Long-Term Investments

9 Months Ended

Sep. 30, 2019

LONG-TERM INVESTMENTS

Long-term investments consisted of the following:



	September 30, 2019		December 31, 2018
Equity securities at fair value that qualify for the NAV practical expedient	$	52,384	$	54,628
Equity-method investments	14,531		11,631
	$	66,915	$	66,259

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

The estimated fair value of the Company’s equity securities at fair value that qualify for the NAV practical expedient 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. In accordance with Subtopic 820-10, these investments are not classified under the fair value hierarchy disclosed in Note 12 because they are investments measured at fair value using the NAV practical expedient.

(b) Equity-Method Investments:

Equity-method investments consisted of the following:



	September 30, 2019		December 31, 2018
Indian Creek Investors LP (“Indian Creek”)	$	665	$	1,167
Boyar Value Fund (“Boyar”)	9,362		8,384
Optika Fund LLC (“Optika”)	4,504		—
Ladenburg Thalmann Financial Services Inc. (“LTS”)	—		2,080
Castle Brands, Inc. (“Castle”)	—		—
	$	14,531	$	11,631

At September 30, 2019, the Company’s ownership percentages in Indian Creek, Boyar, LTS and Castle were 12.47%, 35.65%, 10.22% and 7.62%, respectively. During the third quarter of 2019, the Company contributed $5,000 to Optika and its ownership percentage in the fund was 10.76% at September 30, 2019. The Company accounted for its Indian Creek, Boyar and Optika interests as equity-method investments because the Company’s ownership percentage meets the threshold for equity-method accounting. The Company accounted for its LTS and Castle interests as equity-method investments because the Company has the ability to exercise significant influence over their operating and financial policies.

The fair value of the investment in Boyar, based on the quoted market price as of September 30, 2019, was $9,362, equal to its carrying value. At September 30, 2019, the aggregate fair values of the LTS and Castle investments, based on the quoted market price, were $36,003 and $16,248, respectively.

The Company received cash distributions of $1,495 and $1,231 from the Company’s equity-method investments for the nine months ended September 30, 2019 and 2018, respectively. The Company recognized equity in losses from equity-method investments of $468 and equity in earnings from equity-method investments of $3,230 for the three months ended September 30, 2019 and 2018, respectively. The Company recognized equity in losses from equity-method investments of $791 and equity in earnings from equity method investments of $9,205 for the nine months ended September 30, 2019 and 2018, respectively. The Company has suspended its recognition of equity in losses from LTS and Castle to the extent such losses exceed its basis.

On October 9, 2019, Castle was acquired pursuant to a cash tender offer of $1.27 per outstanding Common Share and, in connection therewith, the Company tendered the entire amount of its 12,895,017 common shares of Castle. The Company received $16,377 in October 2019 from the transaction that will be recognized in the fourth quarter. At the closing of the transaction, the Company’s Executive Vice President resigned as President and Chief Executive Officer of Castle and the Company’s management agreement with Castle was cancelled.

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 12 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 estimated fair value of the Company’s investments in Indian Creek and Optika 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 investments are illiquid and their ultimate realization is subject to the performance of the underlying partnership and their management by the general partners. In accordance with Subtopic 820-10, these investments would not be classified under the fair value hierarchy disclosed in Note 12 if the assets were recorded on the condensed consolidated balance sheet at fair value because they are measured at fair value using the NAV practical expedient.