Investments

9 Months Ended

Sep. 30, 2023

Investments, All Other Investments [Abstract]

Investments

5.INVESTMENTS

Investments Measured at Fair Value

Fair value investments are presented within investments on the Company’s condensed consolidated statements of financial condition. The Company established a fair value hierarchy which prioritizes and ranks the level of market price observability used in measuring investments at fair value. See Note 2 for further information on the Company's fair value hierarchy.

The estimated fair value of sovereign debt securities, money market funds, certificates of deposits, common stock, and warrants are based on quoted prices for recent trading activity in identical or similar instruments. The Company primarily invests in U.S. and U.K. sovereign debt securities with maturities of less than twelve months and we consider these securities to be risk free. Therefore, we do not reserve for expected credit losses on these investments. Common stock and warrants held of publicly-traded companies are categorized as Level 1 in the fair value hierarchy.

Fair Value of Financial Assets

The fair value of the Company's financial assets as of September 30, 2023, have been categorized based upon the fair value hierarchy as follows:

	Total		Level 1		Level 2		Level 3
Financial assets:
Cash and cash equivalents
Sovereign debt securities	$	60,040	$	—	$	60,040	$	—
Money market funds		53,834		—		53,834		—
Certificates of Deposit		10,604		—		10,604		—
Total financial assets included in cash and cash equivalents		124,478		—		124,478		—
Investments
Sovereign debt securities		150,309		—		150,309		—
Total financial assets included in investments		150,309		—		150,309		—
Total financial assets	$	274,787	$	—	$	274,787	$	—

During the nine months ended September 30, 2023, the Company liquidated its equity investments measured at fair value. Therefore, there were no unrealized gains or losses on equity securities held at the reporting date for the three and nine months ended September 30, 2023. Unrealized losses of $1,055 and $9,991 were recognized on equity investments measured at fair value and held at the reporting date for the three and nine months ended September 30, 2022. For sovereign debt securities measured at fair value and held at the reporting date, unrealized gains of $1,108 and $132 were recognized for the three months ended September 30, 2023 and 2022, respectively, and, for the nine months ended September 30, 2023 and 2022, unrealized gains of $1,136 and unrealized losses of $234 were recognized, respectively. All gains and losses were recognized in other income and expenses on the condensed consolidated statement of operations. The cost basis of the investments recorded at fair value shown in the preceding table and included in investments on the condensed consolidated statement of financial condition was $149,173 as of September 30, 2023.

The fair value of the Company's financial assets as of December 31, 2022 have been categorized based upon the fair value hierarchy as follows:

	Total		Level 1		Level 2		Level 3
Financial assets:
Cash and cash equivalents
Sovereign debt securities	$	55,938	$	—	$	55,938	$	—
Money market funds		41,210		—		41,210		—
Total financial assets included in cash and cash equivalents		97,148		—		97,148		—
Investments
Sovereign debt securities		205,779		—		205,779		—
Common stock		12,149		12,149		—		—
Warrants		153		153		—		—
Total financial assets included in investments		218,081		12,302		205,779		—
Total financial assets	$	315,229	$	12,302	$	302,927	$	—

The cost basis of the financial assets recorded at fair value included in investments on the condensed consolidated statement of financial condition was $234,546 as of December 31, 2022.

Investments Held at Cost

In 2020 and 2021, the Company made investments in the sponsors (collectively referred to herein as "Atlas Crest Sponsors") of several Atlas Crest Investment Corp. entities (each an "Atlas Crest Entity" and collectively referred to as "Atlas Crest Entities"), each a special purpose acquisition company ("SPAC"). The Company's Chief Executive Officer, Kenneth Moelis, was the managing member of the Atlas Crest Sponsors and served as Non-Executive Chairman of the Atlas Crest Entities. The Company does not direct the activities of the Atlas Crest Sponsors or the related SPACs.

Investments in the Atlas Crest Sponsors that do not have readily determinable fair values were measured at cost less impairment and were included in investments on the condensed consolidated statements of financial condition. During 2022, the remaining Atlas Crest Entities were wound up and the remainder of the Company's investments were liquidated.

Equity Method Investments

Equity-method investments are presented within investments on the Company’s condensed consolidated statements of financial condition. As of September 30, 2023 and December 31, 2022, the carrying value of the Company's equity method investment in MA Financial (formerly known as Moelis Australia Limited) was $47,346 and $47,164, respectively. The Company's share of earnings on this investment is recorded in other income and expenses on the condensed consolidated statements of operation.

During the nine months ended September 30, 2023 and 2022, MA Financial declared dividends, of which the Company received $3,092 and $2,936, respectively. The Company accounted for the dividends as returns on investment and reduced the carrying value of the investment in MA Financial by the amount of dividends received.

From time to time, MA Financial may issue shares in connection with a transaction or employee compensation which reduces the Company's ownership interest in MA Financial and can result in dilution gains or losses. Such gains or losses are recorded in other income and expenses on the condensed consolidated statements of operation.