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Investments in Marketable Securities
 6 Months Ended
Sep. 30, 2022
Marketable Securities [Abstract]  
Investments in Marketable Securities

Note 2 – Investments in Marketable Securities

Investments in marketable securities consist of debt securities and equity investments. We classify all of our debt securities as available-for-sale (“AFS”). Except when the fair value option is elected, AFS debt securities are recorded at fair value with unrealized gains or losses included in accumulated other comprehensive income (“AOCI”), net of applicable taxes. Realized gains and losses from sales of AFS debt securities are determined using the specific identification method or first in first out method and are included in Investment and other (loss) income, net in our Consolidated Statements of Income.

We elected the fair value option for certain debt securities held within one of our affiliate investment portfolios for operational ease given the size and composition of this portfolio. All debt securities within this specific portfolio are recorded at fair value with changes in fair value included in Investment and other (loss) income, net in our Consolidated Statements of Income. As of September 30, 2022 and March 31, 2022, we held AFS debt securities for which the fair value option was elected of $617 million and $674 million, respectively. The difference between the aggregate fair value and the aggregate unpaid principal balance of AFS debt securities for which the fair value option was elected was an unrealized loss of $98 million and $41 million as of September 30, 2022 and March 31, 2022, respectively.

All equity investments are recorded at fair value with changes in fair value included in Investment and other (loss) income, net in our Consolidated Statements of Income. Realized gains and losses from sales of equity investments are determined using the first in first out method and are included in Investment and other (loss) income, net in our Consolidated Statements of Income.

Investments in marketable securities consisted of the following:

 

 

 

September 30, 2022

 

 

 

Amortized

 

 

Unrealized

 

 

Unrealized

 

 

Fair

 

 

 

cost

 

 

gains

 

 

losses

 

 

value

 

Available-for-sale debt securities:

 

 

 

 

 

 

 

 

 

 

 

 

U.S. government and agency obligations

 

$

642

 

 

$

-

 

 

$

(78

)

 

$

564

 

Foreign government and agency obligations

 

 

17

 

 

 

-

 

 

 

(5

)

 

 

12

 

Municipal debt securities

 

 

9

 

 

 

1

 

 

 

(1

)

 

 

9

 

Corporate debt securities

 

 

513

 

 

 

1

 

 

 

(85

)

 

 

429

 

Mortgage-backed securities:

 

 

 

 

 

 

 

 

 

 

 

 

U.S. government agency

 

 

51

 

 

 

-

 

 

 

(4

)

 

 

47

 

Non-agency residential

 

 

10

 

 

 

-

 

 

 

(1

)

 

 

9

 

Non-agency commercial

 

 

87

 

 

 

1

 

 

 

(8

)

 

 

80

 

Asset-backed securities

 

 

75

 

 

 

-

 

 

 

(8

)

 

 

67

 

Total available-for-sale debt securities

 

$

1,404

 

 

$

3

 

 

$

(190

)

 

$

1,217

 

Equity investments

 

 

 

 

 

 

 

 

 

 

 

3,171

 

Total investments in marketable securities

 

 

 

 

 

 

 

 

 

 

$

4,388

 

 

Note 2 – Investments in Marketable Securities (Continued)

 

 

 

March 31, 2022

 

 

 

Amortized

 

 

Unrealized

 

 

Unrealized

 

 

Fair

 

 

 

cost

 

 

gains

 

 

losses

 

 

value

 

Available-for-sale debt securities:

 

 

 

 

 

 

 

 

 

 

 

 

U.S. government and agency obligations

 

$

538

 

 

$

-

 

 

$

(29

)

 

$

509

 

Foreign government and agency obligations

 

 

26

 

 

 

-

 

 

 

(3

)

 

 

23

 

Municipal debt securities

 

 

9

 

 

 

1

 

 

 

-

 

 

 

10

 

Corporate debt securities

 

 

598

 

 

 

4

 

 

 

(34

)

 

 

568

 

Mortgage-backed securities:

 

 

 

 

 

 

 

 

 

 

 

 

U.S. government agency

 

 

20

 

 

 

-

 

 

 

-

 

 

 

20

 

Non-agency residential

 

 

11

 

 

 

-

 

 

 

(1

)

 

 

10

 

Non-agency commercial

 

 

88

 

 

 

1

 

 

 

(3

)

 

 

86

 

Asset-backed securities

 

 

82

 

 

 

-

 

 

 

(4

)

 

 

78

 

Total available-for-sale debt securities

 

$

1,372

 

 

$

6

 

 

$

(74

)

 

$

1,304

 

Equity investments

 

 

 

 

 

 

 

 

 

 

 

3,649

 

Total investments in marketable securities

 

 

 

 

 

 

 

 

 

 

$

4,953

 

 

A portion of our equity investments are investments in funds that are privately placed and managed by an open-end investment management company (the “Trust”). If we elect to redeem shares, the Trust will normally redeem all shares for cash, but may, in unusual circumstances, redeem amounts exceeding the lesser of $250 thousand or 1 percent of the Trust’s asset value by payment in kind of securities held by the respective fund during any 90-day period.

We also invest in actively traded open-end mutual funds. Redemptions are subject to normal terms and conditions as described in each fund’s prospectus.

For the three and six months ended September 30, 2022, respectively, we had no non-cash investing activities related to in-kind redemptions. For the three months ended September 30, 2021, we had no non-cash investing activities related to in-kind redemptions. For the six months ended September 30, 2021, non-cash investing activities related to in-kind redemptions and subsequent purchases amounted to $1.1 billion.

Unrealized Losses on Securities

The following table presents the aggregate fair value and unrealized losses on AFS debt securities in a continuous unrealized loss position:

 

 

 

September 30, 2022

 

 

 

Less than 12 months

 

 

12 months or longer

 

 

Total

 

Available-for-sale debt securities:

 

Fair value

 

 

Unrealized losses

 

 

Fair value

 

 

Unrealized losses

 

 

Fair value

 

 

Unrealized losses

 

U.S. government and agency obligations

 

$

429

 

 

$

(51

)

 

$

116

 

 

$

(27

)

 

$

545

 

 

$

(78

)

Foreign government and agency obligations

 

 

5

 

 

 

(2

)

 

 

7

 

 

 

(3

)

 

 

12

 

 

 

(5

)

Municipal debt securities

 

 

2

 

 

 

(1

)

 

 

-

 

 

 

-

 

 

 

2

 

 

 

(1

)

Corporate debt securities

 

 

270

 

 

 

(61

)

 

 

147

 

 

 

(24

)

 

 

417

 

 

 

(85

)

Mortgage-backed securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. Government agency

 

 

45

 

 

 

(4

)

 

 

1

 

 

 

-

 

 

 

46

 

 

 

(4

)

Non-agency residential

 

 

5

 

 

 

-

 

 

 

4

 

 

 

(1

)

 

 

9

 

 

 

(1

)

Non-agency commercial

 

 

55

 

 

 

(6

)

 

 

19

 

 

 

(2

)

 

 

74

 

 

 

(8

)

Asset-backed securities

 

 

39

 

 

 

(3

)

 

 

28

 

 

 

(5

)

 

 

67

 

 

 

(8

)

Total available-for-sale debt securities

 

$

850

 

 

$

(128

)

 

$

322

 

 

$

(62

)

 

$

1,172

 

 

$

(190

)

The aggregate unrealized losses on AFS debt securities in a continuous unrealized loss position for twelve months or longer were not significant as of March 31, 2022.

 

Note 2 – Investments in Marketable Securities (Continued)

 

An allowance for credit losses is established when it is determined that a credit loss has occurred. As of September 30, 2022 and March 31, 2022, management determined that credit losses did not exist for securities in an unrealized loss position. This analysis considered a variety of factors including, but not limited to, performance indicators of the issuer, default rates, industry analyst reports, credit ratings, and other relevant information, which indicated that contractual cash flows are expected to occur.

Gains and Losses on Securities

 

The following table represents gains and losses on our investments in marketable securities presented in our Consolidated Statements of Income:

 

 

 

Three months ended

 

 

Six months ended

 

 

 

September 30,

 

 

September 30,

 

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Available-for-sale debt securities:

 

 

 

 

 

 

 

 

 

 

 

 

Unrealized (losses) gains on securities for which the
   fair value option was elected

 

$

(22

)

 

$

(2

)

 

$

(57

)

 

$

7

 

Realized losses on sales

 

$

(11

)

 

$

-

 

 

$

(25

)

 

$

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Equity investments:

 

 

 

 

 

 

 

 

 

 

 

 

Unrealized (losses) gains

 

$

(188

)

 

$

(26

)

 

$

(495

)

 

$

58

 

Realized (losses) gains on sales

 

$

(5

)

 

$

-

 

 

$

(15

)

 

$

22

 

Contractual Maturities

The amortized cost and fair value by contractual maturities of available-for-sale debt securities are summarized in the following table. Actual maturities may differ from contractual maturities because certain borrowers have the right to call or prepay certain obligations.

 

 

September 30, 2022

 

 

 

Amortized cost

 

 

Fair value

 

Available-for-sale debt securities:

 

 

 

 

 

 

Due within 1 year

 

$

77

 

 

$

76

 

Due after 1 year through 5 years

 

 

351

 

 

 

326

 

Due after 5 years through 10 years

 

 

358

 

 

 

308

 

Due after 10 years

 

 

395

 

 

 

304

 

Mortgage-backed and asset-backed securities 1

 

 

223

 

 

 

203

 

Total

 

$

1,404

 

 

$

1,217

 

1 Mortgage-backed and asset-backed securities are shown separately from other maturity groupings as these securities have multiple maturity dates.