Fair Value Measurements for Operating Entities and Consolidated Funds (Tables)

12 Months Ended

Dec. 31, 2021

Fair Value Disclosures [Abstract]

Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis

The following table presents the assets and liabilities that are measured at fair value on a recurring basis on the accompanying consolidated statements of financial condition by caption and by level within the valuation hierarchy as of December 31, 2021 and 2020:

	Assets at Fair Value as of December 31, 2021
	Level 1		Level 2		Level 3		Netting (c)		Total
			(dollars in thousands)
Operating Entities
Securities owned, at fair value
Government bonds	$	16,002	$	—	$	—	$	—	$	16,002
Preferred stock	12,299		—		122,631		—		134,930
Common stock	2,396,041		121		32,658		—		2,428,820
Convertible bonds	—		—		5,250		—		5,250
Corporate bonds	—		19,049		2,419		—		21,468
Trade claims	—		—		3,496		—		3,496
Term loan	—		3,907		—		—		3,907
Warrants and rights	31,056		—		15,403		—		46,459
Private investments	—		—		410		—		410
Receivable on derivative contracts, at fair value
Currency forwards	—		80		—		—		80
Equity swaps	—		306,578		—		(81,742)		224,836
Options	60,985		—		234		—		61,219
	$	2,516,383	$	329,735	$	182,501	$	(81,742)	$	2,946,877
Portfolio funds measured at net asset value (a)									137,986
Consolidated Funds' portfolio funds measured at net asset value (a)									99,067
Carried interest (a)									88,925
Equity method investments (a)									47,200
Total investments									$	3,320,055

	Liabilities at Fair Value as of December 31, 2021
	Level 1		Level 2		Level 3		Netting (c)		Total
	(dollars in thousands)
Operating Entities
Securities sold, not yet purchased, at fair value
Common stock	$	1,192,396	$	—	$	—	$	—	$	1,192,396
Corporate bonds	—		37		—		—		37
Preferred stock	9,009		—		—		—		9,009
Warrants and rights	6		—		—		—		6
Payable for derivative contracts, at fair value
Futures	266		—		—				266
Currency forwards	—		1,346		—		—		1,346
Equity swaps	—		114,689		—		(92,330)		22,359
Options	32,773		—		3,419		—		36,192
Accounts payable, accrued expenses and other liabilities
Contingent consideration liability (b)	—		—		62,223		—		62,223
	$	1,234,450	$	116,072	$	65,642	$	(92,330)	$	1,323,834

(a) In accordance with US GAAP, portfolio funds are measured at fair value using the net asset value per share (or its equivalent) as a practical expedient are not classified in the fair value hierarchy. Carried interest and equity method investments presented in the table above are intended to permit reconciliation of the fair value hierarchy to the amounts presented in the consolidated statement of financial condition.

(b) In accordance with the terms of the purchase agreements for acquisitions that closed during the first quarter of 2019 (the Quarton acquisition), the fourth quarter of 2020 (the MHT acquisition) and the fourth quarter of 2021 (the Portico acquisition, see Note 3), the Company is required to pay to the sellers a portion of future net income and/or revenues of the acquired businesses, if certain targets are achieved through the periods ended through December 31, 2024. For all acquisitions the Company estimated the contingent consideration liabilities using a combination of Monte Carlo and Discounted Cash Flow methods which require the Company to make estimates and assumptions regarding the future cash flows and profits. Changes in these estimates and assumptions could have a significant impact on the amounts recognized. The undiscounted amounts for the Quarton acquisition can range from $10.1 million to $25.0 million. The undiscounted amounts for the MHT acquisition have no minimum or maximum as it is calculated based on revenue. The undiscounted amounts for the Portico acquisition can range from $0 million to $58.0 million.

(c) Derivatives are reported on a net basis, by counterparty, when a legal right of offset exists under an enforceable netting agreement as well as net of cash collateral received or posted under enforceable credit support agreements. See Note 2f for further information on offsetting of derivative financial instruments.

	Assets at Fair Value as of December 31, 2020
	Level 1		Level 2		Level 3		Netting (c)		Total
			(dollars in thousands)
Operating Entities
Securities owned, at fair value
Government bonds	$	19,721	$	—	$	—	$	—	$	19,721
Preferred stock	9,391		—		59,967		—		69,358
Common stock	1,746,407		108		23,786		—		1,770,301
Convertible bonds	—		—		6,040		—		6,040
Corporate bonds	—		86,368		135		—		86,503
Trade claims	—		—		8,713		—		8,713
Term loan	—		—		12,623		—		12,623
Private investments	—		—		642		—		642
Warrants and rights	21,154		—		6,547		—		27,701
Receivable on derivative contracts, at fair value
Currency forwards	—		15		—		—		15
Equity swaps	—		64,634		—		(62,269)		2,365
Options	48,851		—		251		—		49,102
Consolidated Funds
Securities owned, at fair value
Common stock	1,865		—		2,951		—		4,816
Warrants and rights	—		—		5,806		—		5,806
	$	1,847,389	$	151,125	$	127,461	$	(62,269)	$	2,063,706
Portfolio funds measured at net asset value (a)									133,454
Consolidated Funds' portfolio funds measured at net asset value (a)									192,670
Carried interest (a)									82,892
Equity method investments (a)									38,681
Total investments									$	2,511,403

	Liabilities at Fair Value as of December 31, 2020
	Level 1		Level 2		Level 3		Netting (c)		Total
	(dollars in thousands)
Operating Entities
Securities sold, not yet purchased, at fair value
US Government securities	$	—	$	—	$	1,500	$	—	$	1,500
Common stock	699,894		—		—		—		699,894
Corporate bonds	—		10,654		704		—		11,358
Preferred stock	6,589		—		—		—		6,589
Warrants and rights	8,774		—		—		—		8,774
Payable for derivative contracts, at fair value
Currency forwards	—		3,067		—		—		3,067
Equity swaps	—		43,560		—		(37,033)		6,527
Options	62,651		—		3,915		—		66,566
Accounts payable, accrued expenses and other liabilities
Contingent consideration liability (b)	—		—		36,718		—		36,718
	$	777,908	$	57,281	$	42,837	$	(37,033)	$	840,993

(a) In accordance with US GAAP, portfolio funds are measured at fair value using the net asset value per share (or its equivalent) as a practical expedient are not classified in the fair value hierarchy. Carried interest and equity method investments presented in the table above are intended to permit reconciliation of the fair value hierarchy to the amounts presented in the consolidated statement of financial condition.

(b) In accordance with the terms of the purchase agreements for acquisitions that closed during the first quarter of 2019 and the fourth quarter of 2020, the Company is required to pay to the sellers a portion of future net income and/or revenues of the acquired businesses, if certain targets are achieved through the periods ended December 31, 2020 and December 31, 2023. For both the Quarton acquisition, completed during the first quarter of 2019, and the MHT acquisition, completed during the fourth quarter of 2020, the Company estimated the contingent consideration liabilities using a combination of Monte Carlo and Discounted Cash Flow methods which require the Company to make estimates and assumptions regarding the future cash flows and profits. Changes in these estimates and assumptions could have a significant impact on the amounts recognized. The undiscounted amounts for the Quarton acquisition can range from $10.1 million to $35.1 million. The undiscounted amounts for the MHT acquisition have no minimum or maximum as it is calculated based on revenue. (c) Derivatives are reported on a net basis, by counterparty, when a legal right of offset exists under an enforceable netting agreement as well as net of cash collateral received or posted under enforceable credit support agreements. See Note 2f for further information on offsetting of derivative financial instruments.

Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation

The following table includes a roll forward of the amounts for the year ended December 31, 2021 and 2020 for financial instruments classified within level 3. The classification of a financial instrument within level 3 is based upon the significance of the unobservable inputs to the overall fair value measurement.

	Year Ended December 31, 2021
	Balance at December 31, 2020		Transfers in			Transfers out			Purchases/(covers)		(Sales)/shorts		Realized and Unrealized gains/losses		Balance at December 31, 2021		Change in unrealized gains/losses relating to instruments still held (1)
	(dollars in thousands)
Operating Entities
Preferred stock	$	59,967	$	—		$	(1,531)	(b)	$	75,562	$	(9,828)	$	(1,539)	$	122,631	$	(2,570)
Common stock	23,786		3,409		(e)	(7,357)		(b)(j)	19,072		(13,582)		7,330		32,658		5,517
Convertible bonds	6,040		—			(4,031)		(j)	11,802		(11,159)		2,598		5,250		(975)
Corporate bond	135		—			—			2,414		(103)		(27)		2,419		6
Options, asset	251		—			—			—		—		(17)		234		(17)
Options, liability	3,915		—			—			—		—		(496)		3,419		(496)
Term loan	12,623		—			—			638		(12,162)		(1,099)		—		—
Warrants and rights	6,547		3,806		(e)(f)	—			10,706		(1,610)		(4,046)		15,403		(2,812)
Trade claims	8,713		—			(1,389)		(f)	3,056		(5,254)		(1,630)		3,496		(2,698)
Private investments	642		—			—			707		(1,153)		214		410		—
Corporate bond, liability	704		—			—			—		(399)		(305)		—		—
Government bonds, liability	1,500		—			—			—		(1,569)		69		—		—
Contingent consideration liability	36,718		—			—			20,729		(10,077)		14,853		62,223		14,853
Consolidated Funds
Common stock	2,951		(4,000)		(e)	—			—		—		1,049		—		—
Warrants and rights	5,806		—			—			—		(4,447)		(1,359)		—		—

	Year Ended December 31, 2020
	Balance at December 31, 2019		Transfers in			Transfers out			Purchases/(covers)		(Sales)/shorts		Realized and Unrealized gains/losses		Balance at December 31, 2020		Change in unrealized gains/losses relating to instruments still held (1)
	(dollars in thousands)
Operating Entities
Preferred stock	$	7,835	$	45,530	(c)	$	(1,653)	(g)	$	5,891	$	(4,993)	$	7,357	$	59,967	$	10,846
Common stock	17,466		102		(h)	(29)		(a)(f)	7,138		(3,818)		2,927		23,786		1,990
Convertible bonds	2,500		—			—			3,787		(1,050)		803		6,040		803
Corporate Bond, asset	2,421		—			(312)		(g)	666		(2,432)		(208)		135		(180)
Options, asset	336		—			(102)		(h)	—		—		17		251		(1)
Options, liability	2,920		—			—			—		—		995		3,915		995
Warrants and rights	594		4,528		(a)(c)	—			—		—		1,425		6,547		1,425
Term Loan	—		11,149		(c)	—			245		—		1,229		12,623		1,229
Trade claim	7,083		1,044		(a)(f)	—			4,283		(2,944)		(753)		8,713		(777)
Private investments	237		—			—			641		—		(236)		642		(236)
Corporate bond, liability	1,000		—			—			—		—		(296)		704		(248)
Government bonds, liability	1,950		—			—			—		—		(450)		1,500		(450)
Contingent consideration liability	30,896		—			(1,235)		(i)	4,218		(5,653)		8,492		36,718		8,492
Consolidated Funds
Preferred stock	4,393		—			(4,000)		(d)	—		—		(393)		—		—
Common stock	—		4,000		(d)	(100,000)		(j)	100,000		—		(1,049)		2,951		(1,049)
Warrants and rights	5,567		—			—			—		—		239		5,806		239
Convertible bonds	—		—			(76,114)		(j)	75,000		—		1,114		—		—

(1) Unrealized gains/losses are reported in Investment income - Securities principal transactions, net in the accompanying consolidated statements of operations.

(a) The security stopped trading on an open market.

(b) The entity in which the Company is invested completed an initial public offering.

(c) The company consolidated an operating entity which holds preferred stock, loans and warrants.

(d) The investment was involved in a reverse merger and preferred stock was converted to common shares.

(e) Fair market value derived using models and private transaction levels.

(f) The transfers between level 1, level 2 and level 3 are due to the change in the availability of observable inputs.

(g) The investments were converted to common stock.

(h) The options expired and converted into common stock.

(i) The contingent liability reached the end of its earnout period and is now valued based on actual cash payout.

(j) The Company deconsolidated an investment fund.

Fair Value Inputs, Assets, Quantitative Information

The following table includes quantitative information as of December 31, 2021 and 2020 for financial instruments classified within level 3. The table below quantifies information about the significant unobservable inputs used in the fair value measurement of the Company's level 3 financial instruments.

	Quantitative Information about Level 3 Fair Value Measurements
	Fair Value December 31, 2021		Valuation Techniques	Unobservable Inputs	Range	Weighted Average
Level 3 Assets	(dollars in thousands)
Common and preferred stocks	$	76,491	Discounted cash flows Guideline companies	Discount rate EBITDA Market Multiples	12.5% - 20% 6.25x - 6.75x	13% 6.5x
Options	234		Discounted cash flows Guideline companies	Discount rate EBITDA Market Multiples	12.5% - 13.5% 6.25x - 6.75x	13% 6.5x
Trade claims	2,376		Discounted cash flows	Discount rate	40%	40%
Warrants and rights	4,483		Discounted cash flows Guideline companies Black Scholes Model	Discount rate EBITDA Market Multiples Volatility	12.5% - 13.5% 6.25x - 6.75x 90% - 100%	13.0% 6.5x 95%
Other level 3 assets (a)	98,917
Total level 3 assets	$	182,501
Level 3 Liabilities
Options	3,419		Option pricing models	Volatility	35%	35%
Contingent consideration liability	62,223		Discounted cash flows Monte Carlo simulation	Discount rate Volatility	7% - 15% 20% - 24%	12% 22%
Total level 3 liabilities	$	65,642

	Quantitative Information about Level 3 Fair Value Measurements
	Fair Value at December 31, 2020		Valuation Techniques	Unobservable Inputs	Range	Weighted Average
Level 3 Assets	(dollars in thousands)
Common and preferred stocks	$	65,735	Discounted cash flows Guideline companies	Discount rate EBITDA Market Multiples	10% - 12% 6.25x - 6.75x	11% 6.5x
Trade claims	3,500		Discounted cash flows	Discount rate	15%	15%
Warrants and rights	11,217		Discounted cash flows Guideline companies	Discount rate EBITDA Market Multiples	4% - 11% 6.25x - 6.75x	7% 6.5x
Options	251		Discounted cash flows Guideline companies	Discount rate EBITDA Market Multiples	10% - 12% 6.25x - 6.75x	11% 6.5x
Corporate, convertible bonds and term loan	12,623		Discounted cash flows Guideline companies	Discount rate EBITDA Market Multiples	10% - 12% 6.25x - 6.75x	11% 6.5x
Other level 3 assets (a)	34,135
Total level 3 assets	$	127,461
Level 3 Liabilities
Options	3,915		Option pricing models	Volatility	35%	35%
Contingent consideration liability	36,718		Discounted cash flows Monte Carlo simulation	Discount rate Volatility	9% - 16% 22% - 24%	15% 22%
Other level 3 liabilities (a)	2,204
Total level 3 liabilities	$	42,837

(a)The quantitative disclosures exclude financial instruments for which the determination of fair value is based on prices from recent transactions.

Fair Value Measurements, Nonrecurring

For additional information regarding the financial instruments within the scope of this disclosure, and the methods and significant assumptions used to estimate their fair value (see Note 2e).

	December 31, 2021						December 31, 2020						Fair Value Hierarchy
	Carrying Amount			Fair Value			Carrying Amount			Fair Value
				(dollars in thousands)
Financial Assets
Operating companies
Cash and cash equivalents	$	914,343		$	914,343		$	645,169		$	645,169		Level 1
Cash collateral pledged	47,494			47,494			110,743			110,743			Level 2
Segregated cash	194,701			194,701			185,141			185,141			Level 1
Securities purchased under agreements to resell	—			—			191			204			Level 2
Securities borrowed	1,704,603			1,704,603			1,908,187			1,908,187			Level 2
Loans receivable	4,858			4,858		(d)	7,682			7,682		(d)	Level 3
Consolidated Funds
Cash and cash equivalents	296			296			417			417			Level 1
Financial Liabilities
Securities sold under agreements to repurchase	63,469			63,469			5,036			5,544			Level 2
Securities loaned	1,586,572			1,586,572			2,476,414			2,476,414			Level 2
Convertible debt	—			—			80,808		(a)	135,444		(b)	Level 2
Notes payable and other debt	623,371		(e)	655,229		(c)	383,067		(e)	405,840		(c)	Level 2

(a)The carrying amount of the convertible debt includes an unamortized discount of $6.7 million as of December 31, 2020.

(b)The convertible debt includes the conversion option and is based on the last broker quote available.

(c)Notes payable and other debt are based on the last broker quote available.

(d)The fair market value of level 3 loans is calculated using discounted cash flows where applicable.

(e)The carrying amount of the notes payable and other debt includes an unamortized discount and unamortized premium of $2.8 million and $0.3 million as of December 31, 2021, respectively and unamortized premium of $0.4 million as of December 31, 2020.