5. Investments

Available-For-Sale Investments

Investments classified as available-for-sale securities were as follows:


	March 31, 2020
			Gross Unrealized		Gross Unrealized
	Amortized Cost		Gains		(Losses)		Fair Value
Investments - debt securities:
U.S. Treasury Bills	$	49,944	$	18	$	(14)	$	49,948
Corporate debt securities		178		—		(129)		49
		50,122		18		(143)		49,997
Restricted investments:
Short-term bond		1,165		—		(7)		1,158
		1,165		—		(7)		1,158
	$	51,287	$	18	$	(150)	$	51,155


	December 31, 2019
			Gross Unrealized		Gross Unrealized
	Amortized Cost		Gains		(Losses)		Fair Value
Investments - debt securities:
Corporate debt securities	$	178	$	—	$	(125)	$	53
		178		—		(125)		53
Restricted investments:
Short-term bond		2,239		11		—		2,250
Money market fund		114		—		—		114
		2,353		11		—		2,364
	$	2,531	$	11	$	(125)	$	2,417

During the three months ended March 31, 2020 net realized gains from the sale of available-for-sale securities were less than $0.1 million, proceeds from the sale of available-for-sale securities were $1.2 million and purchases of available-for-sale securities were $49.9 million.

During the three months ended March 31, 2019 net realized losses from the sale of available-for-sale securities were less than $0.1 million, proceeds from the sale of available-for-sale securities were $1.1 million and purchases of available-for sale securities were less than $0.1 million.

The following table provides the available-for-sale investments unrealized loss position and related fair values:


	March 31, 2020
	Less Than 12 Months				12 Months or Greater
			Unrealized				Unrealized
	Fair Value		Losses		Fair Value		Losses
Investments - debt securities:
U.S. Treasury Bills	$	42,949	$	14	$	—	$	—
Corporate debt securities		—		—		49		129
Restricted investments:
Short-term bond		—		—		1,158		7
	$	42,949	$	14	$	1,207	$	136


	December 31, 2019
	Less Than 12 Months				12 Months or Greater
			Unrealized				Unrealized
	Fair Value		Losses		Fair Value		Losses
Investments - debt securities:
Corporate debt securities	$	—	$	—	$	53	$	125

As of March 31, 2020, the Company had unrealized losses of $0.2 million related to U.S. Treasury Bills, corporate debt securities and restricted investments. The Company had unrealized losses of $0.1 million as of December 31, 2019 related to corporate debt securities. As of March 31, 2020, the Company determined unrealized losses related to U.S. Treasury Bills, corporate debt securities and restricted investments were not due to credit impairment and did not record an allowance for credit losses related to available-for-sale debt securities. As of March 31, 2020 and December 31, 2019, 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.

The amortized cost and estimated fair value of investments - debt securities and restricted investments classified as available-for-sale, by contractual maturity are shown in the following table. Actual maturities may differ from contractual maturities since certain borrowers have the right to call or prepay obligations.


	March 31, 2020
	Amortized Cost		Fair Value
Due in one year or less	$	50,122	$	49,997
Restricted investments		1,165		1,158
	$	51,287	$	51,155

Investments - Equity Securities

As of March 31, 2020 and December 31, 2019 investments - equity securities included $2.4 million and $9.7 million, respectively, of preferred stock investments recorded at fair value. During the three months ended March 31, 2020 the Company had an unrealized loss on investments – equity securities of $4.8 million, compared to an unrealized gain on investments – equity securities of $2.0 million during the three months ended March 31, 2019. These amounts were included within investment (loss) income, net on the condensed consolidated statements of operations.

Investment Management Agreement

Mr. Bruce R. Berkowitz is the Chairman of the Company’s Board of Directors (the “Board”). He is the Manager of, and controls entities that own and control, Fairholme Holdings, LLC (“Fairholme”), which wholly owns Fairholme Capital Management, L.L.C. (“FCM”, an investment advisor registered with the SEC). Mr. Berkowitz is the Chief Investment Officer of FCM, which has provided investment advisory services to the Company since April 2013. FCM does not receive any compensation for services as the Company’s investment advisor. As of March 31, 2020, clients of FCM, including Mr. Berkowitz, beneficially owned approximately 44.94% 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.

Pursuant to the terms of an Investment Management Agreement, as amended, with the Company (the “Investment Management Agreement”), FCM 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 Company. 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 approval by a second member of Company’s Board, (iii) 25% of the investment account must be held in cash or 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.