equity portfolio And the team is working to monetize them. They're doing just fine. It's just -- its a matter of time. Those are private companies and they need to be monetized at some point and they will be. And I just think it's hard for us to know what the optimal time is for that? All I can say is that the team is well aware of the fact and its adequately incented. From their standpoint as well as from the Company's standpoint to monetize them at appropriate time and as soon as possible. I just think we’ve been talking about it for a long time and that’s just -- I think a reflection of maybe four, five years ago, our sort of really lack appreciation for how much of the carry would be tied up in the last few investments.

[Sharon Leung:]

Okay, got it. Thanks so much for taking my questions, guys.

[Jeffrey Solomon:]

Okay.

[Peter Cohen:]

You’re welcome.

[Operator:]

Thank you. [Operator Instructions] Our next question comes from Nick Brown with Zazove Associates. Your line is open.

[Nick Brown:]

Hi, just two questions. The first one is on the brokerage business. Can you give a little more color on why that was weak this quarter. I mean, given not with the markets we're doing, it would seem like you could have had better growth there?

[Jeffrey Solomon:]

Well, I mean, certainly Nick, you’re familiar with what's going on in the volatility market, I’m sure. Given what your portfolios look like, you can see well collapsed and people are sitting on their hands and honestly involve collapses like this. People are just -- I think investors were generally tentative to move into the market wholesale. I think there is a lot of investors who believe that the rally of the market has been very narrowly focused on, couple are really high-profile stock particularly in tech sector, And there's I'd say a lot of folks been reluctant to put my to work on the active side and this is -- I think by the way I think we’re doing way better than most others frankly. The other -- so many of our competitors have suffered. I think way more meaningfully than we have at least from a lack of volume. And so, I’d say this is market driven more than anything else. On days when we see those spikes volatility or people are get concerned about geopolitical issues, the volume picks up and we certainly see our fair share that we see more in our fair share of it and I'd say that the metrics I focus so that more on for us, Nick are like, are we moving up in terms of our boat at long only you can add hedge fund meaningfully both on the research side as well as on the trading side. And to me that’s the thing that's well within our control. We continue to move up and get a bigger share of the wallet at each of our individual -- each of our client individually then collectively when volume returns to the market, which it will, eventually. We will be in a much better position than we were several years ago. So, I think it's more just lack of volatility, people are just sort of sitting on their hands and not necessarily putting money to work.

[Peter Cohen:]

Volume.

[Nick Brown:]

Okay. That’s helpful. Thank you. And just my one another question, more of a housekeeping question. Given there, further along since the announcement of the CEFC deal. I know in the press release when you announce that you expected it to close by the end of the third quarter. Is that still your expectation or is it taking longer than that?

[Peter Cohen:]

No, I think we’re on track with the processes we’ve to go through to meet that objective.

[Nick Brown:]

Okay. Thank you.

[Peter Cohen:]

Thank you, Nick.

[Operator:]

Thank you. And our next question comes from Weston Wilkinson with Perella Weinberg. Your line is open.

[Weston Wilkinson:]

Hey, guys. Thanks for taking the time. Just a quick question on inorganic growth on the investment management side? What are -- as you guys look to grow that business organically or inorganically on the inorganic side? What are the types of structures or economic structures arrangements, general and general frameworks. That you guys typically look to build around or will look to build around going forward?

[Jeffrey Solomon:]

Yes, I think that’s a -- first of all its a good question. Certainly one that given where you are, you’re probably taking about as much as we are. I think we got a bunch of platform products that we see and we got a bunch of distribution that we know we can act that. We are always looking at new product types that meet the liquidity profile of the strategies we're pursuing, which is to say that we’re trying to match liquidity profiles with the investments we have. We do have platform distribution. We are distributing in Europe. I’m not going to get into too much detail today, because a lot of things that we’re working on are a little bit proprietary nature and as much as they are, I don’t necessarily want to share it an open call, but all the structures that we’re looking at revolve around the fact that we have a real strategy that we think are differentiated and as you can see when we think we have strategies that are a little less than differentiated as we see no traction, we just -- we’ve been much more aggressive at shutting those down and moving to master platform pretty quickly. So I don't know if there is any deep insight to own a share at an open call and structure. Sufficing to say though that when we look at our growth, its coming from individuals and from institutions collectively and it really depends on the channels in which we’re selling into.

[Weston Wilkinson:]

Thank you.

[Operator:]

Thank you. I’m showing no further questions at this time. I’d like to turn the conference back over to management for any closing remarks.

[Peter Cohen:]

Operator, thank you. This is Peter Cohen again. Just thank you all for dialing in and asking questions. We look forward to making a lot of progress in the future. We've got the two major transactions almost under our belt and as I said earlier have -- got the firm to a level of critical mass that we think we can really build on. So thank you and happy bringing your children to work day.

[Jeffrey Solomon:]

Talk to you all next quarter.

[Operator:]

Ladies and gentlemen, thank you for your participation in today's conference. This does conclude the program, and you may now disconnect. Everyone have a great day.