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Consolidation (Tables)

3 Months Ended

Mar. 31, 2019

Organization, Consolidation and Presentation of Financial Statements [Abstract]

The following table presents the balances of the consolidated investment products that, after intercompany eliminations, are reflected in the condensed consolidated balance sheets as of March 31, 2019 and December 31, 2018:



	As of
	March 31, 2019									December 31, 2018
				VIEs									VIEs
	VOEs			CLOs			Other			VOEs			CLOs			Other
($ in thousands)
Cash and cash equivalents	$	592		$	54,805		$	326		$	1,029		$	51,363		$	559
Investments	15,495			1,723,411			29,036			12,923			1,709,266			27,379
Other assets	66			30,444			643			228			30,426			403
Notes payable	—			(1,640,360		)	—			—			(1,620,260		)	—
Securities purchased payable and other liabilities	(482		)	(74,070		)	(390		)	(823		)	(69,737		)	(146		)
Noncontrolling interests	(4,645		)	(12,948		)	—			(2,348		)	(13,958		)	(36		)
The Company’s net interests in consolidated investment products	$	11,026		$	81,282		$	29,615		$	11,009		$	87,100		$	28,159

Schedule of Consolidated Collateralized Loan Obligations

March 31, 2019, as shown in the table below:



	As of
	March 31, 2019
($ in thousands)
Subordinated notes	$	80,206
Accrued investment management fees	1,076
Total Beneficial Interests	$	81,282

The following table represents income and expenses of the consolidated CLOs included in the Company’s condensed consolidated statements of operations for the period indicated:



	Three Months Ended March 31,
($ in thousands)	2019
Income:
Realized and unrealized gain (loss), net	$	(5,719	)
Interest income	26,882
Total Income	21,163

Expenses:
Other operating expenses	305
Interest expense	19,701
Total Expense	20,006
Noncontrolling interest	(453		)
Net Income (loss) attributable to CIPs	$	704

As summarized in the table below, the application of the measurement alternative as prescribed by ASU 2014-13 results in the consolidated net income summarized above to be equivalent to the Company’s own economic interests in the consolidated CLOs, which are eliminated upon consolidation:



	Three Months Ended March 31,
($ in thousands)	2019
Distributions received and unrealized gains (losses) on the subordinated notes held by the Company	$	(1,036	)
Investment management fees	1,740
Total Economic Interests	$	704

Schedule of Assets and Liabilities Measured at Fair Value on Recurring Basis

The Company’s assets and liabilities measured at fair value on a recurring basis, excluding the assets and liabilities of consolidated investment products discussed in Note 17, as of March 31, 2019 and December 31, 2018 by fair value hierarchy level were as follows:

March 31, 2019



	Level 1		Level 2		Level 3		Total
($ in thousands)
Assets
Cash equivalents	$	110,304	$	—	$	—	$	110,304
Investment securities - fair value
Sponsored funds	33,075		—		—		33,075
Equity securities	18,827		—		—		18,827
Debt securities	—		43		4,417		4,460
Nonqualified retirement plan assets	7,519		—		—		7,519
Total assets measured at fair value	$	169,725	$	43	$	4,417	$	174,185

December 31, 2018



	Level 1		Level 2		Level 3		Total
($ in thousands)
Assets
Cash equivalents	$	158,596	$	—	$	—	$	158,596
Investment securities - fair value
Sponsored funds	40,191		—		—		40,191
Equity securities	16,981		—		—		16,981
Debt securities	—		—		2,099		2,099
Investment securities - available for sale	—		—		2,023		2,023
Nonqualified retirement plan assets	6,716		—		—		6,716
Total assets measured at fair value	$	222,484	$	—	$	4,122	$	226,606

The assets and liabilities of the consolidated investment products measured at fair value on a recurring basis as of March 31, 2019 and December 31, 2018 by fair value hierarchy level were as follows:

As of March 31, 2019



	Level 1		Level 2		Level 3		Total
($ in thousands)
Assets
Cash equivalents	$	54,805	$	—	$	—	$	54,805
Debt investments	5,681		1,715,732		31,759		1,753,172
Equity investments	14,770		—		—		14,770
Total Assets Measured at Fair Value	$	75,256	$	1,715,732	$	31,759	$	1,822,747
Liabilities
Notes payable	$	—	$	1,640,360	$	—	$	1,640,360
Short sales	297		—		—		297
Total Liabilities Measured at Fair Value	$	297	$	1,640,360	$	—	$	1,640,657

As of December 31, 2018



	Level 1		Level 2		Level 3		Total
($ in thousands)
Assets
Cash equivalents	$	51,363	$	—	$	—	$	51,363
Debt investments	5,306		1,724,714		6,848		1,736,868
Equity investments	12,700		—		—		12,700
Total Assets Measured at Fair Value	$	69,369	$	1,724,714	$	6,848	$	1,800,931
Liabilities
Notes payable	$	—	$	1,620,260	$	—	$	1,620,260
Short sales	707		—		—		707
Total Liabilities Measured at Fair Value	$	707	$	1,620,260	$	—	$	1,620,967

Reconciliation of Assets of Consolidated Sponsored Investment Products For Level 3 Investments, Unobservable Inputs Used to Determine Fair Value

The following table is a reconciliation of assets for Level 3 investments for which significant unobservable inputs were used to determine fair value.



	Three Months Ended March 31,
($ in thousands)	2019		2018
Level 3 Investments (a)
Balance at beginning of period	$	4,122	$	4,439
Purchases (sales), net	232		1,326
Change in realized and unrealized gain (loss), net	63		(233		)
Balance at end of period	$	4,417	$	5,532


^(a)	The investments that are categorized as Level 3 were valued utilizing third-party pricing information without adjustment.

The following table is a reconciliation of assets of consolidated investment products for Level 3 investments for which significant unobservable inputs were used to determine fair value:



	Three Months Ended March 31,
($ in thousands)	2019			2018
Level 3 Investments of CIPs ^(a)
Balance at beginning of period	$	6,848		$	34,781
Realized gains (losses), net	6			43
Change in unrealized gains (losses), net	(45		)	2,375
Purchases	1,595			7,122
Amortization	2			19
Sales	(429		)	(11,934		)
Transfers to Level 2	(7,199		)	(29,658		)
Transfers from Level 2	30,981			—
Balance at end of period	$	31,759		$	2,748


(a)	The investments that are categorized as Level 3 were valued utilizing third-party pricing information without adjustment. All transfers are deemed to occur at the end of period. Transfers between Level 2 and Level 3 were due to trading activities at period end.

- Definition

Tabular disclosure of the significant judgments and assumptions made in determining whether a variable interest (as defined) held by the entity requires the variable interest entity (VIE) (as defined) to be consolidated and (or) disclose information about its involvement with the VIE, individually or in aggregate (as applicable); the nature of restrictions, if any, on the consolidated VIE's assets and on the settlement of its liabilities reported by an entity in its statement of financial position, including the carrying amounts of such assets and liabilities; the nature of, and changes in, the risks associated with involvement in the VIE; how involvement with the VIE affects the entity's financial position, financial performance, and cash flows; the lack of recourse if creditors (or beneficial interest holders) of the consolidated VIE have no recourse to the general credit of the primary beneficiary (if applicable); the terms of arrangements, giving consideration to both explicit arrangements and implicit variable interests, if any, that could require the entity to provide financial support to the VIE, including events or circumstances that could expose the entity to a loss; the methodology used by the entity for determining whether or not it is the primary beneficiary of the variable interest entity; the significant factors considered and judgments made in determining that the power to direct the activities of a VIE that most significantly impact the VIE's economic performance are shared (as defined); the carrying amounts and classification of assets and liabilities of the VIE included in the statement of financial position; the entity's maximum exposure to loss, if any, as a result of its involvement with the VIE, including how the maximum exposure is determined and significant sources of the entity's exposure to the VIE; a comparison of the carrying amounts of the assets and liabilities and the entity's maximum exposure to loss; information about any liquidity arrangements, guarantees, and (or) other commitments by third parties that may affect the fair value or risk of the entity's variable interest in the VIE; whether or not the entity has provided financial support or other support (explicitly or implicitly) to the VIE that it was not previously contractually required to provide or whether the entity intends to provide that support, including the type and amount of the support and the primary reasons for providing the support; and supplemental information the entity determines necessary to provide.

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