Investments of Operating Entities and Consolidated Funds - (Tables)

3 Months Ended

Mar. 31, 2018

As of March 31, 2018 and December 31, 2017, securities owned, at fair value consisted of the following:



	As of March 31, 2018		As of December 31, 2017
	(dollars in thousands)
Common stocks (b)	$	500,157	$	640,065
Preferred stock (b)	12,397		9,604
Warrants and rights (b)	11,781		9,604
U.S. Government securities (a)	1,791		2,807
Corporate bonds (d)	11,659		4,909
Convertible bonds (c)	—		282
Trade claims	5,955		5,950
	$	543,740	$	673,221


(a)	As of March 31, 2018, maturities ranged from June 2018 to August 2018 with an interest rate of 0%. As of December 31, 2017, maturities ranged from February 2018 to June 2018 with an interest rate of 0%.

(b)

The Company has elected the fair value option for investments in securities of preferred and common stocks with a fair value of $7.3 million and $5.5 million, respectively, at March 31, 2018 and $6.0 million and $5.2 million, respectively, at December 31, 2017. At March 31, 2018 and December 31, 2017, the Company elected the fair value option for investments in warrants and rights with a fair value of $1.3 million and $2.4 million.


(c)	As of December 31, 2017, maturities ranged from February 2018 to March 2018 and interest rates ranged from 5% to 12%.


(d)	As of March 31, 2018, maturities ranged from October 2018 to February 2048 and interest rates ranged from 2.63% to 12.50%. As of December 31, 2017, maturities ranged from October 2018 to May 2040 and interest rates ranged from 0.00% to 10.75%.

Schedule of Derivative Instruments

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



Receivable on derivative contracts	As of March 31, 2018				As of December 31, 2017
	Number of contracts / Notional Value		Fair value		Number of contracts / Notional Value		Fair value
	(dollars in thousands)
Futures	$	3,979	$	748	$	3,819	$	58
Currency forwards	$	1,775	520		$	233	5
Swaps	$	64,489	1,631		$	164,664	10,942
Options other (a)	268,231		31,216		283,112		58,172
Pay to hold	—		798		—		—
			$	34,913			$	69,177

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



Payable for derivative contracts	As of March 31, 2018				As of December 31, 2017
	Number of contracts / Notional Value		Fair value		Number of contracts / Notional Value		Fair value
	(dollars in thousands)
Futures	$	26,583	$	209	$	16,796	$	242
Currency forwards	$	77,431	620		$	62,439	874
Swaps	$	27,927	623		$	11,595	71
Options other (a)	63,328		47,423		57,043		41,563
			$	48,875			$	42,750

(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 March 31, 2018 and December 31, 2017. This table does not include the impact of over collateralization.



							Gross amounts not offset in the Condensed Consolidated Statement of Financial Condition
	Gross amounts recognized		Gross amounts offset on the Condensed Consolidated Statements of Financial Condition (a)		Net amounts included on the Condensed Consolidated Statements of Financial Condition		Financial instruments		Cash Collateral pledged (b)		Net amounts
	(dollars in thousands)
As of March 31, 2018
Receivable on derivative contracts, at fair value	$	34,913	$	—	$	34,913	$	—	$	2,095	$	32,818
Payable for derivative contracts, at fair value	48,875		—		48,875		—		1,314		47,561

As of December 31, 2017
Receivable on derivative contracts, at fair value	69,177		—		69,177		—		10,948		58,229
Payable for derivative contracts, at fair value	42,750		—		42,750		—		1,031		41,719


(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.

Schedule Equity Method Investments

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



	As of March 31, 2018		As of December 31, 2017
	(dollars in thousands)
Surf House Ocean Views Holdings, LLC	$	14,179	$	14,179
Starboard Value LP	16,274		13,202
RCG Longview Debt Fund V Partners, LLC	9,306		9,284
RCG Longview Management, LLC	1,212		1,149
HealthCare Royalty GP, LLC	249		281
HealthCare Royalty GP II, LLC	142		148
RCG Longview Debt Fund IV Management, LLC	331		331
HealthCare Royalty GP III, LLC	1,108		764
RCG Kennedy House, LLC	119		154
RCG Longview Equity Management, LLC	114		114
RCG LPP II GP, LLC	270		487
RCG Park Liberty GP Member Manager, LLC	1,018		428
Other	849		578
	$	45,171	$	41,099

Schedule of Securities Sold, Not yet Purchased

As of March 31, 2018 and December 31, 2017, securities sold, not yet purchased, at fair value consisted of the following:



	As of March 31, 2018		As of December 31, 2017
	(dollars in thousands)
Common stocks	$	252,585	$	342,328
Corporate bonds (a)	1,287		122
Preferred stock	450		77
Warrants and rights	7,264		—
	$	261,586	$	342,527


(a)	As of March 31, 2018, the maturities ranged from August 2018 to January 2026 with interest rates ranged from 5.55% to 7.50%. As of December 31, 2017, the maturities ranged from July 2025 to January 2026 with interest rates ranged from 3.78% to 5.55%.

Schedule of Assets and Associated Liabilities Accounted for as Secured Borrowings

The following tables present the contractual gross and net securities borrowing and lending agreements and the related offsetting amount, as of March 31, 2018 and December 31, 2017.



							Gross amounts not offset on the Condensed Consolidated Statements of Financial Condition
	Gross amounts recognized		Gross amounts offset on the Condensed Consolidated Statements of Financial Condition (a)		Net amounts included on the Condensed Consolidated Statements of Financial Condition		Additional Amounts Available		Financial instruments		Cash Collateral pledged (b)		Net amounts
	(dollars in thousands)
As of March 31, 2018
Securities borrowed	$	598,090	$	—	$	598,090	$	—	$	577,017	$	—	$	21,073
Securities loaned	462,854		—		462,854		—		445,271		—		17,583

As of December 31, 2017
Securities borrowed	443,148		—		443,148		—		414,778		—		28,370
Securities loaned	456,831		—		456,831		—		439,228		—		17,603


(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.

Investments Classified by Contractual Maturity Date

The following tables present gross obligations for securities loaned transactions by remaining contractual maturity and class of collateral pledged as of March 31, 2018 and December 31, 2017:



	Open and Overnight		Up to 30 days		31 - 90 days		Greater than 90 days		Total
	(dollars in thousands)
As of March 31, 2018
Equities	$	462,854	$	—	$	—	$	—	$	462,854

As of December 31, 2017
Equities	$	456,831	$	—	$	—	$	—	$	456,831

Fair Value, Concentration of Risk

Investment's percentage of the Company's equity

Issuer

Security Type

Country

Industry

Percentage of Equity

Market Value

(dollars in thousands)

As of March, 31, 2018

Linkem

Equity

Italy

Wireless Broadband

7.77

58,947

As of December 31, 2017

Linkem

Equity

Italy

Wireless Broadband

7.52

56,271

Schedule of Other Investments

As of March 31, 2018 and December 31, 2017, other investments included the following:



	As of March 31, 2018		As of December 31, 2017
	(dollars in thousands)
Portfolio Funds, at fair value (1)	$	111,810	$	100,148
Equity method investments (2)	45,171		41,099
Lehman claims, at fair value	312		301
	$	157,293	$	141,548

Schedule of Other Investments, Portfolio Funds

The Portfolio Funds, at fair value as of March 31, 2018 and December 31, 2017, included the following:



	As of March 31, 2018		As of December 31, 2017
	(dollars in thousands)
Starboard Value and Opportunity Fund LP (c)(*)	$	32,267	$	32,079
Formation8 Partners Fund I, L.P. (f)	28,243		28,243
RCG Longview Debt Fund V, L.P. (g)(*)	7,386		8,892
RCG Longview II LP (g) (*)	4,121		131
Cowen Healthcare Investments II LP (j) (*)	4,669		—
Eclipse Ventures Fund I, L.P. (b)	3,494		3,428
HealthCare Royalty Partners LP (a)(*)	3,048		3,452
Lagunita Biosciences, LLC (d)	2,856		2,400
RCG IO Renergys Sarl (j) (*)	2,254		—
Starboard Leaders Fund LP (e)(*)	1,314		1,276
RCG Longview Equity Fund, LP (g) (*)	1,221		—
RCG Longview Debt Fund VI, LP (g) (*)	1,042		1,022
RCG Park Liberty GP Member LLC (g) (*)	908		750
HealthCare Royalty Partners II LP (a)(*)	836		873
RCG LPP2 PNW5 Co-Invest, L.P. (h)(*)	309		3,493
Quadratic Fund LLC (i)(*)	45		906
Other private investment (k)(*)	14,271		10,133
Other affiliated funds (l)(*)	3,526		3,070
	$	111,810	$	100,148

* 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 16.


(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)	Eclipse Ventures 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.


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


(d)	Lagunita Biosciences, LLC, is a healthcare investment company that creates and grows early stage companies to commercialize impactful translational science that addresses significant clinical needs, is a private equity structure and therefore distributions will be made when the underlying investments are liquidated.


(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)	RCG Longview Debt Fund V, L.P., RCG Longview II LP, RCG Park Liberty GP Member LLC, RCG Longview Equity Fund, LP and RCG Longview Debt Fund VI, LP are real estate private equity structures and therefore distributions will be made when the underlying investments are liquidated.


(h)	RCG LPP2 PNW5 Co-Invest, L.P. is a single purpose entity formed to participate in a joint venture which acquired five multi-unit residential rental properties located in the Pacific Northwest. RCG LPP2 PNW5 Co-Invest, L.P. is a private equity structure and therefore distributions will be made when the underlying investments are liquidated.


(i)	Quadratic Fund LLC permits redemptions 30 days prior written notice.


(j)	Cowen Healthcare Investments II LP and RCG IO Renergys Sarl are private equity funds. Distributions are made from these funds when cash flows are received from the underlying investments. Investors do not have redemption rights.


(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.

Consolidated Funds

Investment Holdings [Line Items]

Marketable Securities

As of March 31, 2018 and December 31, 2017, securities owned, at fair value, held by the Consolidated Funds consisted of the following:



	As of March 31, 2018		As of December 31, 2017
	(dollars in thousands)
Preferred stock	$	11,893	$	50,445
Common stocks	81,509		77,702
U.S. Government securities (a)	8,826		34,201
Warrants and rights	5,254		3,568
	$	107,482	$	165,916


(a)	As of March 31, 2018, maturities ranged from August 2018 to April 2023 and interest rates ranged from 0% to 6.13%. As of December 31, 2017, maturities ranged from January 2018 to April 2022 and interest rates ranged from 0% to 5.75%.

Schedule of Derivative Instruments

As of March 31, 2018 and December 31, 2017, receivable on derivative contracts, at fair value, held by the Consolidated Funds are comprised of:



	As of March 31, 2018		As of December 31, 2017
	(dollars in thousands)
Currency forwards	$	4	$	524
Equity swaps	1,407		1,754
Options	455		242
	$	1,866	$	2,520

Payable for derivative contracts

As of March 31, 2018 and December 31, 2017, payable for derivative contracts, at fair value, held by the Consolidated Funds are comprised of:



	As of March 31, 2018		As of December 31, 2017
	(dollars in thousands)
Currency forwards	$	166	$	11
Equity swaps	1,660		7,042
Options	154		77
	$	1,980	$	7,130

Schedule of Securities Sold, Not yet Purchased

As of March 31, 2018 and December 31, 2017, there were no securities sold, not yet purchased, at fair value

Schedule of Other Investments, Portfolio Funds

Investments in Portfolio Funds, at fair value

As of March 31, 2018 and December 31, 2017, investments in Portfolio Funds, at fair value, included the following:



	As of March 31, 2018		As of December 31, 2017
	(dollars in thousands)
Investments of Enterprise LP	$	89,638	$	87,221
Investments of Merger Fund	287,248		286,890
	$	376,886	$	374,111

Enterprise Master

Investment Holdings [Line Items]

Marketable Securities

Securities owned by Enterprise Master, at fair value



	As of March 31, 2018		As of December 31, 2017
	(dollars in thousands)
Preferred stock	$	—	$	—
Common stock	469		608
	$	469	$	608

Schedule of Other Investments, Portfolio Funds

Portfolio Funds, owned by Enterprise Master, at fair value



		As of March 31, 2018		As of December 31, 2017
	Strategy	(dollars in thousands)
RCG Special Opportunities Fund, Ltd*	Multi-Strategy	$	100,525	$	97,345
RCG Longview Equity Fund, LP*	Real Estate	—		1,266
RCG Longview Debt Fund IV, LP*	Real Estate	—		99
RCG Longview II, LP*	Real Estate	—		229
RCG Renergys, LLC*	Energy	—		—
Other Private Investments	Various	937		937
Other Real Estate Investments *	Real Estate	—		—
		$	101,462	$	99,876


*	Affiliates of the Company.

Merger Master

Investment Holdings [Line Items]

Schedule of Derivative Instruments

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



	As of March 31, 2018		As of December 31, 2017
Description	(dollars in thousands)
Options	$	69,017	$	108,063
Equity swaps	1,665		14,488
Currency forwards	—		—
	$	70,682	$	122,551

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



	As of March 31, 2018		As of December 31, 2017
Description	(dollars in thousands)
Options	$	1,845	$	1,256
Currency forwards	—		213
Equity swaps	251		1,249
	$	2,096	$	2,718