Long-Term Investments

9 Months Ended

Sep. 30, 2018

LONG-TERM INVESTMENTS

Long-term investments consisted of the following:



	September 30, 2018		December 31, 2017
Equity securities at fair value that qualify for the NAV practical expedient	$	58,787	$	—
Investments accounted at cost	—		65,450
Equity-method investments	17,665		15,841
	$	76,452	$	81,291

(a) Equity Securities at Fair Value That Qualify for the NAV Practical Expedient

The amendments of ASU 2016-01 adopted on January 1, 2018 triggered a change in the accounting classification and accounting treatment of the Company’s long-term investments accounted at cost at December 31, 2017. Under the new guidance, certain investments are now measured at fair value and are classified as equity securities at fair value that qualify for the NAV practical expedient. The Company, using the practical expedient, estimates the fair value of these equity securities within the scope of ASC 820-10-15-4 through 15-5 using the per share NAV, which represents the amount of net assets attributable to each share of capital stock outstanding at the close of the period. These investments qualify for the NAV practical expedient because they do not have readily determinable fair values and are investment companies within the scope of Topic 946. The adoption of the guidance as it relates to these investments resulted in a cumulative-effect adjustment that increased opening stockholders’ deficiency by $8,838.

The Company’s equity securities at fair value that qualify for the NAV practical expedient are classified as Level 2 under the fair value hierarchy disclosed in Note 11 because they are measured at NAV per share. The estimated fair value of these investments was provided by the partnerships based on the indicated market values of the underlying assets or investment portfolio. The investments in these investment partnerships are illiquid and the ultimate realization of these investments is subject to the performance of the underlying partnership and its management by the general partners.

The Company redeemed two of its investments that qualify for the NAV practical expedient and redeemed 50% of another investment during September 2018. The Company recorded $14,143 of in-transit redemptions from the proceeds at September 30, 2018.

$5,000 of the 2017 long-term investment balance of $65,450 is now classified as equity securities without readily determinable fair values that do not qualify for the NAV practical expedient. Refer to Note 4 for disclosures related to this investment.

(b) Cost-Method Investments:

Long-term investments accounted at cost consisted of the following:



	December 31, 2017
	Carrying		Fair
	Value		Value
Investment partnerships	$	65,450	$	74,111
	$	65,450	$	74,111

The principal business of the investment partnerships is investing in investment securities. The estimated fair value of the investment partnerships was provided by the partnerships based on the indicated market values of the underlying assets or investment portfolio. The investments in these investment partnerships are illiquid and the ultimate realization of these investments is subject to the performance of the underlying partnership and its management by the general partners.

If it is determined that an other-than-temporary decline in fair value exists in long-term investments, the Company records an impairment charge with respect to such investment in its condensed consolidated statements of operations. The Company will

continue to perform additional assessments to determine the impact, if any, on the Company’s condensed consolidated financial statements. Thus, future impairment charges may occur.

The Company has accounted for these investments using the cost method of accounting because the investments did not meet the requirements for equity-method accounting.

The Company invested $25,000 in five new investments and made an additional contribution of $1,500 to three of its existing investments during the nine months ended September 30, 2017. The Company received cash distributions of $1,163 from the Company’s investments in long-term investments under the cost method for the nine months ended September 30, 2017.

The long-term investments were carried on the condensed consolidated balance sheet at cost at December 31, 2017. The fair value determination disclosed above would be classified as Level 3 under fair value hierarchy disclosed in Note 11 if such assets were recorded on the condensed consolidated balance sheet at fair value. The fair value determinations disclosed above were based on company assumptions, and information obtained from the partnerships based on the indicated market values of the underlying assets of their investment portfolio.

Equity-method investments consisted of the following:



	September 30, 2018		December 31, 2017
Indian Creek Investors LP (“Indian Creek”)	$	6,150	$	4,498
Boyar Value Fund (“Boyar”)	9,506		9,026
Ladenburg Thalmann Financial Services Inc. (“LTS”)	2,009		2,317
Castle Brands, Inc. (“Castle”)	—		—
	$	17,665	$	15,841

At September 30, 2018, the Company’s ownership percentages in Indian Creek, Boyar, LTS and Castle were 12.77%, 34.33%, 7.56% and 7.71%, respectively.

The value of Boyar, based on the quoted market price as of September 30, 2018, was $9,506, equal to its carrying value. At September 30, 2018, the aggregate fair values of the LTS and Castle investments, based on the quoted market price, were $41,016 and $13,798, respectively.

The Company received cash distributions of $1,231 and $847 from the Company’s equity-method investments for the nine months ended September 30, 2018 and 2017, respectively. The Company redeemed 50% of its investment in Indian Creek during the three months ended September 2018 and recorded $6,150 of in-transit redemptions from the proceeds at September 30, 2018. The Company recognized equity in earnings from equity-method investments of $3,230 for the three months ended September 30, 2018 and equity in losses from equity-method investments of $303 for the three months ended September 30, 2017. The Company recognized equity in earnings from equity-method investments of $9,205 for the nine months ended September 30, 2018 and equity in losses from equity-method investments of $2,823 for the nine months ended September 30, 2017. The Company has suspended its recognition of equity in losses from Castle to the extent such losses exceed its basis.

If it is determined that an other-than-temporary decline in fair value exists in equity-method investments, the Company records an impairment charge with respect to such investment in its condensed consolidated statements of operations. The Company will continue to perform additional assessments to determine the impact, if any, on the Company’s condensed consolidated financial statements. Thus, future impairment charges may occur.

The equity-method investments are carried on the condensed consolidated balance sheet at cost under the equity method of accounting. The fair values disclosed above for Boyar, LTS and Castle would be classified as Level 1 under the fair value hierarchy disclosed in Note 11 if such assets were recorded on the condensed consolidated balance sheet at fair value. The fair values are based on quoted prices for identical assets in active markets or inputs that are based upon quoted prices for similar instruments in active markets.

The fair value determination disclosed above for Indian Creek would be classified as Level 2 under the fair value hierarchy disclosed in Note 11 if it were recorded on the condensed consolidated balance sheet at fair value. The estimated fair value of the Company’s investment represents the NAV per share and was provided by the partnership based on the indicated market value of the underlying assets or investment portfolio. The investment is illiquid and its ultimate realization is subject to the performance of the underlying partnership and its management by the general partners.