XML 42 R13.htm IDEA: XBRL DOCUMENT v3.3.1.900
Investments
 12 Months Ended
Dec. 31, 2015
Investments, Debt and Equity Securities [Abstract]  
Investments
Investments
Investments consist of:
 
December 31,
 
2015
 
2014
 
(in thousands)
Available-for-sale (primarily seed capital)
$
364

 
$
6,172

Trading:
 
 
 
Long-term incentive compensation-related
59,150

 
74,095

U.S. Treasury Bills
24,942

 
28,982

Seed capital
406,322

 
400,746

Equities
43,584

 
79,720

Exchange-traded options
5,910

 
22,290

Investments in limited partnership hedge funds:
 
 
 
Long-term incentive compensation-related
19,004

 
24,684

Seed capital
20,082

 
33,951

Consolidated private equity fund (10% seed capital)
23,897

 
32,604

Private equity (seed capital)
48,761

 
48,734

Other
17,784

 
11,497

Total investments
$
669,800

 
$
763,475


Total investments related to long-term incentive compensation obligations of $78.2 million and $98.8 million as of December 31, 2015 and 2014, respectively, consist of company-sponsored mutual funds and hedge funds. For long-term incentive compensation awards granted before 2009, we typically made investments in our services that were notionally elected by plan participants and maintained them (and continue to maintain them) in a consolidated rabbi trust or separate custodial account. The rabbi trust and custodial account enable us to hold such investments separate from our other assets for the purpose of settling our obligations to participants. The investments held in the rabbi trust and custodial account remain available to the general creditors of AB.
The underlying investments of hedge funds in which we invest include long and short positions in equity securities, fixed income securities (including various agency and non-agency asset-based securities), currencies, commodities and derivatives (including various swaps and forward contracts). These investments are valued at quoted market prices or, where quoted market prices are not available, are fair valued based on the pricing policies and procedures of the underlying funds.
U.S. Treasury Bills, the majority of which are pledged as collateral with clearing organizations, are held in our investment account. These clearing organizations have the ability by contract or custom to sell or re-pledge this collateral.
We allocate seed capital to our investment teams to help develop new products and services for our clients. The seed capital trading investments are equity and fixed income products, primarily in the form of separately-managed account portfolios, U.S. mutual funds, Luxembourg funds, Japanese investment trust management funds or Delaware business trusts. We also may allocate seed capital to investments in private equity funds, such as our consolidated venture capital fund, which holds technology, media, telecommunications, healthcare and clean-tech investments, and a third-party venture capital fund that invests in communications, consumer, digital media, healthcare and information technology markets.
Trading securities also include long positions in corporate equities, an exchange-traded fund and long exchange-traded options traded through our options desk.
The cost and fair value of available-for-sale and trading investments held as of December 31, 2015 and 2014 were as follows:
 
Amortized
Cost
 
Gross
Unrealized
Gains
 
Gross
Unrealized
Losses
 
Fair
Value
 
(in thousands)
December 31, 2015:
 
 
 
 
 
 
 
Available-for-sale:
 
 
 
 
 
 
 
Equity investments
$
1,778

 
$
9

 
$
(1,606
)
 
$
181

Fixed income investments
197

 
3

 
(17
)
 
183

 
$
1,975

 
$
12

 
$
(1,623
)
 
$
364

Trading:
 

 
 

 
 

 
 

Equity investments
$
357,844

 
$
2,230

 
$
(27,896
)
 
$
332,178

Fixed income investments
215,122

 
391

 
(7,783
)
 
207,730

 
$
572,966

 
$
2,621

 
$
(35,679
)
 
$
539,908

 
 
 
 
 
 
 
 
December 31, 2014:
 

 
 

 
 

 
 

Available-for-sale:
 

 
 

 
 

 
 

Equity investments
$
4,339

 
$
1,625

 
$
(13
)
 
$
5,951

Fixed income investments
202

 
19

 
—

 
221

 
$
4,541

 
$
1,644

 
$
(13
)
 
$
6,172

Trading:
 

 
 

 
 

 
 

Equity investments
$
411,898

 
$
18,370

 
$
(20,476
)
 
$
409,792

Fixed income investments
199,645

 
2,646

 
(6,250
)
 
196,041

 
$
611,543

 
$
21,016

 
$
(26,726
)
 
$
605,833


Proceeds from sales of available-for-sale investments were approximately $4.2 million, $0.1 million and $10.9 million in 2015, 2014 and 2013, respectively. Realized gains from our sales of available-for-sale investments were $1.3 million in 2015, zero in 2014 and $4.7 million in 2013. Realized losses from our sales of available-for-sale investments were zero in 2015, 2014 and 2013, respectively. We assess valuation declines to determine the extent to which such declines are fundamental to the underlying investment or attributable to temporary market-related factors. Based on our assessment as of December 31, 2015, we do not believe the declines are other than temporary.

The portion of trading gains (losses) related to trading securities held as of December 31, 2015 and 2014 were as follows:
 
December 31,
 
2015
 
2014
 
(in thousands)
Net (losses) gains recognized during the period
$
(27,246
)
 
$
12,461

Less: net gains recognized during the period on trading securities sold during the period
5,812

 
18,171

Unrealized (losses) recognized during the period on trading securities held
$
(33,058
)
 
$
(5,710
)