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Consolidation (Tables)

9 Months Ended

Sep. 30, 2019

Organization, Consolidation and Presentation of Financial Statements [Abstract]

The following table presents the balances of the CIP that, after intercompany eliminations, are reflected in the condensed consolidated balance sheets as of September 30, 2019 and December 31, 2018:



	As of
	September 30, 2019									December 31, 2018
				VIEs									VIEs
	VOEs			CLOs			Other			VOEs			CLOs			Other
($ in thousands)
Cash and cash equivalents	$	8,717		$	74,032		$	413		$	1,029		$	51,363		$	559
Investments	79,434			1,908,324			31,165			12,923			1,709,266			27,379
Other assets	2,584			13,684			554			228			30,426			403
Notes payable	—			(1,821,243		)	—			—			(1,620,260		)	—
Securities purchased payable and other liabilities	(2,658		)	(81,018		)	(377		)	(823		)	(69,737		)	(146		)
Noncontrolling interests	(37,307		)	(11,912		)	(1,167		)	(2,348		)	(13,958		)	(36		)
Net interests in CIP	$	50,770		$	81,867		$	30,588		$	11,009		$	87,100		$	28,159

Schedule of Consolidated Collateralized Loan Obligations

September 30, 2019, as shown in the table below:



	As of
	September 30, 2019
($ in thousands)
Subordinated notes	$	80,315
Accrued investment management fees	1,552
Total Beneficial Interests	$	81,867

The following table represents income and expenses of the consolidated CLOs included in the Company’s Condensed Consolidated Statements of Operations for the period indicated:



	Nine Months Ended September 30,
($ in thousands)	2019
Income:
Realized and unrealized gain (loss), net	$	(2,116	)
Interest income	85,346
Total Income	83,230

Expenses:
Other operating expenses	2,960
Interest expense	72,030
Total Expense	74,990
Noncontrolling interests	297
Net Income (loss) attributable to CIP	$	8,537

As summarized in the table below, the application of the measurement alternative as prescribed by ASU 2014-13 results in the consolidated net income summarized above to be equivalent to the Company’s own economic interests in the consolidated CLOs, which are eliminated upon consolidation:



	Nine Months Ended September 30,
($ in thousands)	2019
Distributions received and unrealized gains (losses) on the subordinated notes held by the Company	$	3,345
Investment management fees	5,192
Total Economic Interests	$	8,537

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

The Company’s assets and liabilities measured at fair value on a recurring basis, excluding the assets and liabilities of CIP discussed in Note 17, as of September 30, 2019 and December 31, 2018 by fair value hierarchy level were as follows:

September 30, 2019



	Level 1		Level 2		Level 3		Total
($ in thousands)
Assets
Cash equivalents	$	159,967	$	—	$	—	$	159,967
Investment securities - fair value
Sponsored funds	12,366		—		—		12,366
Equity securities	11,257		—		—		11,257
Debt securities	—		28		—		28
Nonqualified retirement plan assets	8,039		—		—		8,039
Total assets measured at fair value	$	191,629	$	28	$	—	$	191,657

December 31, 2018



	Level 1		Level 2		Level 3		Total
($ in thousands)
Assets
Cash equivalents	$	158,596	$	—	$	—	$	158,596
Investment securities - fair value
Sponsored funds	40,191		—		—		40,191
Equity securities	16,981		—		—		16,981
Debt securities	—		—		2,099		2,099
Investment securities - available for sale	—		—		2,023		2,023
Nonqualified retirement plan assets	6,716		—		—		6,716
Total assets measured at fair value	$	222,484	$	—	$	4,122	$	226,606

The assets and liabilities of CIP measured at fair value on a recurring basis as of September 30, 2019 and December 31, 2018 by fair value hierarchy level were as follows:

As of September 30, 2019



	Level 1		Level 2		Level 3		Total
($ in thousands)
Assets
Cash equivalents	$	74,032	$	—	$	—	$	74,032
Debt investments	21,686		1,934,395		12,610		1,968,691
Equity investments	49,701		39		492		50,232
Derivatives	105		884		—		989
Total Assets Measured at Fair Value	$	145,524	$	1,935,318	$	13,102	$	2,093,944
Liabilities
Notes payable	$	—	$	1,821,243	$	—	$	1,821,243
Derivatives	133		1,071		—		1,204
Short sales	424		—		—		424
Total Liabilities Measured at Fair Value	$	557	$	1,822,314	$	—	$	1,822,871

As of December 31, 2018



	Level 1		Level 2		Level 3		Total
($ in thousands)
Assets
Cash equivalents	$	51,363	$	—	$	—	$	51,363
Debt investments	5,306		1,724,714		6,848		1,736,868
Equity investments	12,700		—		—		12,700
Total Assets Measured at Fair Value	$	69,369	$	1,724,714	$	6,848	$	1,800,931
Liabilities
Notes payable	$	—	$	1,620,260	$	—	$	1,620,260
Short sales	707		—		—		707
Total Liabilities Measured at Fair Value	$	707	$	1,620,260	$	—	$	1,620,967

Reconciliation of Assets of Consolidated Sponsored Investment Products For Level 3 Investments, Unobservable Inputs Used to Determine Fair Value

The following table is a reconciliation of assets for Level 3 investments for which significant unobservable inputs were used to determine fair value.



	Three Months Ended September 30,					Nine Months Ended September 30,
($ in thousands)	2019		2018			2019			2018
Level 3 Investments (1)
Balance at beginning of period	$	—	$	5,744		$	4,122		$	4,439
Purchases (sales), net	—		—			(4,185		)	1,326
Change in realized and unrealized gain (loss), net	—		(701		)	63			(722		)
Balance at end of period	$	—	$	5,043		$	—		$	5,043

(1)

The investments that are categorized as Level 3 were valued utilizing third-party pricing information without adjustment.

The following table is a reconciliation of assets of CIP for Level 3 investments for which significant unobservable inputs were used to determine fair value:



	Nine Months Ended September 30,
($ in thousands)	2019			2018
Level 3 Investments of CIP (1)
Balance at beginning of period	$	6,848		$	34,781
Realized gains (losses), net	(95		)	1,993
Change in unrealized gains (losses), net	294			602
Purchases	2,157			7,122
Sales	(5,414		)	(13,892		)
Transfers to Level 2	(42,232		)	(34,119		)
Transfers from Level 2	51,544			4,517
Balance at end of period	$	13,102		$	1,004

(1)

The investments that are categorized as Level 3 were valued utilizing third-party pricing information without adjustment. All transfers are deemed to occur at the end of period. Transfers between Level 2 and Level 3 were due to trading activities at period end.

- Definition

Tabular disclosure of the significant judgments and assumptions made in determining whether a variable interest (as defined) held by the entity requires the variable interest entity (VIE) (as defined) to be consolidated and (or) disclose information about its involvement with the VIE, individually or in aggregate (as applicable); the nature of restrictions, if any, on the consolidated VIE's assets and on the settlement of its liabilities reported by an entity in its statement of financial position, including the carrying amounts of such assets and liabilities; the nature of, and changes in, the risks associated with involvement in the VIE; how involvement with the VIE affects the entity's financial position, financial performance, and cash flows; the lack of recourse if creditors (or beneficial interest holders) of the consolidated VIE have no recourse to the general credit of the primary beneficiary (if applicable); the terms of arrangements, giving consideration to both explicit arrangements and implicit variable interests, if any, that could require the entity to provide financial support to the VIE, including events or circumstances that could expose the entity to a loss; the methodology used by the entity for determining whether or not it is the primary beneficiary of the variable interest entity; the significant factors considered and judgments made in determining that the power to direct the activities of a VIE that most significantly impact the VIE's economic performance are shared (as defined); the carrying amounts and classification of assets and liabilities of the VIE included in the statement of financial position; the entity's maximum exposure to loss, if any, as a result of its involvement with the VIE, including how the maximum exposure is determined and significant sources of the entity's exposure to the VIE; a comparison of the carrying amounts of the assets and liabilities and the entity's maximum exposure to loss; information about any liquidity arrangements, guarantees, and (or) other commitments by third parties that may affect the fair value or risk of the entity's variable interest in the VIE; whether or not the entity has provided financial support or other support (explicitly or implicitly) to the VIE that it was not previously contractually required to provide or whether the entity intends to provide that support, including the type and amount of the support and the primary reasons for providing the support; and supplemental information the entity determines necessary to provide.

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