INVESTMENTS

Short-Term Investments

The Company's short-term investments primarily consist of its marketable securities portfolio. The classification of marketable securities as a current asset is based on the intended holding period and realizability of the investments. The investments are carried at fair value and totaled $123 and $220 as of March 31, 2020 and December 31, 2019, respectively. Unrealized (losses) gains on short-term investments for the three months ended March 31, 2020 and 2019 totaled $(97) and $232, respectively.

Realized Gains (Losses) on Investments

Proceeds from sales of equity securities were $1,191 and $0 in the three months ended March 31, 2020 and 2019, respectively. The Company determines gains and losses from sales of equity securities based on specific identification of the securities sold. Gross realized gains and losses from sales of equity securities, which are reported as a component of Realized and unrealized losses (gains) on securities, net in the Company's consolidated statements of operations, were as follows:



	Three Months Ended March 31,
	2020			2019
Gross realized gains	$	—		$	—
Gross realized losses	(16,352		)	—
Realized losses, net	$	(16,352	)	$	—

Long-Term Investments

The following table summarizes the Company's long-term investments as of March 31, 2020 and December 31, 2019.



	Ownership %				Long-Term Investments Balance				(Income) Loss Recorded in the Consolidated Statements of Operations
									Three Months Ended March 31,
	March 31, 2020		December 31, 2019		March 31, 2020		December 31, 2019		2020			2019
Corporate securities ^{(a), (d)}					$	167,806	$	186,777	$	1,553		$	(1,889	)
Collateralized debt securities					787		855		$	—		$	—
Steel Connect, Inc. ("STCN") convertible notes ^{(b), (e)}					8,189		11,839		$	3,650		$	343
STCN preferred stock ^{(c), (e)}					23,033		39,178		$	16,145		$	(4,117	)
Equity method investments: ^(e)
Carried at fair value:
STCN common stock	29.2	%	29.4	%	13,637		26,547		$	11,452		$	(4,539	)
Aviat Networks, Inc. ("Aviat")	12.4	%	12.4	%	5,697		9,417		$	3,720		$	(1,068	)
Other	43.8	%	43.8	%	1,683		1,223		$	(460	)	$	—
Total					$	220,832	$	275,836

(a)

Cost basis totaled $41,076 and $58,495 at March 31, 2020 and December 31, 2019, respectively, and gross unrealized gains totaled $126,730 and $128,282 at March 31, 2020 and December 31, 2019, respectively. Primarily includes the Company's investments in the common stock of $165,230, or 5.0%, and $1,007, or 2.1%, of Aerojet Rocketdyne Holdings, Inc. and Babcock & Wilcox Enterprises, Inc., respectively, as of March 31, 2020 and $180,357, or 5.0%, and $4,989, or 3.0%, respectively, as of December 31, 2019.

(b)

Represents investment in STCN convertible notes. The convertible notes outstanding as of December 31, 2018 matured on March 1, 2019. The Company entered into a new convertible note with STCN ("New Note") on February 28, 2019, which matures on March 1, 2024. The cost basis of the New Note totaled $14,943 as of March 31, 2020 and the gross unrealized loss was $6,754 as of March 31, 2020. The New Note is convertible into shares of STCN's common stock at an initial conversion rate of 421.2655 shares of common stock per $1,000 principal amount of the New Note (which is equivalent to an initial conversion price of approximately $2.37 per share), subject to adjustment upon the occurrence of certain events. The cost basis of the Company's investment was $14,943 as of December 31, 2019 and gross unrealized loss totaled $3,104 as of December 31, 2019. Changes in fair value are recorded in the Company's consolidated statements of operations as the Company elected the fair value option to account for this investment. The New Notes, if converted as of March 31, 2020, when combined with STCN common and preferred shares, also if converted, owned by the Company, would result in the Company having a direct interest of approximately 48.9% of STCN's outstanding shares.

(c)

Represents investment in shares of STCN preferred stock with a cost basis of $35,634. Each share of preferred stock can be converted into shares of STCN's common stock at an initial conversion price equal to $1.96 per share, subject to adjustment upon the occurrence of certain events. Changes in fair value are recorded in the Company's consolidated statements of operations as the Company elected the fair value option to account for this investment.


(d)	(Income) loss from these investments is included in Realized and unrealized losses (gains) on securities, net in the consolidated statements of operations.


(e)	(Income) loss from these investments is included in Loss (income) of associated companies, net of taxes in the consolidated statements of operations.

The amount of unrealized gains (losses) for the three months ended March 31, 2020 and 2019 that relate to equity securities still held as of March 31, 2020 and 2019, respectively, was as follows:



	Three Months Ended March 31,
	2020			2019
Net (losses) gains recognized during the period on equity securities	$	(18,002	)	$	2,109
Less: Net losses recognized during the period on equity securities sold during the period	(16,352		)	—
Unrealized (losses) gains recognized during the period on equity securities still held at the end of the period	$	(1,650	)	$	2,109

Equity Method Investments

The Company's investments in associated companies are eligible to be accounted for under the equity method of accounting; however, the Company has elected the fair value option for most of these investments. Associated companies are included in the Corporate and Other segment. Certain associated companies have a fiscal year end that differs from December 31. Additional information for SPLP's significant investments in associated companies follows:

•

STCN is a supply chain business process management company serving clients in markets such as consumer electronics, communications, computing, medical devices, software and retail. STCN also owns IWCO Direct Holdings, Inc., which delivers data-driven marketing solutions for its customers, including strategy, creative and execution for omnichannel marketing campaigns, along with postal logistics programs for direct mail.


•	Aviat designs, manufactures and sells a range of wireless networking solutions and services to mobile and fixed telephone service providers, private network operators, government agencies, transportation and utility companies, public safety agencies and broadcast system operators across the globe.

The following summary balance sheet amounts are for STCN as of January 31, 2020 and July 31, 2019, respectively, and the statement of operations amounts are for the three months ended January 31, 2020 and 2019, respectively, which are both STCN's nearest corresponding fiscal quarters to the Company's fiscal quarters ended March 31, 2020 and 2019:



(Unaudited)	2020			2019
Summary of balance sheet amounts:
Current assets	$	223,534		$	213,324
Non-current assets	565,361			518,239
Total assets	$	788,895		$	731,563

Current liabilities	$	268,113		$	256,850
Non-current liabilities	431,786			386,835
Total liabilities	699,899			643,685
Contingently redeemable preferred stock	35,181			35,186
Equity	53,815			52,692
Total liabilities and equity	$	788,895		$	731,563

	Three Months Ended March 31,
(Unaudited)	2020			2019
Summary operating results:
Net revenue	$	215,452		$	206,223
Gross profit	$	45,249		$	37,543
Net loss	$	(3,557	)	$	(11,753	)

Other Investments

WebBank has held-to-maturity ("HTM") debt securities which are carried at amortized cost and included in Other non-current assets on the Company's consolidated balance sheets. The amount and contractual maturities of HTM debt securities are noted in the table below. Actual maturities may differ from expected or contractual maturities because borrowers may have the right to call or prepay obligations with or without penalties. The securities are collateralized by unsecured consumer loans.



	March 31, 2020
	Amortized Cost		Gross Unrealized Gains (Losses)			Estimated Fair Value		Carrying Value
Collateralized securities	$	27,025	$	(583	)	$	26,442	$	27,025

Contractual maturities within:
One year to five years								11,079
Five years to ten years								14,092
After ten years								1,854
Total								$	27,025

	December 31, 2019
	Amortized Cost		Gross Unrealized Gains (Losses)			Estimated Fair Value		Carrying Value
Collateralized securities	$	37,896	$	(3	)	$	37,893	$	37,896

Contractual maturities within:
One year to five years								23,339
Five years to ten years								12,373
After ten years								2,184
Total								$	37,896

WebBank regularly evaluates each HTM debt security whose value has declined below amortized cost to assess whether the decline in fair value is other-than-temporary. If there is an other-than-temporary impairment in the fair value of any individual security classified as HTM, WebBank writes down the security to fair value with a corresponding credit loss portion charged to earnings, and the non-credit portion charged to accumulated other comprehensive income or loss ("AOCI").