Fair Value (Tables)

6 Months Ended

Jun. 30, 2015

Fair value of assets and liabilities measured on a recurring basis

Valuation of our financial instruments by pricing observability levels as of June 30, 2015 and December 31, 2014 was as follows (in thousands):



	Level 1		Level 2		Level 3		Total
June 30, 2015:
Money markets	$	254,133	$	—	$	—	$	254,133
U.S. Treasury Bills	—		459,007		—		459,007
Available-for-sale
Equity securities	5,527		—		—		5,527
Fixed income securities	298		—		—		298
Trading
Equity securities	331,417		22,703		124		354,244
Fixed income securities	178,203		2,721		—		180,924
Long exchange-traded options	7,935		—		—		7,935
Derivatives	2,347		12,222		—		14,569
Private equity	15,177		—		50,730		65,907
Total assets measured at fair value	$	795,037	$	496,653	$	50,854	$	1,342,544

Securities sold not yet purchased
Short equities – corporate	$	20,642	$	—	$	—	$	20,642
Short exchange-traded options	1,907		—		—		1,907
Derivatives	168		10,447		—		10,615
Contingent payment arrangements	—		—		42,032		42,032
Total liabilities measured at fair value	$	22,717	$	10,447	$	42,032	$	75,196

December 31, 2014:
Money markets	$	89,566	$	—	$	—	$	89,566
U.S. Treasury Bills	—		444,152		—		444,152
Available-for-sale
Equity securities	5,951		—		—		5,951
Fixed income securities	221		—		—		221
Trading
Equity securities	387,495		7		—		387,502
Fixed income securities	164,317		2,742		—		167,059
Long exchange-traded options	22,290		—		—		22,290
Derivatives	571		6,216		—		6,787
Private equity	12,162		—		58,926		71,088
Total assets measured at fair value	$	682,573	$	453,117	$	58,926	$	1,194,616

Securities sold not yet purchased
Short equities – corporate	$	81,784	$	—	$	—	$	81,784
Short exchange-traded options	7,118		—		—		7,118
Derivatives	2,438		6,954		—		9,392
Contingent payment arrangements	—		—		42,436		42,436
Total liabilities measured at fair value	$	91,340	$	6,954	$	42,436	$	140,730

Fair value measurement Level 3 reconciliation

The change in carrying value associated with private equity and trading equity securities Level 3 financial instruments carried at fair value is as follows:



	Three Months Ended June 30,						Six Months Ended June 30,
	2015			2014			2015			2014
	(in thousands)

Balance as of beginning of period	$	58,841		$	50,744		$	58,926		$	52,081
Transfer out	—			—			(26		)	—
Purchases	76			2,320			198			2,821
Sales	(18,042		)	—			(18,042		)	(1,121		)
Realized gains (losses), net	10,114			(400		)	4,920			721
Unrealized (losses) gains, net	(135		)	342			4,878			(1,496		)
Balance as of end of period	$	50,854		$	53,006		$	50,854		$	53,006

Information about Level 3 fair value measurements

Quantitative information about private equity Level 3 fair value measurements as of June 30, 2015 and December 31, 2014 is as follows:



	Fair value as of June 30, 2015		Valuation Technique	Unobservable Input	Range
	(in thousands)
Private Equity:
Technology, Media and Telecommunications	$	12,447	Market comparable companies	Revenue multiple	1.8 - 2.7
			Pending acquisition	Marketability discount	30	%

Also, we have an investment in a private equity fund focused exclusively on the energy sector (fair value of $7.5 million) that is classified as Level 3. This investment’s valuation is based on a market approach, considering recent transactions of the fund and the industry.



	Fair value as of December 31, 2014		Valuation Technique	Unobservable Input	Range
	(in thousands)
Private Equity:
Technology, Media and Telecommunications	$	20,112	Market comparable companies	Revenue multiple	2.0 - 3.5
				Discount rate	18	%
				Discount years	2.0 years

Change in carrying value associated with contingent payment arrangements Level 3 financial instruments

The change in carrying value associated with contingent payment arrangements Level 3 financial instruments carried at fair value is as follows:



	Three Months Ended June 30,					Six Months Ended June 30,
	2015			2014		2015			2014
	(in thousands)

Balance as of beginning of period	$	42,223		$	37,688	$	42,436		$	38,205
Addition	—			8,915		—			8,915
Accretion	442			321		885			642
Payments	(633		)	—		(1,289		)	(838		)
Balance as of end of period	$	42,032		$	46,924	$	42,032		$	46,924