Fair Value (Tables)

3 Months Ended

Mar. 31, 2015

Fair value of assets and liabilities measured on a recurring basis

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

	Level 1		Level 2		Level 3		Total

March 31, 2015:
Money markets	$	172,415	$	—	$	—	$	172,415
U.S. Treasury Bills		—		499,059		—		499,059
Available-for-sale
Equity securities		6,136		—		—		6,136
Fixed income securities		306		—		—		306
Trading
Equity securities		334,792		24,680		122		359,594
Fixed income securities		183,227		3,086		—		186,313
Long exchange-traded options		6,767		—		—		6,767
Derivatives		360		8,191		—		8,551
Private equity		13,885		—		58,719		72,604
Total assets measured at fair value	$	717,888	$	535,016	$	58,841	$	1,311,745

Securities sold not yet purchased
Short equities – corporate	$	61,302	$	—	$	—	$	61,302
Short exchange-traded options		5,602		—		—		5,602
Derivatives		3,011		6,762		—		9,773
Contingent payment arrangements		—		—		42,223		42,223
Total liabilities measured at fair value	$	69,915	$	6,762	$	42,223	$	118,900

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 March 31,
	2015			2014
	(in thousands)

Balance as of beginning of period	$	58,926		$	52,081
Transfer out		(26	)		—
Purchases		122			501
Sales		—			(1,121	)
Realized (losses) gains, net		(5,194	)		1,121
Unrealized gains (losses), net		5,013			(1,838	)
Balance as of end of period	$	58,841		$	50,744

Information about Level 3 fair value measurements

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

	Fair Value as of March 31, 2015		Valuation Technique	Unobservable Input	Range
	(in thousands)
Private Equity:

Technology, Media and Telecommunications	$	20,044	Market comparable companies	Revenue multiple		2.1 – 4.6
				Marketability discount		30	%

In addition, as of March 31, 2015, there are two investments (with a combined fair value of $0.1 million) in the Healthcare and Clean-tech category that are classified as Level 3. The first investment is valued based on liquidation value and the second investment is a warrant valued using the Black-Scholes option valuation model. 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 March 31,
		2015			2014
	(in thousands)

Balance as of beginning of period		$	42,436		$	38,205
Accretion			443			321
Payments			(656	)		(838	)
Balance as of end of period		$	42,223		$	37,688

- Definition

Tabular disclosure of the fair value measurement of assets using significant unobservable inputs (Level 3), a reconciliation of the beginning and ending balances, separately presenting changes during the period attributable to the following: (1) total gains or losses for the period (realized and unrealized), segregating those gains or losses included in earnings (or changes in net assets) and gains or losses recognized in other comprehensive income (loss), and a description of where those gains or losses included in earnings (or changes in net assets) are reported in the statement of income (or activities); (2) purchases, sales, issues, and settlements (each type disclosed separately); and (3) transfers in and transfers out of Level 3 (for example, transfers due to changes in the observability of significant inputs), by class of asset.

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- Definition

Tabular disclosure of the fair value measurement of liabilities using significant unobservable inputs (Level 3), a reconciliation of the beginning and ending balances, separately presenting changes attributable to the following: (1) total gains or losses for the period (realized and unrealized), segregating those gains or losses included in earnings (or changes in net assets), and gains or losses recognized in other comprehensive income (loss) and a description of where those gains or losses included in earnings (or changes in net assets) are reported in the statement of income (or activities); (2) purchases, sales, issues, and settlements (each type disclosed separately); and (3) transfers in and transfers out of Level 3 (for example, transfers due to changes in the observability of significant inputs) by class of liability.

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