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Investments of Operating Entities and Consolidated Funds - (Tables)
 9 Months Ended
Sep. 30, 2018
Investment Holdings [Line Items]  
Marketable Securities
As of September 30, 2018 and December 31, 2017, securities owned, at fair value consisted of the following:
 
As of September 30, 2018
 
As of December 31, 2017
 
(dollars in thousands)
Common stock (b)
$
576,720

 
$
640,065

Preferred stock (b)
6,466

 
9,604

Warrants and rights (b)
21,403

 
9,604

U.S. Government securities (a)
2,842

 
2,807

Corporate bonds (d)
30,992

 
4,909

Convertible bonds (c)
—

 
282

Trade claims
5,746

 
5,950

 
$
644,169

 
$
673,221

(a)
As of September 30, 2018, maturities ranged from October 2018 to August 2019 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 stock with a fair value of $2.9 million and $6.2 million, respectively, at September 30, 2018 and $6.0 million and $5.2 million, respectively, at December 31, 2017. At September 30, 2018 and December 31, 2017, the Company elected the fair value option for investments in warrants and rights with a fair value of $1.1 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 September 30, 2018, maturities ranged from October 2018 to April 2049 and interest rates ranged from 0.50% to 14.00%. 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 September 30, 2018
 
As of December 31, 2017
 
Number of contracts / Notional Value
 
Fair value
 
Number of contracts / Notional Value
 
Fair value
 
(dollars in thousands)
Futures
$
—

 
$
—

 
$
3,819

 
$
58

Currency forwards
$
79,310

 
1,088

 
$
233

 
5

Swaps
$
57,926

 
1,203

 
$
164,664

 
10,942

Options other (a)
660,776

 
29,330

 
283,112

 
58,172

Pay to hold
$
—

 
608

 
$
—

 
—

 
 
 
$
32,229

 
 
 
$
69,177

(a) Includes index, equity, commodity future and cash conversion options.
Payable for derivative contracts
As of September 30, 2018
 
As of December 31, 2017
 
Number of contracts / Notional Value
 
Fair value
 
Number of contracts / Notional Value
 
Fair value
 
(dollars in thousands)
Futures
$
25,474

 
$
71

 
$
16,796

 
$
242

Currency forwards
$
2,897

 
4

 
$
62,439

 
874

Swaps
$
77,775

 
2,743

 
$
11,595

 
71

Options other (a)
96,500

 
27,184

 
57,043

 
41,563

 
 
 
$
30,002

 
 
 
$
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 September 30, 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 September 30, 2018
 
 
 
 
 
 
 
 
 
 
 
Receivable on derivative contracts, at fair value
$
32,229

 
$
—

 
$
32,229

 
$
—

 
$
2,899

 
$
29,330

Payable for derivative contracts, at fair value
30,002

 
—

 
30,002

 
—

 
2,747

 
27,255

 
 
 
 
 
 
 
 
 
 
 
 
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 September 30, 2018
 
As of December 31, 2017
 
(dollars in thousands)
Surf House Ocean Views Holdings, LLC
$
7,478

 
$
14,179

Starboard Value LP
17,842

 
13,202

RCG Longview Debt Fund V Partners, LLC
10,273

 
9,284

RCG Longview Management, LLC
1,316

 
1,149

RCG Longview Debt Fund VI Partners LLC
971

 
—

HealthCare Royalty GP, LLC
174

 
281

HealthCare Royalty GP II, LLC
197

 
148

RCG Longview Debt Fund IV Management, LLC
331

 
331

HealthCare Royalty GP III, LLC
1,562

 
764

RCG Kennedy House, LLC
119

 
154

RCG Longview Equity Management, LLC
114

 
114

RCG LPP II GP, LLC
272

 
487

RCG Park Liberty GP Member Manager, LLC
1,018

 
428

Other
654

 
578

 
$
42,321

 
$
41,099
Schedule of Securities Sold, Not yet Purchased
As of September 30, 2018 and December 31, 2017, securities sold, not yet purchased, at fair value consisted of the following:
 
As of September 30, 2018
 
As of December 31, 2017
 
(dollars in thousands)
Common stock
$
353,113

 
$
342,328

Corporate bonds (a)
20,309

 
122

Preferred stock
836

 
77

Warrants and rights
260

 
—

 
$
374,518

 
$
342,527

(a)
As of September 30, 2018, the maturities ranged from January 2026 to April 2049 with interest rates ranged from 5.00% to 5.55%. 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 September 30, 2018 and December 31, 2017.
 
 
 
 
 
 
 
Gross amounts not offset on 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
 
Additional Amounts Available
 
Financial instruments
 
Cash Collateral pledged (b)
 
Net amounts
 
(dollars in thousands)
As of September 30, 2018
 
 
 
 
 
 
 
 
 
 
 
 
 
Securities borrowed
$
713,288

 
$
—

 
$
713,288

 
$
—

 
$
684,569

 
$
—

 
$
28,719

Securities loaned
548,629

 
—

 
548,629

 
—

 
531,984

 
—

 
16,645

 
 
 
 
 
 
 
 
 
 
 
 
 
 
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 September 30, 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 September 30, 2018
 
 
 
 
 
 
 
 
 
Common stock
$
548,629

 
$
—

 
$
—

 
$
—

 
$
548,629

 
 
 
 
 
 
 
 
 
 
As of December 31, 2017
 
 
 
 
 
 
 
 
 
Common stock
$
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 September 30, 2018
Linkem
 
Equity
 
Italy
 
Wireless Broadband
 
8.01
%
 
$
64,754

As of December 31, 2017
Linkem
 
Equity
 
Italy
 
Wireless Broadband
 
7.52
%
 
$
56,271
Schedule of Other Investments
As of September 30, 2018 and December 31, 2017, other investments included the following:
 
As of September 30, 2018
 
As of December 31, 2017
 
(dollars in thousands)
Portfolio Funds, at fair value (1)
$
125,107

 
$
100,148

Equity method investments (2)
42,321

 
41,099

Lehman claims, at fair value
—

 
301

 
$
167,428

 
$
141,548
Schedule of Other Investments, Portfolio Funds
The Portfolio Funds, at fair value as of September 30, 2018 and December 31, 2017, included the following:
 
As of September 30, 2018
 
As of December 31, 2017
 
(dollars in thousands)
Starboard Value and Opportunity Fund LP (c)(*)
$
33,321

 
$
32,079

Formation8 Partners Fund I, L.P. (f)
28,135

 
28,243

RCG Longview Debt Fund V, L.P. (g)(*)
4,537

 
8,892

RCG Longview II LP (g) (*)
4,160

 
131

Cowen Healthcare Investments II LP (j) (*)
15,875

 
—

Eclipse Ventures Fund I, L.P. (b)
3,575

 
3,428

HealthCare Royalty Partners LP (a)(*)
2,129

 
3,452

Lagunita Biosciences, LLC (d)
3,859

 
2,400

RCG IO Renergys Sarl (j) (*)
1,780

 
—

Starboard Leaders Fund LP (e)(*)
1,405

 
1,276

Eclipse SPV I, LP (k)(*)
1,447

 
—

RCG Longview Equity Fund, LP (g) (*)
819

 
—

RCG Longview Debt Fund VI, LP (g) (*)
588

 
1,022

RCG Park Liberty GP Member LLC (g) (*)
908

 
750

HealthCare Royalty Partners II LP (a)(*)
1,162

 
873

RCGL PE MPA, LLC (g)(*)
549

 
—

RCG LPP2 PNW5 Co-Invest, L.P. (h)(*)
309

 
3,493

Quadratic Fund LLC (i)(*)
—

 
906

Other private investment (l)(*)
15,997

 
10,133

Other affiliated funds (m)(*)
4,552

 
3,070

 
$
125,107

 
$
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, RCGL PE MPA, LLC and RCG Longview Debt Fund VI, LP are real estate private equity structures. The timing of distributions depend on the nature of the underlying investments and therefore will be made either quarterly or 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)
Effective January 31, 2018, the Company is no longer affiliated with Quadratic Capital Management LLC.
(j)
Cowen Healthcare Investments II LP and RCG IO Renergys Sarl are private equity funds.  Distributions are made from these funds when cash flows or securities are received from the underlying investments. Investors do not have redemption rights.
(k)
Eclipse SPV I, L.P. is a co-investment vehicle organized to invest in a private company focused on software-driven automation projects.  Distributions will be made when the underlying investments are liquidated.
(l)
Other private investment represents the Company's closed end investment in a portfolio fund that invests in a wireless broadband communication provider in Italy.
(m)
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 September 30, 2018 and December 31, 2017, securities owned, at fair value, held by the Consolidated Funds consisted of the following:
 
As of September 30, 2018
 
As of December 31, 2017
 
(dollars in thousands)
     Preferred stock
$
24,314

 
$
50,445

     Common stock
55,535

 
77,702

     U.S. Government securities (a)
20,446

 
34,201

     Corporate bonds (b)
3,758

 
—

     Warrants and rights
4,848

 
3,568

 
$
108,901

 
$
165,916

(a)
As of September 30, 2018, maturities ranged from November 2018 to December 2018 and interest rates were 0%. As of December 31, 2017, maturities ranged from January 2018 to April 2022 and interest rates ranged from 0% to 5.75%.
(b)
As of September 30, 2018, the maturity was December 2023 with an interest rate of 5.88%.
Schedule of Derivative Instruments
As of September 30, 2018 and December 31, 2017, receivable on derivative contracts, at fair value, held by the Consolidated Funds are comprised of:
 
As of September 30, 2018
 
As of December 31, 2017
 
(dollars in thousands)
Currency forwards
$
27

 
$
524

Equity swaps
1,584

 
1,754

Options
300

 
242

 
$
1,911

 
$
2,520

Payable for derivative contracts
As of September 30, 2018 and December 31, 2017, payable for derivative contracts, at fair value, held by the Consolidated Funds are comprised of:
 
As of September 30, 2018
 
As of December 31, 2017
 
(dollars in thousands)
Currency forwards
$
539

 
$
11

Equity swaps
1,590

 
7,042

Options
60

 
77

 
$
2,189

 
$
7,130
Schedule of Other Investments, Portfolio Funds
Investments in Portfolio Funds, at fair value
As of September 30, 2018 and December 31, 2017, investments in Portfolio Funds, at fair value, included the following:
 
As of September 30, 2018
 
As of December 31, 2017
 
(dollars in thousands)
Investments of Enterprise LP
$
97,026

 
$
87,221

Investments of Merger Fund
86,264

 
286,890

 
$
183,290

 
$
374,111
Enterprise Master  
Investment Holdings [Line Items]  
Marketable Securities
Securities owned by Enterprise Master, at fair value
 
As of September 30, 2018
 
As of December 31, 2017
 
(dollars in thousands)
Common stock
$
469

 
$
608

 
$
469

 
$
608
Schedule of Other Investments, Portfolio Funds
Portfolio Funds, owned by Enterprise Master, at fair value
 
 
 
As of September 30, 2018
 
As of December 31, 2017
 
Strategy
 
(dollars in thousands)
RCG Special Opportunities Fund, Ltd*
Multi-Strategy
 
$
109,518

 
$
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

Other Private Investments
Various
 
864

 
937

 
 
 
$
110,382

 
$
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 September 30, 2018
 
As of December 31, 2017
Description
(dollars in thousands)
Options
$
1,817

 
$
108,063

Equity swaps
1,658

 
14,488

Currency forwards
200

 
—

 
$
3,675

 
$
122,551

Payable for derivative contracts, at fair value, owned by Merger Master
 
As of September 30, 2018
 
As of December 31, 2017
Description
(dollars in thousands)
Options
$
261

 
$
1,256

Currency forwards
—

 
213

Equity swaps
2,005

 
1,249

 
$
2,266

 
$
2,718