Company: COHN
Filing Date: 2025-03-12
Form Type: 10-K
Source: 0001437749-25-007158
Chunk: 2679

Company: Cohen & Co Inc.
Filing Date: 2025-03-12
Form: 10-K
Item: Item 6
Chunk 2679
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ACs would be negatively impacted if the stock of SPACs that successfully complete a business combination underperform the market.  If volumes of SPAC activity decline, our results of operations will likely be significantly negatively impacted.  

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Equity prices of SPACs and post-business combination SPACs declined significantly during 2023 and 2024. We are exposed to public equity prices of SPACs and post-business combination SPACs both through our other investments, at fair value and investments in equity method affiliates as well as our other investments sold, not yet purchased. As a result, we recorded significant principal transaction losses and equity method losses during the years ended December 31, 2023 and 2024 in certain SPAC related investments. Continued declines in the equity prices of these companies will result in further losses for us.

Margin Pressures in Fixed Income Brokerage Business 

Performance in the financial services industry in which we operate is highly correlated to the overall strength of the economy and financial market activity. Overall market conditions are a product of many factors beyond our control and can be unpredictable. These factors may affect the financial decisions made by investors, including their level of participation in the financial markets. In turn, these decisions may affect our business results. With respect to financial market activity, our profitability is sensitive to a variety of factors including the volatility of the equity and fixed income markets, the level and shape of the various yield curves, and the volume and value of trading in securities.

Margins and volumes in certain products and markets within the fixed income brokerage business continue to decrease materially as competition has increased and general market activity has declined. Further, we continue to expect that competition will increase over time, resulting in continued margin pressure. ﻿

Our response to this margin compression has included: (i) building a diversified fixed income trading platform; (ii) acquiring or building out new product lines and expanding existing product lines; (iii) building a hedging execution and funding operation to service mortgage originators; (iv) building out CCM, and (v) monitoring our fixed costs. Our cost management initiatives are ongoing. However, there can be no certainty that these efforts will be sufficient. If insufficient, we will likely see a decline in profitability.

U.S.  Housing Market

In recent years, our mortgage group has grown in significance to our Capital Markets segment and our company overall.  The mortgage group primarily earns revenue by providing hedging execution, securities financing,