Investments of Operating Entities and Consolidated Funds


a.	Operating Entities

Securities owned, at fair value

Securities owned, at fair value are held by the Company and are considered held for trading. Substantially all equity securities are pledged to the clearing brokers under terms which permit the clearing broker to sell or re-pledge the securities to others subject to certain limitations.

As of December 31, 2015 and 2014, securities owned, at fair value consisted of the following:



	As of December 31,
	2015		2014
	(dollars in thousands)
U.S. Government securities (a)	$	3,016	$	2,010
Preferred stock (b)	25,563		15,070
Common stocks (b)	516,108		597,476
Convertible bonds (c)	819		900
Corporate bonds (d)	47,192		159,557
Warrants and rights	3,059		1,417
Mutual funds (e)	14,477		15,776
	$	610,234	$	792,206


(a)	As of December 31, 2015, maturities ranged from January 2016 to August 2016 with interest rates ranged between 0% to 5.95%. As of December 31, 2014, maturities ranged from May 2015 to April 2016 with interest rates ranged between 0% to 5.95%.


(b)	Included in preferred stocks and common stocks are investments in securities for which the Company has elected the fair value option with the fair value of $7.7 million and $7.4 million, respectively, at December 31, 2015 and $14.3 million of common stocks at December 31, 2014. These investments were acquired in contemplation with merchant banking transactions.


(c)	As of December 31, 2015, maturities ranged from July 2016 to March 2018 with interest rates ranged between 8% to 10.00%. As of December 31, 2014, the maturity was February 2015 with an interest rate of 10.00%.


(d)	As of December 31, 2015, maturities ranged from March 2016 to February 2046 and interest rates ranged between 3.25% to 9.00%. As of December 31, 2014, maturities ranged from February 2015 to February 2046 and interest rates ranged between 5.63% to 11.54%.


(e)	Included in this amount as of December 31, 2015 and 2014, are investments in affiliated funds of $13.4 million and $15.7 million, respectively.

Receivable on and Payable for derivative contracts, at fair value

The Company's direct involvement with derivative financial instruments includes futures, currency forwards, equity swaps, and options. The Company's derivatives trading activities exposes the Company to certain risks, such as price and interest rate fluctuations, volatility risk, credit risk, counterparty risk, foreign currency movements and changes in the liquidity of markets.

Upon issuance of the Company's cash convertible unsecured senior notes ("Convertible Notes") (See Note 19), the Company recognized the embedded cash conversion option at fair value of $35.7 million which is valued as of December 31, 2015 at $18.2 million and is included in payable for derivative contracts in the accompanying consolidated statement of financial condition. Also, on the date of issuance of the Convertible Notes, the Company entered into a separate cash convertible note economic hedge transaction (the "Hedge Transaction") with a counterparty (the “Option Counterparty”) whereby, the Company purchased a cash settled option contract with terms identical to the conversion option embedded in the Convertible Notes and simultaneously sold an equity settled warrant with a higher strike price. The Hedge Transaction is expected to reduce the Company’s exposure to potential cash payments in excess of the principal amount of converted notes that the Company may be required to make upon conversion of the Convertible Notes. The Company paid a premium of $35.7 million for the option under the Hedge Transaction and received a premium of $15.2 million for the equity settled warrant transaction, for a net cost of $20.5 million. The Hedge Transaction is valued at $18.2 million as of December 31, 2015 and is included in receivable on derivative contracts in the accompanying consolidated statement of financial condition. Aside from the initial premium paid, the Company will not be required to make any cash payments under the Hedge Transaction and could be entitled to receive an amount of cash from the Option Counterparty generally equal to the amount by which the market price per share of common stock exceeds the strike price of the Hedge Transaction during the relevant valuation period. The warrants cover 28,048,786 shares of the Company's Class A common stock and have an initial exercise price of $7.18 per share. The warrants expire over a period of 80 trading days beginning on November 14, 2018. The warrant transaction could have a dilutive effect to the extent that the market value per share of the Company’s Class A common stock exceeds the applicable strike price of the warrants.

The Company's long and short exposure to derivatives is as follows:



Receivable on derivative contracts	As of December 31,
	2015				2014
	Number of contracts / Notional Value		Fair value		Number of contracts / Notional Value		Fair value
	(dollars in thousands)
Futures	$	9,416	$	189	$	3,041	$	75
Currency forwards	$	67,862	659		$	23,961	310
Equity swaps	$	118,488	2,327		$	12,904	251
Options other (a)	289,433		31,456		367,441		48,201
Foreign currency options	$	283,797	4,987		$	32,200	1,040
			$	39,618			$	49,877

(a) Includes index, equity, commodity future and cash conversion options.



Payable for derivative contracts	As of December 31,
	2015				2014
	Number of contracts / Notional Value		Fair value		Number of contracts / Notional Value		Fair value
	(dollars in thousands)
Futures	$	11,995	$	101	$	2,213	$	33
Currency forwards	$	44,156	463		$	—	—
Equity and credit default swaps	$	7,605	71		$	18,352	1,603
Options other (a)	16,632		20,548		22,043		39,694
			$	21,183			$	41,330

(a) Includes index, equity, commodity future and cash conversion options.

The following tables present the gross and net derivative positions and the related offsetting amount, as of December 31, 2015 and 2014.



							Gross amounts not offset in the Statement of Financial Condition
	Gross amounts recognized		Gross amounts offset on the Consolidated Statements of Financial Condition (a)		Net amounts included on the Consolidated Statements of Financial Condition		Financial instruments		Cash Collateral pledged (b)		Net amounts
	(dollars in thousands)
As of December 31, 2015
Receivable on derivative contracts, at fair value	$	39,618	$	—	$	39,618	$	—	$	9,339	$	30,279
Payable for derivative contracts, at fair value	21,183		—		21,183		—		534		20,649

As of December 31, 2014
Receivable on derivative contracts, at fair value	49,877		—		49,877		—		2,588		47,289
Payable for derivative contracts, at fair value	41,330		—		41,330		—		1,603		39,727


(a)	Includes financial instruments subject to enforceable master netting provisions that are permitted to be offset to the extent an event of default has occurred.


(b)	Includes the amount of collateral held or posted.

The realized and unrealized gains/(losses) related to derivatives trading activities were $(4.6) million, $(0.5) million and $4.4 million for the years ended December 31, 2015, 2014 and 2013, respectively, and are included in other income in the accompanying consolidated statements of operations.

Pursuant to the various derivatives transactions discussed above, except for the cash convertible note hedge (see Note 19) and exchange traded derivatives, the Company is required to post/receive collateral. As of December 31, 2015 and 2014, collateral consisting of $27.1 million and $5.5 million of cash, respectively, is included in receivable from brokers and payable to brokers on the accompanying consolidated statements of financial condition. As of December 31, 2015 and 2014 all derivative contracts were with multiple major financial institutions.

Other investments

As of December 31, 2015 and 2014, other investments included the following:



	As of December 31,
	2015		2014
	(dollars in thousands)
(1) Portfolio Funds, at fair value	$	111,360	$	103,466
(2) Real estate investments, at fair value	1,921		2,175
(3) Equity method investments	27,067		61,443
(4) Lehman claims, at fair value	299		380
	$	140,647	$	167,464


(1)	Portfolio Funds, at fair value

The Portfolio Funds, at fair value as of December 31, 2015 and 2014, included the following:



	As of December 31,
	2015		2014
	(dollars in thousands)
HealthCare Royalty Partners (a)(*)	$	12,127	$	11,935
HealthCare Royalty Partners II (a)(*)	6,006		6,648
Orchard Square Partners Credit Fund LP (b)	4,170		11,532
Starboard Value and Opportunity Fund LP (c)(*)	20,369		21,792
Starboard Partners Fund LP (d)(*)	14,036		14,652
Starboard Leaders Fund LP (e)(*)	1,080		1,367
Formation8 Partners Fund I, L.P. (f)	19,454		11,283
Formation8 Partners Hardware Fund I, L.P. (g)	1,101		—
RCG LV Park Lane LLC (h) (*)	809		642
RCGL 12E13th LLC (i) (*)	609		638
RCG Longview Debt Fund V, L.P. (i) (*)	18,147		12,876
RCG LPP SME Co-Invest, L.P. (j) (*)	2,468		—
Other private investment (k) (*)	6,909		7,324
Other affiliated funds (l)(*)	4,075		2,777
	$	111,360	$	103,466

* These portfolio funds are affiliates of the Company.

The Company has no unfunded commitments regarding the portfolio funds held by the Company except as noted in Note 18.


(a)	HealthCare Royalty Partners, L.P. and HealthCare Royalty Partners II, L.P. are private equity funds and therefore distributions will be made when cash flows are received from the underlying investments, typically on a quarterly basis.


(b)	Orchard Square Partners Credit Fund LP has a quarterly redemption policy with a 60 day notice period and a 4% penalty on redemptions of investments of less than a year in duration.


(c)	Starboard Value and Opportunity Fund LP permits quarterly withdrawals upon 90 days notice.


(d)	Starboard Partners Fund LP permits redemptions on a semi-annual basis on 180 days prior written notice subsequent to an initial two year lock up.


(e)	Starboard Leaders Fund LP does not permit withdrawals, but instead allows terminations with respect to capital commitments upon 30 days prior written notice at any time following the first anniversary of an investors initial capital contribution.


(f)	Formation8 Partners Fund I, L.P. is a private equity fund which invests in early stage and growth transformational information and energy technology companies. Distributions will be made when the underlying investments are liquidated.


(g)	Formation8 Partners Hardware Fund I, L.P. is a private equity fund which invests in early stage and growth hardware companies. Distributions will be made when the underlying investments are liquidated.


(h)	RCG LV Park Lane LLC is a single purpose entity formed to participate in a joint venture which acquired, at a discount, the mortgage notes on a portfolio of multifamily real estate properties located in Birmingham, Alabama. RCG LV Park Lane LLC is a private equity structure and therefore distributions will be made when the underlying investments are liquidated.


(i)	RCGL 12E13th LLC and RCG Longview Debt Fund V, L.P. are real estate private equity structures and therefore distributions will be made when the underlying investments are liquidated.


(j)	RCG LPP SME Co-Invest, L.P. is a single purpose entity formed to participate in a joint venture which acquired two fully entitled residential development sites in the New York City metro area. RCG LPP SME Co-Invest, L.P. is a private equity structure and therefore distributions will be made when the underlying investments are liquidated.


(k)	Other private investment represents the Company's closed end investment in a portfolio fund that invests in a wireless broadband communication provider in Italy.


(l)	The majority of these funds are affiliates of the Company or are managed by the Company and the investors can redeem from these funds as investments are liquidated.


(2)	Real estate investments, at fair value

Real estate investments as of December 31, 2015 and 2014 are carried at fair value and include real estate equity investments held by RCG RE Manager, LLC (“RE Manager”), a real estate operating subsidiary of the Company, of $1.9 million and $2.2 million, respectively.


(3)	Equity method investments

Equity method investments include investments held by the Company in several operating companies whose operations primarily include the day to day management of a number of real estate funds, including the portfolio management and administrative services related to the acquisition, disposition, and active monitoring of the real estate funds' underlying debt and equity investments. The Company's ownership interests in these equity method investments range from 20% to 55%. The Company holds a majority of the outstanding ownership interest (i.e., more than 50%) in RCG Longview Partners II, LLC. The operating agreement that governs the management of day-to-day operations and affairs of this entity stipulates that certain decisions require support and approval from other members in addition to the support and approval of the Company. As a result, all operating decisions made in this entity requires the support of both the Company and an affirmative vote of a majority of the other managing members who are not affiliates of the Company. As the Company does not possess control over any of these entities, the presumption of consolidation has been overcome pursuant to current accounting standards and the Company accounts for these investments under the equity method of accounting. Also included in equity method investments are the investments in (a) HealthCare Royalty Partners General Partners and (b) Starboard Value (and certain related parties) which serves as an operating company whose operations primarily include the day to day management (including portfolio management) of several activist hedge funds and related managed accounts.

The Company holds a non-controlling financial interest in Starboard Value entities. The independent portfolio managers are responsible for activities which are significant to the overall business and hold the majority of the equity interest. The Starboard Value entities were formed to provide a full range of investment advisory and management services and act as a general partner, investment advisor, and pension advisor or in similar capacity to clients. In accordance with the respective offering documents of the underlying funds, Starboard Value entities are entitled to a fixed percentage of management fee and performance fees. The Company and the Starboard principals reached an agreement in the fourth quarter of 2015 to sell a portion of the Company's ownership interest in the activist business of Starboard Value to the Starboard principals for a gain of $14.4 million which is recorded in Other Income (Loss) in the accompanying Consolidated Statements of Operations and Due From Related Parties in the accompanying Consolidated Statements of Financial Condition. The Company entered into definitive agreements with respect to, and closed, this transaction with an effective date of December 31, 2015. In connection with the transaction, certain service agreements between the Company and Starboard Value were terminated. Starboard Value will also assume certain employees from the Company and will procure certain services directly which were previously provided by the Company. Out of the total sale price, $9.6 million is being financed through the profits of the relevant Starboard entities over a five year period and earns interest at 5% per annum.

During the second quarter of 2014, CBOE SE initiated a plan to wind down its operations and liquidate its assets and liabilities. As a result, the Company determined that the carrying value of its investment in CBOE SE was no longer recoverable and reassessed it for impairment. The Company recognized an impairment loss of $0.8 million, during the second quarter of 2014, which was deemed to be other than temporary. The impairment loss was measured based on the estimated recovery under the liquidation plan submitted to the creditors and the regulators and potential sale to a third party and is included in other income (loss) on the accompanying consolidated statement of operations. The Company recorded no other impairment charges in relation to its equity method investments for the years ended December 31, 2015, 2014 and 2013.

The following table summarizes equity method investments held by the Company:



	As of December 31,
	2015		2014
	(dollars in thousands)
RCG Longview Debt Fund IV Management, LLC	$	331	$	676
RCG Longview Debt Fund V Partners, LLC	4,655		2,684
HealthCare Royalty GP, LLC	989		973
HealthCare Royalty GP II, LLC	1,017		1,125
HealthCare Royalty GP III, LLC	88		62
CBOE Stock Exchange, LLC	—		611
Starboard Value LP	15,769		48,772
RCG Longview Partners, LLC	—		237
RCG Longview Management, LLC	656		1,117
RCG Urban American, LLC	120		422
RCG Urban American Management, LLC	379		379
RCG Longview Equity Management, LLC	114		316
Urban American Real Estate Fund II, LLC	1,211		2,329
RCG Kennedy House, LLC	304		509
Other	1,434		1,231
	$	27,067	$	61,443

For the year ended December 31, 2014, three equity method investments have met the significance criteria as defined under Regulation S-X Rule 4-08(g) of the SEC guidance. As such, the Company is presenting the following summarized financial information:



	As of December 31,
	2015		2014
	(dollars in thousands)
Assets
Cash	$	1,060	$	4,595
Performance & management fee receivable	32,638		108,355
Investments in Portfolio Funds, at fair value	18,797		12,403
Other assets	2,327		1,485
Liabilities	10,426		12,632
Equity	$	44,396	$	114,206



	Year Ended December 31,
	2015			2014			2013
	(dollars in thousands)
Revenues	$	36,641		$	129,203		$	41,879
Expenses	(20,658		)	(20,362		)	(11,602		)
Net realized and unrealized gains (losses)	4,258			4,563			1,566
Net Income	$	20,241		$	113,404		$	31,843

For the period ended December 31, 2015, equity method investments held by the Company in aggregate have met the significance criteria as defined under SEC guidance. As such, the Company is required to present summarized financial information for these significant investees for the years ended December 31, 2015, 2014 and 2013 and such information is as follows.



	As of December 31,
	2015		2014
	(dollars in thousands)
Assets	$	118,835	$	196,710
Liabilities	21,349		21,303
Equity	$	97,486	$	175,407



	Year Ended December 31,
	2015			2014			2013
	(dollars in thousands)
Revenues	$	49,669		$	160,224		$	78,222
Expenses	(30,516		)	(46,575		)	(49,340		)
Net realized and unrealized gains (losses)	13,221			14,325			18,589
Net Income	$	32,374		$	127,974		$	47,471

As of December 31, 2015 and 2014, the Company's share of losses in its equity method investment in RCG Longview Partners II, LLC has exceeded the carrying amount recorded in this investee. These amounts are included in accounts payable, accrued expenses and other liabilities in the accompanying consolidated statements of financial condition. RCG Longview Partners II, LLC, as general partner to a real estate fund, has reversed previously recorded incentive income allocations and has recorded a current clawback obligation to the limited partners in the fund. This obligation is due to a change in unrealized value of the fund on which there have previously been distributed carried interest realizations; however, the settlement of a potential obligation is not due until the end of the life of the respective fund. As the Company is obligated to return previous distributions it received from RCG Longview Partners II, LLC, it has continued to record its share of gains/losses in the investee including reflecting its share of the clawback obligation in the amount of $6.2 million.

The Company's income (loss) from equity method investments was $(3.3) million, $49.1 million, $16.1 million for the years ended December 31, 2015, 2014 and 2013, respectively, and is included in net gains (losses) on securities, derivatives and other investments on the accompanying consolidated statements of operations.


(4)	Lehman Claims, at fair value

Lehman Brothers International (Europe) (“LBIE”), through certain affiliates, was a prime broker to the Company, and the Company held cash and cash equivalent balances with LBIE. On September 15, 2008, LBIE was placed into administration (the “Administration”) in the United Kingdom and, as a result, the assets held by the Company in its LBIE accounts were frozen at LBIE. The assets which the Company believed were held at LBIE at the time of Administration (the “Total Net Equity Claim”) consisted of $1.0 million, which represented an unsecured claim against LBIE. The total amounts received to date in respect of the Company’s unsecured claim against LBIE are approximately $1.0 million, representing 100.0% of its agreed claim. The Company may receive further distributions in respect of its claim, but the amount and timing of these distributions remains uncertain. The Company does not expect future distributions to be material.

Securities sold, not yet purchased, at fair value

Securities sold, not yet purchased, at fair value represent obligations of the Company to deliver a specified security at a contracted price and, thereby, create a liability to purchase that security at prevailing prices. The Company's liability for securities to be delivered is measured at their fair value as of the date of the consolidated financial statements. However, these transactions result in off-balance sheet risk, as the Company's ultimate cost to satisfy the delivery of securities sold, not yet purchased, at fair value may exceed the amount reflected in the accompanying consolidated statements of financial condition. Substantially all equity securities and options are pledged to the clearing broker under terms which permit the clearing broker to sell or re-pledge the securities to others subject to certain limitations. As of December 31, 2015 and 2014, securities sold, not yet purchased, at fair value consisted of the following:



	As of December 31,
	2015		2014
	(dollars in thousands)
Common stocks	$	257,101	$	207,815
Corporate bonds (a)	58		60
	$	257,159	$	207,875


(a)	As of December 31, 2015 and 2014, the maturity was January 2026 with an interest rate of 5.55%.

Securities lending and borrowing transactions

The following tables present the contractual gross and net securities borrowing and lending agreements and the related offsetting amount, as of December 31, 2014. During the first quarter of 2015 this business was completely liquidated.



							Gross amounts not offset in the Statement of Financial Condition
	Gross amounts recognized		Gross amounts offset on the Consolidated Statements of Financial Condition (a)		Net amounts included on the Consolidated Statements of Financial Condition		Additional Amounts Available			Financial instruments			Cash Collateral pledged (b)		Net amounts
	(dollars in thousands)
As of December 31, 2014
Securities borrowed	$	676,100	$	—	$	676,100	$	(15,655	)	$	(660,445	)	$	—	$	—
Securities loaned	682,493		—		682,493		(2,441		)	(680,052		)	—		—


(a)	Includes financial instruments subject to enforceable master netting provisions that are permitted to be offset to the extent an event of default has occurred.


(b)	Includes the amount of cash collateral held/posted.

Variable Interest Entities

The total assets and liabilities of the variable interest entities for which the Company has concluded that it holds a variable interest, but for which it is not the primary beneficiary, are $3.1 billion and $472.4 million as of December 31, 2015 and $3.0 billion and $499.2 million as of December 31, 2014, respectively. In addition, the maximum exposure relating to these variable interest entities as of December 31, 2015 was $321.9 million, and as of December 31, 2014 was $260.9 million, all of which is included in other investments, at fair value in the accompanying consolidated statements of financial condition. The exposure to loss primarily relates to the Consolidated Feeder Funds' investment in their Unconsolidated Master Funds as of December 31, 2015 and 2014.

Other

On December 22, 2015, the Company, through a wholly owned Luxembourg subsidiary, completed the purchase of the net assets in Hollenfels from a counterparty unrelated to the Company. The purchase price for Hollenfels was $469.8 million. This acquisition was accounted for as an asset acquisition in accordance with US GAAP because upon separation from the transferor, Hollenfels does not meet the definition of a business. The Company intends to provide third party reinsurance coverage through Hollenfels, with a view of building a sustainable premium base slowly, with adequate protections against large loss events as deemed appropriate by the Company's management. (See Note 17).


b.	Consolidated Funds

Securities owned, at fair value

As of December 31, 2015, securities owned, at fair value, of $32.0 million represents various private investments in shares of preferred stock of biotechnology companies held by Cowen Private.

Other investments, at fair value

As of December 31, 2015 and 2014 other investments, at fair value, held by the Consolidated Funds are comprised of:



	As of December 31,
	2015		2014
	(dollars in thousands)
(1) Portfolio Funds	$	263,818	$	188,884
(2) Lehman claims	—		493
	$	263,818	$	189,377

Investments in Portfolio Funds, at fair value

As of December 31, 2015 and 2014, investments in Portfolio Funds, at fair value, included the following:



	As of December 31,
	2015		2014
	(dollars in thousands)
Investments of Enterprise LP	$	111,075	$	138,253
Investments of Merger Fund	74,348		50,631
Investments of Quadratic LLC	78,395		—
	$	263,818	$	188,884

Consolidated portfolio fund investments of Enterprise LP

Enterprise LP operates under a “master-feeder” structure, whereby Enterprise Master's shareholders are Enterprise LP and RCG II Intermediate Fund, L.P. The consolidated investments in Portfolio Funds include Enterprise LP's investment of $111.1 million and $138.3 million in Enterprise Master as of December 31, 2015 and 2014, respectively. On May 12, 2010, the Company announced its intention to close Enterprise Master. Prior to this announcement, strategies utilized by Enterprise Master included merger arbitrage and activist investing, investments in distressed securities, convertible hedging, capital structure arbitrage, equity market neutral, investments in private placements of convertible securities, proprietary mortgages, structured credit investments, investments in mortgage backed securities and other structured finance products, investments in real estate and real property interests, structured private placements and other relative value strategies. Enterprise Master had broad investment powers and maximum flexibility in seeking to achieve its investment objective. Enterprise Master was permitted to invest in equity securities, debt instruments, options, futures, swaps, credit default swaps and other derivatives. As Enterprise Master winds down its positions, it will return capital to its investors. There are no unfunded commitments at Enterprise LP.

Consolidated portfolio fund investments of Merger Fund

The Merger Fund operates under a “master-feeder” structure, whereby Ramius Merger Master Ltd's ("Merger Master") shareholders are Merger Fund and Ramius Merger Fund Ltd. The consolidated investments in Portfolio Funds include Merger Fund's investment of $74.3 million and $50.6 million in Merger Master as of December 31, 2015 and 2014, respectively. The Merger Master’s investment objective is to achieve consistent absolute returns while emphasizing the preservation of investor capital. The Merger Master seeks to achieve these objectives by taking a fundamental, research-driven approach to investing, primarily in the securities of issuers engaged in, or subject to, announced (or unannounced but otherwise anticipated) extraordinary corporate transactions, which may include, but are not limited to, mergers, acquisitions, leveraged buyouts, tender offers, hostile takeover bids, sale processes, exchange offers, and recapitalizations. Merger Master invests in the securities of one or more issuers engaged in or subject to such extraordinary corporate transactions. Merger Master typically seeks to derive a profit by realizing the price differential, or “spread,” between the market price of securities purchased or sold short and the market price or value of securities realized in connection with the completion or termination of the extraordinary corporate transaction, or in connection with the adjustment of market prices in anticipation thereof, while seeking to minimize the market risk associated with the aforementioned investment activities. Merger Master will, depending on markets conditions, generally focus the majority of its investment program on announced transactions. If the investment manager of Merger Master considers it necessary, it may either alone or as part of a group, also initiate shareholder actions seeking to maximize value. Such shareholder actions may include, but are not limited to, re-orienting management’s focus or initiating the sale of the company (or one or more of its divisions) to a third party. There are no unfunded commitments at Merger Fund.

Consolidated portfolio fund investments of Quadratic Fund LLC

Quadratic LLC operates under a “master-feeder” structure, whereby Quadratic Master Fund Ltd's ("Quadratic Master") shareholders are Quadratic Fund LLC and Quadratic Fund Ltd. The consolidated investments in Portfolio Funds include Quadratic Fund LLC's investment of $78.4 million in Quadratic Master as of December 31, 2015. The Quadratic Master’s investment objective is to achieve attractive, risk-adjusted rates of return through the use of proprietary fundamental global macro and options/swaptions based strategies. Quadratic Master’s strategy is primarily executed via options and swaptions. Quadratic Master will pursue absolute returns in all market environments. Occasionally, Quadratic Master may use dividend swaps, credit default swaps, interest rate swaps, inflation swaps, futures, foreign currency forwards, tranches and other delta one products as a hedge against existing options positions or when the investment manager believes that the payoff possibilities thereof are sufficiently asymmetric as to exhibit option-like qualities. There are no unfunded commitments at Quadratic Fund.


(2)	Lehman Claims, at fair value

With respect to the aforementioned Lehman claims, the Total Net Equity Claim of Enterprise Master based on the value of assets at the time of Lehman's insolvency held directly by Enterprise Master and through Enterprise Master's ownership interest in affiliated funds consisted of $24.3 million. As of December 31, 2015, Enterprise Master has received distributions totaling approximately $37.2 million in respect of its claim. Enterprise Master does not expect to receive any further distributions in respect of its claim.

Indirect Concentration of the Underlying Investments Held by Consolidated Funds

From time to time, either directly or indirectly through its investments in the Consolidated Funds, the Company may maintain exposure to a particular issue or issuer (both long and/or short) which may account for 5% or more of the Company's equity. Based on information that is available to the Company as of December 31, 2015 and 2014, the Company assessed whether or not its interests in an issuer for which the Company's pro-rata share exceeds 5% of the Company's equity. There were no indirect concentrations that exceed 5% of the Company's equity as of December 31, 2015 and 2014.

Underlying Investments of Unconsolidated Funds Held by Consolidated Funds

Enterprise Master and Merger Master

Enterprise LP's investment in Enterprise Master represents Enterprise LP's proportionate share of Enterprise Master's net assets; as a result, the investment balances of Enterprise Master reflected below may exceed the net investment which Enterprise LP has recorded. Merger Fund's investment in Merger Master represents Merger Fund's proportionate share of Merger Master's net assets; as a result, the investment balances of Merger Master reflected below may exceed the net investment which Merger Fund has recorded. The following tables present summarized investment information for the underlying investments and derivatives held by Enterprise Master and Merger Master as of December 31, 2015 and 2014:

Securities owned by Enterprise Master, at fair value



	As of December 31,
	2015		2014
	(dollars in thousands)
Bank debt	$	—	$	20
Common stock	724		1,659
Preferred stock	1,484		576
Private equity	—		587
Restricted stock	124		124
Rights	321		2,802
Trade claims	128		128
	$	2,781	$	5,896

Receivable/(Payable) on derivative contracts, at fair value, owned by Enterprise Master



	As of December 31,
	2015			2014
Description	(dollars in thousands)
Currency forwards	$	(4	)	$	64
	$	(4	)	$	64

Portfolio Funds, owned by Enterprise Master, at fair value



		As of December 31,
		2015		2014
	Strategy	(dollars in thousands)
RCG Longview Equity Fund, LP*	Real Estate	$	7,635	$	9,090
RCG Longview II, LP*	Real Estate	698		747
RCG Longview Debt Fund IV, LP*	Real Estate	3,577		5,348
RCG Longview, LP*	Real Estate	—		40
RCG Soundview, LLC*	Real Estate	452		452
RCG Urban American Real Estate Fund, L.P.*	Real Estate	312		1,161
RCG International Sarl*	Multi-Strategy	—		2,113
RCG Special Opportunities Fund, Ltd*	Multi-Strategy	81,544		92,405
RCG Energy, LLC *	Energy	1,189		2,294
RCG Renergys, LLC*	Energy	1		1
Other Private Investments	Various	10,515		12,057
Other Real Estate Investments (*)	Real Estate	5,753		10,138
		$	111,676	$	135,846


*	Affiliates of the Company.

Merger Master

Securities owned by Merger Master, at fair value



	As of December 31,
	2015		2014
	(dollars in thousands)
Common stocks	$	157,429	$	133,510
Corporate bonds (a)	492		3,383
	$	157,921	$	136,893


(a)	As of December 31, 2015, the maturity was ranged from June 2024 with interest rate of 5.25%. As of December 31, 2014, maturities ranged from February 2017 to June 2019 and interest rates ranged between 8.50% and 9.75%.

Securities sold, not yet purchased, by Merger Master, at fair value

As of December 31, 2015 and 2014, Merger Master held common stock, sold not yet purchased, of $73.8 million and $39.9 million, respectively.

Receivable on derivative contracts, at fair value, owned by Merger Master



	As of December 31,
	2015		2014
Description	(dollars in thousands)
Options	$	1,275	$	541
Currency forwards	235		—
Equity swaps	1,001		78
	$	2,511	$	619

Payable for derivative contracts, at fair value, owned by Merger Master



	As of December 31,
	2015		2014
Description	(dollars in thousands)
Options	$	563	$	238
Equity swaps	30		58
	$	593	$	296

Quadratic Master

Receivable on derivative contracts, at fair value, owned by Quadratic Master



	As of December 31, 2015
Description	(dollars in thousands)
Options	$	9,007
Currency forwards	92
	$	9,099

As of December 31, 2015, Quadratic Master held options payable for derivative, of $0.2 million.