Investments

At December 31, 2017, investments and restricted investments classified as available-for-sale securities were as follows:



	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Investments:
U.S. Treasury securities	$	9,892	$	—	$	22	$	9,870
Corporate debt securities	67,781		411		1,817		66,375
Preferred stock	35,955		423		1,355		35,023
	113,628		834		3,194		111,268
Restricted investments:
Short-term bond	4,264		—		13		4,251
Money market fund	218		—		—		218
	4,482		—		13		4,469
	$	118,110	$	834	$	3,207	$	115,737

At December 31, 2016, investments and restricted investments classified as available-for-sale securities were as follows:



	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Investments:
Corporate debt securities	$	135,590	$	5,311	$	1,769	$	139,132
Preferred stock	36,048		656		111		36,593
	171,638		5,967		1,880		175,725
Restricted investments:
Short-term bond	4,232		—		6		4,226
Money market fund	1,410		—		—		1,410
	5,642		—		6		5,636
	$	177,280	$	5,967	$	1,886	$	181,361

Mr. Bruce R. Berkowitz is the Chairman of the Company’s Board. He is the Manager of, and controls entities that own and control, Fairholme Holdings, which wholly owns FCM and FTC. Mr. Berkowitz is the Chief Investment Officer of FCM, and the Chief Executive Officer and a director of FTC. Since April 2013, FCM has provided investment advisory services to the Company directly, or more recently, as the sub-advisor to FTC. Neither FCM nor FTC receives any compensation for services as the Company’s investment advisor. As of December 31, 2017, clients of FCM and FTC beneficially owned approximately 42.33% of the Company’s common stock and Fairholme, including Mr. Berkowitz and clients of FCM and FTC, collectively beneficially owned 43.95% of the Company’s common stock. FCM and its client The Fairholme Fund, a series of the Fairholme Funds, Inc., may be deemed affiliates of the Company.

Prior to October 31, 2017, Mr. Berkowitz served on the Sears Holding Corporation board of directors, which may have been deemed an affiliate of FCM, or the Company. On October 31, 2017, Mr. Berkowitz stepped down from the Sears Holding Corporation board of directors.

Both Mr. Cesar Alvarez and Mr. Howard Frank are members of the Company’s Board and also serve as directors of Fairholme Funds, Inc. Mr. Alvarez is also a director of FTC.

Pursuant to the terms of the Investment Management Agreement, as amended, with the Company, FTC agreed to supervise and direct the investments of investment accounts established by the Company in accordance with the investment guidelines and restrictions approved by the Investment Committee of the Company’s Board. The investment guidelines are set forth in the Investment Management Agreement and require that, as of the date of any investment: (i) no more than 15% of the investment account may be invested in securities of any one issuer (excluding the U.S. Government), (ii) any investment in any one issuer (excluding the U.S. Government) that exceeds 10% of the investment account, but not 15%, requires the consent of at least two members of the Investment Committee, (iii) 25% of the investment account must be held in cash and cash equivalents, (iv) the investment account is permitted to be invested in common equity securities; however, common stock investments shall be limited to exchange-traded common equities, shall not exceed 5% ownership of a single issuer and, cumulatively, the common stock held in the Company’s investment portfolio shall not exceed $100.0 million market value, and (v) the aggregate market value of investments in common stock, preferred stock or other equity investments cannot exceed 25% of the market value of the Company’s investment portfolio at the time of purchase.

During 2017, net realized gains from the sale of available-for-sale securities were $10.7 million, proceeds from the sale of available-for-sale securities were $174.5 million and proceeds from the maturity of available-for-sale securities were $14.0 million. During 2016, net realized gains from the sale of available-for-sale securities were $0.8 million, proceeds from the sale of available-for-sale securities were $197.5 million and proceeds from the maturity of available-for-sale securities were $185.0 million.

The following table provides the U.S. Treasury securities, corporate debt securities, preferred stock and restricted investments unrealized loss position and related fair values:



	As of December 31, 2017								As of December 31, 2016
	Less Than 12 Months				12 Months or Greater				Less Than 12 Months				12 Months or Greater
	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
Investments:
U.S. Treasury securities	$	9,870	$	22	$	—	$	—	$	—	$	—	$	—	$	—
Corporate debt securities	15,515		691		29,595		1,126		64,516		1,410		6,971		359
Preferred stock	11,263		1,337		1,986		18		—		—		153		111
Restricted investments:
Short-term bond	—		—		4,251		13		4,226		6		—		—
	$	36,648	$	2,050	$	35,832	$	1,157	$	68,742	$	1,416	$	7,124	$	470

As of December 31, 2017, the Company had unrealized losses of $3.2 million related to U.S. Treasury securities, corporate debt securities, preferred stock and restricted investments. The Company had unrealized losses of $1.9 million as of December 31, 2016 related to corporate debt securities, preferred stock and restricted investments. As of December 31, 2017 and 2016, the Company did not intend to sell the investments with a material unrealized loss and it is more likely than not that the Company will not be required to sell any of these securities prior to their anticipated recovery, which could be maturity. During 2017, the Company determined that unrealized losses related to its corporate debt securities and preferred stock were other-than-temporary and recorded an impairment of $2.3 million for credit-related loss in investment income, net in the Company's consolidated statements of operations.

The net carrying value and estimated fair value of investments and restricted investments classified as available-for-sale at December 31, 2017, by contractual maturity are shown in the following table. Actual maturities may differ from contractual maturities because certain borrowers have the right to call or prepay obligations.



	Amortized Cost		Fair Value
Due in one year or less	$	11,892	$	11,852
Due after one year through five years	65,713		64,332
Due after five year through ten years	68		61
	77,673		76,245
Preferred stock	35,955		35,023
Restricted investments	4,482		4,469
	$	118,110	$	115,737