Diversity helps Cohen family businesses succeed

Edward E. Cohen (third from right), chairman of Atlas Pipeline Holdings L.P., rang the opening bell of the New York Stock Exchange on Sept. 13, 2006.
Edward E. Cohen (third from right), chairman of Atlas Pipeline Holdings L.P., rang the opening bell of the New York Stock Exchange on Sept. 13, 2006. (NYSE Group Inc. / Bloomberg News)
Posted: February 04, 2014

They grew up in business families, where finding customers and getting paid was dinner-table talk - Edward E. Cohen, son of a North Philadelphia paperhanging contractor, and Betsy Zubrow, daughter of a West Philly neighborhood doctor. They were Penn Law students when they married in 1965.

So it's not surprising the couple and sons Daniel and Jonathan have built a collection of companies. Or that they've listed more than a dozen firms on stock exchanges.

What's unusual is the scope of the enterprises - the mix of energy (the Atlas group of companies), real estate (the Resource companies), and finance (fast-growing Bancorp Bank, the former Jefferson Bank, a string of small investment banks) - that have helped the Cohens finance projects as diverse as Walnut Street restaurants, Wall Street mortgage bonds, and Marcellus Shale natural gas wells.

Their businesses' ups and downs across two generations would fill a complex flow chart. Some lost big in 2008's financial-markets collapse. But the Cohens are diversified.

"We believe in the long term," said Betsy Z. Cohen, 71.

The family agreed to a rare sit-down at its Manhattan office recently to talk about what it's like to argue and execute in decade-long, multisector cycles.

"We're not a family business. We're a family that's in business together," said Daniel Cohen, 44, who, like his mother, has worked mostly on the financial side of the complex.

"If your dad's a plumber, but all he knows is plumbing, that's all you'll do," said Jonathan Cohen, 43, who works with his father in energy and property finance. "We're not one of those families where a paterfamilias accumulated money in energy and then went into banking and real estate. This is a group of entrepreneurs who liked business and were encouraged by their parents."

Over the family dinner table on Rittenhouse Square, they mounted a spotlight and turned it on one another amid heated debate that frightened and fascinated girlfriends and Germantown Friends schoolmates.

The Cohens' foundation in classical studies - Edward and the kids read ancient Greek and Latin (Daniel added Mandarin) - gives them an edge in strategic and long-term thinking, Jonathan said: "We don't come out clones of JPMorgan."

"Our basic approach, Betsy's and mine, is that sectors are cyclical," said Edward Cohen, 75. "It makes sense to be in more than one sector. We also follow the rule of buying low and selling high."

Doesn't everybody? He smiled. "The herd mentality dominates in the United States. If something's hot, everyone wants to be in that. But we want to exit it. We look for something not popular."

Edward is chief executive of Atlas Energy L.P.; Jonathan is chairman. They are also top officers at publicly traded sister companies Atlas Pipeline Holdings (gas processing and distribution) and oil and gas developer Atlas Resource Partners.

The Cohens bet big on Appalachian gas and oil before most Americans had heard of fracking.

"We claim no superior ability to read future events," Edward told investors in a recent conference call. But, he noted, he was able to sell Atlas Energy and its Marcellus Shale assets to Chevron in 2010 for $4.3 billion - the Cohens owned 10 percent - at "the all-time high point" for natural gas. They have since bought back in at lower prices.

Originally, the Cohens bought into Atlas in the late 1990s after selling their leasing businesses. They sent Jonathan to work at the company's Pittsburgh headquarters. "I thought it was a demotion. Everyone was fleeing Appalachia" for more promising gas fields, he said.

Over the next decade, hydraulic fracturing and horizontal drilling fed new interest in Pennsylvania's Marcellus Shale. Edward Cohen credits, in part, their old Penn friend Ed Rendell, Pennsylvania governor from 2003 to 2011.

"The wells [in Pennsylvania] had been so unproductive for so long. So when the Marcellus came along, Pennsylvania had less regulation, less taxation, than Texas," Edward said.

Though other Democrats urged taxes or drilling limits, Rendell "had an instinct. He understood a lot of capital investment would come" if it was easiest to invest in Pennsylvania, said Betsy. Gov. Corbett "has continued those policies," she said approvingly.

The Cohens' Marcellus exposure became an issue at Jonathan's home in eco-conscious New York when his sixth grader came to dinner with pointed questions. He was able to tell her the family businesses "don't frack in New York," he recalled. "She moved on."

Betsy Cohen founded what became Jefferson Bank in 1974, helped finance the Walnut Street restaurant revival - she made owners guarantee kitchen loans with real estate - and sold it to what is now TD Bank at the end of the 1990s at a healthy three times book value.

The proceeds helped her start branchless Bancorp Inc., Wilmington, where Daniel is a director. The bank does private-label payment cards for PayPal, Google, and Western Union, among its other specialized lines.

Jonathan's other gigs include serving as CEO of Resource America Inc., a Philadelphia real estate investment and finance company, and of Resource Capital Corp., a New York commercial real estate investment trust whose fortunes have risen, fallen, and partly recovered with the property markets.

Daniel is vice chair of the publicly traded Philadelphia firm Institutional Financial Markets Inc., a successor to Cohen Bros. & Co. and other once-high-flying boutique investment banks. The business, radically shrunken and backed by new investors, survived the 2008 collapse a little better than some Wall Street firms it used to trade with.

"There are all these niche financial businesses that we can grow nicely," said Daniel. "They won't be necessarily the biggest businesses, but they will have very good returns for our shareholders."

Since 2008, the energy Cohens have made a lot more money than the finance Cohens - Edward and Jonathan each collected more than $30 million in stock and cash from the Atlas firms last year, according to Securities and Exchange Commission records. But the family said that would likely shift again.

The senior Cohens now live near Sarasota, Fla. "But Philadelphia is the one place where I know everybody," said Edward. "New York is anonymous as you walk the streets. In Florida, there are no pavements to walk on. Walk around Rittenhouse Square, we're always running into people."

Though many contemporaries "have now departed," their sons are in their prime, and there are six grandchildren, 7 to 17, just starting to make their way.

Publicly Held Cohen Family Enterprises

Family shareholding and bondholding in these companies is worth well more than $100 million.

Atlas Energy L.P. (ATLS)

Natural gas property, pipelines, investments; headquarters: Moon Township, Pa. (near Pittsburgh); employees: 832

Market value: $2.4 billion

Recent price: $47.37/share. High: $55.65 (2013); low: $0.72 (2009)

Executives: Edward E. Cohen, CEO; Jonathan Cohen, chairman

Atlas Pipeline Holdings (APL)

Natural gas processing and distribution; headquarters: Moon Township; employees: 350

Market value: $2.7 billion

Recent price: $33.43/share. High (2007) $55.05; low (2009) $2.62

Executives: Edward E. Cohen, chairman; Jonathan Cohen, vice chairman

Atlas Resource Partners L.P. (ARP)

Oil and gas development; headquarters: Pittsburgh; employees: none (managed by Atlas Energy)

Market value: $1.3 billion

Recent price: $22.46/share. High: $28.75 (2012); low: $18.97 (2013)

Executives: Edward E. Cohen, chairman and CEO; Jonathan Cohen, vice chairman

The Bancorp (TBBK)

Electronic transactions, loans, deposits; headquarters: Wilmington; employees: 532

Market value: $726 million

Recent price: $19.05/share. High: $30.34 (2006); low: $2.22 (2008)

Executives: Betsy Z. Cohen, CEO; Daniel Cohen, chairman

Resource America Inc. (REXI)  

Real estate and finance; headquarters: Philadelphia; employees: 602

Market value: $180 million

Recent price: $8.78/share. High: $27.95 (2007); low: $0.79 (2009)

Executives: Jonathan Cohen, CEO; Edward E. Cohen, chairman

Resource Capital Corp. (RSO)

Commercial real estate investment trust; headquarters: New York; employees: 612

Market value: $755 million

Recent price: $5.89/share. High: $18.78 (2007); low: $1.50 (2009)

Executives: Jonathan Cohen, CEO

Institutional Financial Markets Inc. (IFMI)  

Investment banking, securities trading; headquarters: Philadelphia; employees: 197

Market value: $37 million

Recent price: $2.44/share. High: 122.60 (2004); low: 79 cents (2009)

Executives: Daniel Cohen, vice chairman

SOURCES: Securities and Exchange Commission, Bloomberg





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