Fair Value Measurements

12 Months Ended

Dec. 31, 2019

Fair Value Disclosures [Abstract]

Fair Value Measurements

6. FAIR VALUE MEASUREMENTS

The Company established a fair value hierarchy which prioritizes and ranks the level of market price observability used in measuring investments at fair value. Financial instruments measured and reported at fair value are classified and disclosed in one of the following categories (from highest to lowest) based on inputs:

Level 1—Quoted prices (unadjusted) are available in active markets for identical instruments that the Company has the ability to access as of the reporting date. The Company, to the extent that it holds such instruments, does not adjust the quoted price for these instruments, even in situations in which the Company holds a large position and a sale could reasonably affect the quoted price.

Level 2—Pricing inputs are observable for the instruments, either directly or indirectly, as of the reporting date, but are not the same as those used in level 1. Fair value is determined through the use of models or other valuation methodologies.

Level 3—Pricing inputs are unobservable for the instruments and include situations in which there is little, if any, market activity for the investments. The inputs into the determination of fair value require significant judgment or estimation by the Company’s management.

The estimated fair values of government securities money markets, U.S. Treasury instruments, and government debt securities as of December 31, 2019 and 2018 are based on quoted prices for recent trading activity in identical or similar instruments. The Company generally invests in U.S. Treasury instruments with maturities of less than twelve months. See Note 2 for further information on the Company’s fair value hierarchy.

The Company’s methodology for reclassifications impacting the fair value hierarchy is that transfers in/out of the respective category are reported at fair value as of the beginning of the period in which the reclassification occurred.

At the end of the reporting period, the Company reviews U.S. treasury instruments held to determine whether the securities are of the most recent issuance of that security with the same maturity (referred to as “on-the-run”, which is the most liquid version of the maturity band). If a U.S. treasury instrument held at the end of the reporting period was from the most recent issuance it is classified as level 1, otherwise it is referred to as “off-the-run” and is classified as level 2.

The following table summarizes the levels of the fair value hierarchy into which the Company’s financial assets fall as of December 31, 2019:

	Total		Level 1			Level 2			Level 3
Financial assets:
Included in cash and cash equivalents
U.S. treasury instruments	$	62,949	$	—		$		62,949	$	—
Government securities money market		33,065		—				33,065		—
Investments
U.S. treasury instruments		173,960		—				173,960		—
Common stock		327			327		—				—
Total financial assets	$	270,301	$		327	$		269,974	$		—

For the twelve months ended December 31, 2019, unrealized gains of $177 were recognized in other income and expenses on the consolidated statement of operations related to common stock held at the reporting date. The cost basis of the financial assets recorded at fair value included in investments on the consolidated statement of financial condition was $173,806 as of December 31, 2019.

The following table summarizes the levels of the fair value hierarchy into which the Company’s financial assets fall as of December 31, 2018:

	Total		Level 1			Level 2			Level 3
Financial assets:
Included in cash and cash equivalents
U.S. treasury instruments	$	110,529	$		100,500	$		10,029	$	—
Government securities money market		90,866		—				90,866		—
Investments
Government debt securities (1)		1,105			—			1,105		—
U.S. treasury instruments		79,395			7,977			71,418			—
Common stock		150			150		—
Total financial assets	$	282,045	$		108,627	$		173,418	$		—

(1) Consists of municipal bonds and agency bonds.

For the twelve months ended December 31, 2018, unrealized losses of $113 were recognized in other income and expenses on the consolidated statement of operations related to common stock held at the reporting date. The cost basis of the financial assets recorded at fair value included in investments on the consolidated statement of financial condition was $80,717 as of December 31, 2018.