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Consolidation (Tables)

9 Months Ended

Sep. 30, 2021

Organization, Consolidation and Presentation of Financial Statements [Abstract]

The following table presents the balances of CIP that, after intercompany eliminations, were reflected on the Condensed Consolidated Balance Sheets as of September 30, 2021 and December 31, 2020:


	As of
	September 30, 2021						December 31, 2020
	VOEs		VIEs				VOEs		VIEs
(in thousands)			CLOs		Other				CLOs		Other
Cash and cash equivalents	$	785	$	153,825	$	1,638	$	9,837	$	82,295	$	1,206
Investments	24,902		2,085,625		62,746		57,256		2,217,055		58,966
Other assets	4		26,006		819		1,989		10,484		957
Notes payable	—		(2,083,827)		—		—		(2,190,445)		—
Securities purchased payable and other liabilities	(648)		(103,035)		(1,007)		(2,566)		(42,940)		(323)
Noncontrolling interests	(6,487)		(8,813)		(6,321)		(24,707)		(9,799)		(3,354)
Net interests in CIP	$	18,556	$	69,781	$	57,875	$	41,809	$	66,650	$	57,452

Schedule of Consolidated Collateralized Loan Obligations

Although these beneficial interests are eliminated upon consolidation, the application of the measurement alternative prescribed by ASU 2014-13, Consolidation (Topic 810) ("ASU 2014-13"), results in the net assets of the consolidated CLOs shown above to be equivalent to the beneficial interests retained by the Company at September 30, 2021, as shown in the table below:





(in thousands)
Subordinated notes	$	68,564
Accrued investment management fees	1,217
Total beneficial interests	$	69,781

The following table represents income and expenses of the consolidated CLOs included on the Company’s Condensed Consolidated Statements of Operations for the period indicated:


(in thousands)	Nine Months Ended September 30, 2021
Income:
Realized and unrealized gain (loss), net	$	(6,382)
Interest income	66,389

Total income	60,007

Expenses:
Other operating expenses	1,299
Interest expense	42,342
Total expense	43,641
Noncontrolling interests	(719)
Net Income (loss) attributable to CIP	$	15,647

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:


(in thousands)	Nine Months Ended September 30, 2021
Distributions received and unrealized gains (losses) on the subordinated notes	$	8,720
Investment management fees	6,927

Total economic interests	$	15,647

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 CIP discussed in Note 16, as of September 30, 2021 and December 31, 2020 by fair value hierarchy level were as follows:

September 30, 2021


(in thousands)	Level 1		Level 2		Level 3		Total
Assets
Cash equivalents	$	366,937	$	—	$	—	$	366,937
Investment securities - fair value
Sponsored funds	64,691		—		—		64,691
Equity securities	13,446		—		—		13,446
Debt securities	—		6		—		6

Nonqualified retirement plan assets	12,378		—		—		12,378
Total assets measured at fair value	$	457,452	$	6	$	—	$	457,458

December 31, 2020


(in thousands)	Level 1		Level 2		Level 3		Total
Assets
Cash equivalents	$	207,101	$	—	$	—	$	207,101
Investment securities - fair value
Sponsored funds	25,909		—		—		25,909
Equity securities	14,078		—		—		14,078
Debt securities	—		3		—		3

Nonqualified retirement plan assets	10,612		—		—		10,612
Total assets measured at fair value	$	257,700	$	3	$	—	$	257,703

The assets and liabilities of CIP measured at fair value on a recurring basis as of September 30, 2021 and December 31, 2020 by fair value hierarchy level were as follows:

As of September 30, 2021


(in thousands)	Level 1		Level 2		Level 3		Total
Assets
Cash equivalents	$	153,825	$	—	$	—	$	153,825
Debt investments	293		2,094,852		45,855		2,141,000
Equity investments	27,787		3,754		732		32,273

Total assets measured at fair value	$	181,905	$	2,098,606	$	46,587	$	2,327,098
Liabilities
Notes payable	$	—	$	2,083,827	$	—	$	2,083,827

Short sales	560		—		—		560
Total liabilities measured at fair value	$	560	$	2,083,827	$	—	$	2,084,387

As of December 31, 2020


(in thousands)	Level 1		Level 2		Level 3		Total
Assets
Cash equivalents	$	82,295	$	—	$	—	$	82,295
Debt investments	16,859		2,219,199		53,368		2,289,426
Equity investments	38,468		3,856		814		43,138
Derivatives	858		1,227		—		2,085
Total assets measured at fair value	$	138,480	$	2,224,282	$	54,182	$	2,416,944
Liabilities
Notes payable	$	—	$	2,190,445	$	—	$	2,190,445
Derivatives	714		757		—		1,471
Short sales	520		—		—		520
Total liabilities measured at fair value	$	1,234	$	2,191,202	$	—	$	2,192,436

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 of CIP for Level 3 investments for which significant unobservable inputs were used to determine fair value:


	Nine Months Ended September 30,
(in thousands)	2021		2020
Balance at beginning of period	$	54,182	$	40,422
Realized gains (losses), net	(209)		5
Change in unrealized gains (losses), net	1,580		(335)

Purchases	8,267		1,137

Amortization	78		9
Sales	(31,501)		(1,256)
Transfers to Level 2	(54,445)		(50,463)
Transfers from Level 2	68,635		25,643
Balance at end of period (1)	$	46,587	$	15,162

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