INVESTMENTS

3 Months Ended

Mar. 31, 2022

Corporate Investments

Corporate investments may consist of investments in funds, companies in which the Company does not have a controlling financial interest, and non-investment grade debt securities. Investments for which the Company is deemed to exert significant influence are accounted for under the equity method of accounting and reflect the Company’s ownership interest in each fund or company. In the case of investments for which the Company is not deemed to exert significant influence or control, the fair value option of accounting has been elected. Investment income represents the Company’s pro-rata share of income or loss from these funds or companies, or the change in fair value of the investment, as applicable. The Company’s general partnership interests are substantially illiquid. While investments in funds reflect each respective fund’s holdings at fair value, equity-method investments in companies are not adjusted to reflect the fair value of the underlying company. The fair value of the underlying investments in Oaktree funds is based on the Company’s assessment, which takes into account expected cash flows, earnings multiples and/or comparisons to similar market transactions, among other factors. Valuation adjustments reflecting consideration of credit quality, concentration risk, sales restrictions and other liquidity factors are integral to valuing these instruments.

Corporate investments consisted of the following:


	As of
Corporate Investments	March 31, 2022		December 31, 2021

Equity-method investments:
Funds	$	955,784	$	915,185
Companies	9,597		36,225
Other investments, at fair value	56,106		71,154
Total corporate investments	$	1,021,487	$	1,022,564

The components of investment income (loss) are set forth below:


	Three months ended March 31,
Investment Income (Loss)		2022		2021

Equity-method investments:
Funds		$	14,253	$	106,524
Companies		(646)		22
Other investments, at fair value		(1,866)		6,693
Total investment income		$	11,741	$	113,239

Equity-method Investments

The Company’s equity-method investments include its investments in Oaktree funds for which it serves as general partner, and other third-party funds and companies that are not consolidated, but for which the Company is deemed to exert significant influence. The Company’s share of income or loss generated by these investments is recorded within investment income in the condensed consolidated statements of operations. The Company’s equity-method investments in Oaktree funds principally reflect the Company’s general partner interests in those funds, which typically does not exceed 2.5% in each fund. The Oaktree funds are investment companies that follow a specialized basis of accounting established by GAAP.

Each reporting period, the Company evaluates each of its equity-method investments to determine if any are considered significant, as defined by the SEC. For the three months ended March 31, 2022, no individual equity-method investment met the significance criteria.

Summarized financial information of the Company’s equity-method investments is set forth below.


	Three months ended March 31,
Statements of Operations		2022		2021
Revenues / investment income		$	840,605	$	413,311
Interest expense		(54,290)		(38,941)
Other expenses		(220,991)		(199,258)
Net realized and unrealized gain on investments		986,800		4,336,081
Net income		$	1,552,124	$	4,511,193

Other Investments, at Fair Value

Other investments, at fair value primarily consist of (a) investments in certain Oaktree and non-Oaktree funds, (b) non-investment grade debt securities, and (c) derivatives utilized to hedge the Company’s exposure to investment income earned from its funds.

The following table summarizes net gains (losses) attributable to the Company’s other investments:


	Three months ended March 31,
		2022		2021

Realized (loss) gain		$	(91)	$	8,672
Net change in unrealized loss		(1,775)		(1,979)
Total (loss) gain		$	(1,866)	$	6,693

Investments of Consolidated Funds

Investments, at Fair Value

Investments held and securities sold short by the consolidated funds are summarized below:


	Fair Value as of				Fair Value as a Percentage of Investments of Consolidated Funds as of
Investments	March 31, 2022		December 31, 2021		March 31, 2022		December 31, 2021
United States:
Debt securities:
Communication services	$	632,188	$	635,930	5.2	%	5.6	%
Consumer discretionary	755,434		665,405		6.2		5.8
Consumer staples	258,509		190,391		2.1		1.7
Energy	358,067		354,585		2.9		3.1
Financials	507,025		463,412		4.1		4.0
Health care	452,332		459,713		3.7		4.0
Industrials	1,033,990		891,850		8.4		7.8
Information technology	664,185		685,959		5.4		6.0
Materials	504,009		436,434		4.1		3.8
Real estate	215,600		202,131		1.8		1.8
Utilities	315,793		305,220		2.6		2.7
Other	13,213		10,683		0.1		0.1
Total debt securities (cost:$5,781,052 and $5,303,858 as of March 31, 2022 and December 31, 2021, respectively)	5,710,345		5,301,713		46.5		46.3
Equity securities:
Communication services	63,485		54,635		0.5		0.5
Consumer discretionary	148,153		126,978		1.2		1.1
Energy	438,506		369,912		3.6		3.2
Financials	191,637		151,501		1.6		1.3
Health care	42,397		33,475		0.3		0.3
Industrials	237,983		246,856		1.9		2.2
Materials	82,273		82,273		0.7		0.7
Utilities	85,994		81,989		0.7		0.7
Total equity securities (cost: $1,007,406 and $1,086,667 as of March 31, 2022 and December 31, 2021, respectively)	1,290,428		1,147,619		10.5		10.0
Real estate:
Real estate	—		—		—		—
Financials	—		—		—		—
Total real estate securities (cost: $— and $— as of March 31, 2022 and December 31, 2021, respectively)	—		—		—		—


	Fair Value as of				Fair Value as a Percentage of Investments of Consolidated Funds as of
Investments	March 31, 2022		December 31, 2021		March 31, 2022		December 31, 2021
Europe:
Debt securities:
Communication services	$	749,449	$	756,728	6.1	%	6.6	%
Consumer discretionary	846,533		915,535		6.9		8.0
Consumer staples	215,726		206,590		1.8		1.8
Energy	1,024		1,251		0.0		0.0
Financials	97,529		98,126		0.8		0.9
Health care	703,823		751,936		5.7		6.6
Industrials	659,808		656,033		5.4		5.7
Information technology	372,578		383,041		3.0		3.3
Materials	496,064		466,181		4.0		4.1
Real estate	32,766		34,116		0.3		0.3
Utilities	2,192		1,777		0.0		0.0
Other	12,324		15,049		0.1		0.1
Total debt securities (cost: $4,256,220 and $4,289,708 as of March 31, 2022 and December 31, 2021, respectively)	4,189,816		4,286,363		34.1		37.4
Equity securities:
Consumer discretionary	114,679		102,919		0.9		0.9
Materials	28,729		—		0.2		—
Financials	29,178		19,987		0.2		0.2
Health care	89		—		0.0		—
Industrials	78,883		27,475		0.6		0.2

Total equity securities (cost: $219,444 and $119,114 as of March 31, 2022 and December 31, 2021, respectively)	251,558		150,381		2.1		1.3
Real estate:
Real estate	36,887		33,834		0.3		0.3
Total real estate securities (cost: $38,874 and $34,927 as of March 31, 2022 and December 31, 2021, respectively)	36,887		33,834		0.3		0.3
Asia and other:
Debt securities:
Communication services	7,410		6,087		0.1		0.1
Consumer discretionary	77,447		71,082		0.6		0.6
Consumer staples	13,014		13,378		0.1		0.1
Energy	27,375		24,325		0.2		0.2
Financials	13,985		14,739		0.1		0.1

Health care	2,980		4,084		0.0		0.0
Industrials	10,642		7,084		0.1		0.1
Information technology	572		714		0.0		0.0
Materials	120,201		121,151		1.0		1.1
Real estate	325,643		131,155		2.7		1.1
Utilities	3,680		3,743		0.0		0.0
Other	10,670		9,482		0.1		0.1
Total debt securities (cost: $626,545 and $417,825 as of March 31, 2022 and December 31, 2021, respectively)	613,619		407,024		5.1		3.6


	Fair Value as of				Fair Value as a Percentage of Investments of Consolidated Funds as of
Investments	March 31, 2022		December 31, 2021		March 31, 2022		December 31, 2021
Asia and other:
Equity securities:
Consumer discretionary	$	1,108	$	1,057	0.0	%	0.0	%

Energy	8,555		8,332		0.1		0.1

Industrials	110,558		81,782		0.9		0.7


Real estate	42,960		38,614		0.4		0.3
Utilities	242		176		0.0		—
Total equity securities (cost: $146,930 and $120,308 as of March 31, 2022 and December 31, 2021, respectively)	163,423		129,961		1.4		1.1

Total debt securities	10,513,780		9,995,100		85.8		87.2
Total equity securities	1,705,431		1,427,961		13.9		12.5
Total real estate	36,887		33,834		0.3		0.3
Total investments, at fair value	$	12,256,098	$	11,456,895	100.0	%	100.0	%

As of March 31, 2022 and December 31, 2021, no single issuer or investment had a fair value that exceeded 5% of Oaktree’s total consolidated net assets.

Net Gains (Losses) From Investment Activities of Consolidated Funds

Net gains (losses) from investment activities in the condensed consolidated statements of operations consist primarily of realized and unrealized gains and losses on the consolidated funds’ investments (including foreign exchange gains and losses attributable to foreign-denominated investments and related activities) and other financial instruments. Unrealized gains or losses result from changes in the fair value of these investments and other financial instruments. Upon disposition of an investment, unrealized gains or losses are reversed and an offsetting realized gain or loss is recognized in the current period.

The following table summarizes net gains (losses) from investment activities:


	Three months ended March 31,
	2022				2021
	Net Realized Gain (Loss) on Investments		Net Change in Unrealized Appreciation (Depreciation) on Investments		Net Realized Gain (Loss) on Investments		Net Change in Unrealized Appreciation (Depreciation) on Investments

Investments and other financial instruments	$	(90,055)	$	201,267	$	4,967	$	47,372
CLO liabilities (1)	(2,115)		(45,844)		1,928		4,563
Foreign-currency forward contracts (2)	956		2,928		(1,373)		2,706
Total-return and interest-rate swaps (2)	(3,984)		(32,833)		—		(34)
Options and futures (2)	5,973		1,983		522		199
Warrants (2)	—		858		—		(938)
Total	$	(89,225)	$	128,359	$	6,044	$	53,868

(1) Represents the net change in the fair value of CLO liabilities based on the more observable fair value of CLO assets, as measured under the CLO measurement guidance. Please see note 2 for more information.

(2) Please see note 7 for additional information.