Investment in Securities

9 Months Ended

Sep. 30, 2011

Investment in Securities [Abstract]

Investment in Securities

 B.  Investment in Securities

Investments in securities at September 30, 2011, December 31, 2010 and September 30, 2010 consisted of the following:

	September 30, 2011				December 31, 2010				September 30, 2010
	Cost		Fair Value		Cost		Fair Value		Cost		Fair Value
	(In thousands)
Trading securities:
Government obligations	$	18,698	$	18,699	$	27,327	$	27,288	$	1,388	$	1,363
Common stocks		166,989		160,861		158,455		170,374		122,720		128,386
Mutual funds		1,096		1,202		1,205		1,554		1,194		1,365
Convertible bonds		-		-		574		620		762		938
Preferred stocks		-		-		1,783		1,973		1,783		1,834
Other investments		442		396		1,559		1,350		785		582
Total trading securities		187,225		181,158		190,903		203,159		128,632		134,468
Available for sale securities:
Common stocks		16,724		31,903		16,835		37,139		16,918		31,594
Mutual funds		41,718		57,262		43,707		65,188		44,717		62,148
Total available for sale securities		58,442		89,165		60,542		102,327		61,635		93,742
Total investments in securities	$	245,667	$	270,323	$	251,445	$	305,486	$	190,267	$	228,210

Securities sold, not yet purchased at September 30, 2011, December 31, 2010 and September 30, 2010 consisted of the following:

	September 30, 2011				December 31, 2010				September 30, 2010
	Proceeds		Fair Value		Proceeds		Fair Value		Proceeds		Fair Value
Trading securities:	(In thousands)
Common stocks	$	7,979	$	6,743	$	19,071	$	19,299	$	18,026	$	18,387
Other		-		-		-		-		56		59
Total securities sold, not yet purchased	$	7,979	$	6,743	$	19,071	$	19,299	$	18,082	$	18,446

Management determines the appropriate classification of debt and equity securities at the time of purchase and reevaluates such designation as of each balance sheet date.  Investments in United States Treasury Bills and Notes with maturities of greater than three months at the time of purchase are classified as investments in securities, and those with maturities of three months or less at time of purchase are classified as cash equivalents.  A substantial portion of investments in securities are held for resale in anticipation of short-term market movements and therefore are classified as trading securities.  Trading securities are stated at fair value, with any unrealized gains or losses, reported in current period earnings.  Available for sale ("AFS") investments are stated at fair value, with any unrealized gains or losses, net of taxes, reported as a component of equity except for losses deemed to be other than temporary which are recorded as unrealized losses in the condensed consolidated statements of income.  There was no impairment of AFS securities for the three or nine month periods ended September 30, 2011 and September 30, 2010.

The Company recognizes all derivatives as either assets or liabilities measured at fair value and includes them in either investments in securities or securities sold, not yet purchased on the condensed consolidated statements of financial condition.  From time to time, the Company and/or the partnerships and offshore funds that the Company consolidates will enter into hedging transactions to manage their exposure to foreign currencies and equity prices related to their proprietary investments.  For the three and nine months ended September 30, 2011, the Company had no derivative transactions.  For the three months ended September 30, 2010, the Company had derivative transactions in equity derivatives which resulted in net losses of $36,000.  For the nine months ended September 30, 2010, the Company had derivative transactions in equity derivatives which resulted in net losses of $154,000.  At December 31, 2010 and September 30, 2010, we held derivative contracts on 403,000 equity shares and 265,000 equity shares, respectively, and the fair value was $1.0 million and $285,000, respectively; these are included in investments in securities in the condensed consolidated statements of financial condition.  At September 30, 2011, the Company did not hold any derivatives.  These transactions are not designated as hedges for accounting purposes, and therefore changes in fair values of these derivatives are included in net gain/(loss) from investments in the condensed consolidated statements of income. 

At September 30, 2011, December 31, 2010 and September 30, 2010, the fair value of common stock investments available for sale was $31.9 million, $37.1 million and $31.6 million, respectively.  The total unrealized gains for common stock investments available for sale securities with unrealized gains was $15.2 million, $20.3 million and $14.7 million at September 30, 2011, December 31, 2010 and September 30, 2010, respectively.  There were no unrealized losses for common stock investments available for sale at September 30, 2011, December 31, 2010 or September 30, 2010.  At September 30, 2011, December 31, 2010 and September 30, 2010, the fair value of mutual fund investments available for sale with unrealized gains was $57.2 million, $65.2 million and $62.1 million, respectively.  The total unrealized gains for mutual fund investments available for sale securities with unrealized gains at September 30, 2011, December 31, 2010 and September 30, 2010 was $15.6 million, $21.5 million and $17.4 million, respectively.  At September 30, 2011, the fair value of mutual fund investments available for sale with unrealized losses was $0.1 million.  The total unrealized losses for mutual fund investments available for sale with unrealized losses was less than $0.1 million at September 30, 2011.  At December 31, 2010 and September 30, 2010, there were no unrealized losses for mutual fund investments available for sale.

Unrealized changes to fair value, net of taxes, for the three months ended September 30, 2011 and September 30, 2010 of $7.9 million in losses and $3.3 million in gains, respectively, have been included in other comprehensive income, a component of equity, at September 30, 2011 and September 30, 2010.  Return of capital on available for sale securities for the three months ended September 30, 2011 and September 30, 2010 was $0.5 million and $0.6 million, respectively.  There were no sales of investments available for sale for the three months ended September 30, 2011 or September 30, 2010.  Unrealized changes to fair value, net of taxes, for the nine months ended September 30, 2011 and September 30, 2010 of $7.0 million in losses and $0.2 million in gains, respectively, have been included in other comprehensive income, a component of equity, at September 30, 2011 and September 30, 2010.  Return of capital on available for sale securities for the nine months ended September 30, 2011 and September 30, 2010 was $1.3 million and $1.9 million, respectively.  Proceeds from sales of investments available for sale were approximately $5.7 million and $2.0 million for the nine month periods ended September 30, 2011 and September 30, 2010, respectively.  For the nine months ended September 30, 2011 and September 30, 2010, gross realized gains on the sale of investments available for sale amounted to $0.6 million and $13,000, respectively; there were no gross realized losses on the sale of investments available for sale.

Investments classified as available for sale that are in an unrealized loss position for which other-than-temporary impairment has not been recognized consisted of the following:

	September 30, 2011							December 31, 2010						September 30, 2010
			Unrealized							Unrealized						Unrealized
	Cost		Losses			Fair Value		Cost		Losses		Fair Value		Cost		Losses		Fair Value
(in thousands)
Mutual Funds	$	100	$	(21	)	$	79	$	-	$	-	$	-	$	-	$	-	$	-

At September 30, 2011, there was one holding in a loss position which was not deemed to be other-than-temporarily impaired because it passed scrutiny in our evaluation of the length of time that it had been in a loss position and our evaluation of issuer-specific and industry-specific considerations.  In this specific instance, the investment at September 30, 2011 was a mutual fund with diversified holdings across multiple companies and across multiple industries.  The one holding was impaired for four consecutive months and its fair value at September 30, 2011 was $0.1 million.