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Consolidation | 3 Months Ended
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Mar. 31, 2016
Organization, Consolidation and Presentation of Financial Statements [Abstract] |
Consolidation | Consolidation Consolidated Sponsored Investment Products As of March 31, 2016 and December 31, 2015, the Company consolidated 20 and 12 sponsored investment products, respectively. During the three months ended March 31, 2016, the Company consolidated ten additional sponsored investment products and deconsolidated two sponsored investment products because it no longer held a majority voting interest. Consolidated sponsored investment products that are voting interest entities ("VOEs") are fund products in which the Company has a controlling financial interest. Consolidated sponsored investment products are typically consolidated when the Company makes an initial investment in a newly launched fund as the Company typically owns a majority of the voting interest and are deconsolidated when the Company redeems its investment or its voting interests decrease to a minority percentage. The consolidated sponsored investment product that is a variable interest entity ("VIE") is a global fund product that is considered a VIE for which the Company is the primary beneficiary. The Company determined that it is the primary beneficiary of the VIE as the Company has the power to direct the activities that most significantly impact the economic performance of the entity and has the obligation to absorb losses, or the rights to receive benefits from, the VIE that could potentially be significant to the VIE. As of March 31, 2016, the Company consolidated one sponsored investment product that was a VIE. The following table presents the balances of the consolidated sponsored investment products that were reflected in the Condensed Consolidated Balance Sheets as of March 31, 2016 and December 31, 2015:
| As of
| March 31, 2016 |  | December 31, 2015
| VOEs |  | VIE |  | VOEs |  | VIE
($ in thousands) |  |  |  |  |  |  |
Total cash and cash equivalents | $ | 8,759 |  |  | $ | 289 |  |  | $ | 11,408 |  |  | $ | 458 |
Total investments | 165,836 |  |  | 33,794 |  |  | 291,247 |  |  | 32,088 |
All other assets | 59,896 |  |  | 4,033 |  |  | 8,281 |  |  | 268 |
Total liabilities | (17,262 | ) |  | (2,949 | ) |  | (14,948 | ) |  | (439 | )
Redeemable noncontrolling interests | (25,214 | ) |  | (15,211 | ) |  | (61,236 | ) |  | (12,628 | )
The Company’s net interests in consolidated sponsored investment products | $ | 192,015 |  |  | $ | 19,956 |  |  | $ | 234,752 |  |  | $ | 19,747 |
Fair Value Measurements The assets and liabilities of the consolidated sponsored investment products measured at fair value on a recurring basis as of March 31, 2016 and December 31, 2015 by fair value hierarchy level were as follows: As of March 31, 2016
| Level 1 |  | Level 2 |  | Level 3 |  | Total
($ in thousands) |  |  |  |  |  |  |
Assets |  |  |  |  |  |  |
Debt securities | $ | — |  |  | $ | 124,341 |  |  | $ | 677 |  |  | $ | 125,018 |
Equity securities | 74,269 |  |  | 24 |  |  | 319 |  |  | 74,612 |
Derivatives | 33 |  |  | 31 |  |  | — |  |  | 64 |
Total Assets Measured at Fair Value | $ | 74,302 |  |  | $ | 124,396 |  |  | $ | 996 |  |  | $ | 199,694 |
Liabilities |  |  |  |  |  |  |
Derivatives | $ | — |  |  | $ | 81 |  |  | $ | — |  |  | $ | 81 |
Short sales | 1,495 |  |  | — |  |  | — |  |  | 1,495 |
Total Liabilities Measured at Fair Value | $ | 1,495 |  |  | $ | 81 |  |  | $ | — |  |  | $ | 1,576 |
As of December 31, 2015
| Level 1 |  | Level 2 |  | Level 3 |  | Total
($ in thousands) |  |  |  |  |  |  |
Assets |  |  |  |  |  |  |
Debt securities | $ | — |  |  | $ | 151,156 |  |  | $ | 1,397 |  |  | $ | 152,553 |
Equity securities | 162,986 |  |  | 7,796 |  |  | — |  |  | 170,782 |
Derivatives | 33 |  |  | 738 |  |  | — |  |  | 771 |
Total Assets Measured at Fair Value | $ | 163,019 |  |  | $ | 159,690 |  |  | $ | 1,397 |  |  | $ | 324,106 |
Liabilities |  |  |  |  |  |  |
Derivatives | $ | 128 |  |  | $ | 844 |  |  | $ | — |  |  | $ | 972 |
Short sales | 5,334 |  |  | 75 |  |  | — |  |  | 5,409 |
Total Liabilities Measured at Fair Value | $ | 5,462 |  |  | $ | 919 |  |  | $ | — |  |  | $ | 6,381 |
The following is a discussion of the valuation methodologies used for the assets and liabilities of the Company’s consolidated sponsored investment products measured at fair value. Investments of consolidated sponsored investment products represent the underlying debt, equity and other securities held in sponsored products which are consolidated by the Company. Equity securities are valued at the official closing price on the exchange on which the securities are traded and are categorized within Level 1. Level 2 investments include most debt securities, which are valued based on quotations received from independent pricing services or from dealers who make markets in such securities and certain equity securities, including non-US securities, for which closing prices are not readily available or are deemed to not reflect readily available market prices and are valued using an independent pricing service. Pricing services do not provide pricing for all securities, and therefore indicative bids from dealers are utilized, which are based on pricing models used by market makers in the security and are also included within Level 2. Level 3 investments include debt securities that are not widely traded, are illiquid or are priced by dealers based on pricing models used by market makers in the security. The following table is a reconciliation of assets of consolidated sponsored investment products for Level 3 investments for which significant unobservable inputs were used to determine fair value.
| Three Months Ended March 31,
($ in thousands) | 2016 |  | 2015
Level 3 Debt securities (a) |  |  |
Balance at beginning of period | $ | 1,397 |  |  | $ | 1,065 |
Realized losses, net | (102 | ) |  | — |
Purchases | 19 |  |  | — |
Paydowns | (1 | ) |  | (1 | )
Sales | (498 | ) |  | — |
Transferred to Level 2 | (618 | ) |  | (152 | )
Transfers from Level 2 | 710 |  |  | — |
Change in unrealized gain, net | 89 |  |  | 1 |
Balance at end of period | $ | 996 |  |  | $ | 913 |
(a) | None of the securities reflected in the table were internally fair valued at March 31, 2016 or March 31, 2015.
For the three months ended March 31, 2016 and 2015, securities held by consolidated sponsored investment products with an end of period value of $3.8 million and $15.3 million, respectively, were transferred from Level 2 to Level 1 because certain non-U.S. securities quoted market prices were no longer adjusted based on third-party factors derived from model-based valuation techniques for which the significant assumptions were observable in the market. For the three months ended March 31, 2016 and 2015, securities held by consolidated sponsored investment products with an immaterial end of period value were transferred from Level 1 to Level 2 because certain non-U.S. securities quoted market prices were adjusted based on third-party factors derived from model-based valuation techniques for which the significant assumptions were observable in the market. Derivatives The Company has certain consolidated sponsored investment products which include derivative instruments as part of their investment strategies to contribute to the achievement of defined investment objectives. These derivatives may include futures contracts, options contracts and forward contracts. Derivative instruments in an asset position are classified as other assets of consolidated sponsored investment products in the Condensed Consolidated Balance Sheets. Derivative instruments in a liability position are classified as liabilities of consolidated sponsored investment products within the Condensed Consolidated Balance Sheets. The change in fair value of such derivatives is recorded in realized and unrealized gain (loss) on investments of consolidated sponsored investment products, net, in the Condensed Consolidated Statements of Operations. In connection with entering into these derivative contracts, these funds may be required to pledge to the broker an amount of cash equal to the “initial margin” requirements that varies based on the type of derivative. The cash pledged or on deposit is recorded in the Condensed Consolidated Balance Sheets of the Company as cash pledged or on deposit of consolidated sponsored investment products. The fair value of such derivatives at March 31, 2016 and March 31, 2015 was immaterial. Short Sales Some of the Company’s consolidated sponsored investment products may engage in short sales, which are transactions in which a security is sold which is not owned or is owned but there is no intention to deliver, in anticipation that the price of the security will decline. Short sales are recorded in the Condensed Consolidated Balance Sheets within other liabilities of consolidated sponsored investment products. Borrowings One of the Company’s consolidated sponsored investment products employs leverage in the form of using proceeds from short sales, which allows it to use its long positions as collateral in order to purchase additional securities. The use of these proceeds from short sales is secured by the assets of the consolidated sponsored investment product, which are held with the custodian in a separate account. This consolidated sponsored investment product is permitted to borrow up to 33.33% of its total assets. Consolidated Investment Product During 2015, the Company contributed $40.0 million to a special purpose entity ("SPE") that was created specifically to accumulate bank loan assets for securitization as a potential CLO that will be managed by its Newfleet affiliate. The SPE is a VIE, and the Company consolidates the SPE's assets and liabilities as a consolidated investment product within its financial statements as it is the primary beneficiary of the VIE. The Company determined that it is the primary beneficiary of the VIE as the Company has the power to direct the activities that most significantly impact the economic performance of the entity and has the obligation to absorb losses, or the rights to receive benefits from, the VIE that could potentially be significant to the VIE. As discussed in Note 2, the Company adopted ASU 2014-13 effective January 1, 2016. This guidance requires reporting entities to use the more observable of the fair value of the financial assets or the financial liabilities to measure the financial assets and the financial liabilities of a CFE when a CFE is initially consolidated. The Company has elected the measurement alternative for its consolidated investment product, and the Company's subsequent earnings from the consolidated investment product will reflect changes in value of the Company's own economic interest in the consolidated investment product. The following table presents the balances of the consolidated investment product that were reflected in the Condensed Consolidated Balance Sheets as of March 31, 2016 and December 31, 2015:
| As of
| March 31, 2016 |  | December 31, 2015
($ in thousands) |  |  |
Total cash equivalents | $ | 7,440 |  |  | $ | 8,297 |
Total investments | 193,663 |  |  | 199,485 |
Other assets | 1,585 |  |  | 1,467 |
Debt | (155,464 | ) |  | (152,597 | )
Securities purchased payable | (6,554 | ) |  | (18,487 | )
The Company’s net interests in the consolidated investment product | $ | 40,670 |  |  | $ | 38,165 |
Fair Value Measurements of Consolidated Investment Product The assets and liabilities of the consolidated investment product measured at fair value on a recurring basis by fair value hierarchy level were as follows: As of March 31, 2016:
| Level 1 |  | Level 2 |  | Level 3 |  | Total
($ in thousands) |  |  |  |  |  |  |
Assets |  |  |  |  |  |  |
Cash equivalents | $ | 7,440 |  |  | $ | — |  |  | $ | — |  |  | $ | 7,440 |
Bank loans | — |  |  | 193,663 |  |  | — |  |  | 193,663 |
Total Assets Measured at Fair Value | $ | 7,440 |  |  | $ | 193,663 |  |  | $ | — |  |  | $ | 201,103 |
As of December 31, 2015:
| Level 1 |  | Level 2 |  | Level 3 |  | Total
($ in thousands) |  |  |  |  |  |  |
Assets |  |  |  |  |  |  |
Cash equivalents | $ | 8,297 |  |  | $ | — |  |  | $ | — |  |  | $ | 8,297 |
Bank loans | — |  |  | 199,485 |  |  | — |  |  | 199,485 |
Total Assets Measured at Fair Value | $ | 8,297 |  |  | $ | 199,485 |  |  | $ | — |  |  | $ | 207,782 |
The following is a discussion of the valuation methodologies used for the assets and liabilities of the Company’s consolidated investment product measured at fair value. Cash equivalents represent investments in money market funds. Cash investments in actively traded money market funds are valued using published net asset values and are classified as Level 1. Bank loans represent the underlying debt securities held in the sponsored product which are consolidated by the Company. Bank loan investments include debt securities, which are valued based on quotations received from an independent pricing service. Pricing services do not provide pricing for all securities, and therefore indicative bids from dealers are utilized, which are based on pricing models used by market makers in the security and are also included within Level 2. The estimated fair value of debt at March 31, 2016 and December 31, 2015, which has a variable interest rate, approximates its carrying value. The securities purchase payable at March 31, 2016 and December 31, 2015 approximates fair value due to the short-term nature of the instruments. Debt of Consolidated Investment Product On August 17, 2015, the SPE entered into a three-year term $160.0 million financing transaction with a bank lending counterparty (the “Financing Facility”). The proceeds of the Financing Facility are intended to be used to purchase and warehouse commercial bank loan assets pending the securitization of such assets as a CLO. The size of the Financing Facility may be increased subject to the occurrence of certain events and the mutual consent of the parties. The Financing Facility is secured by all the assets of the SPE and initially bears interest at a rate of three-month LIBOR plus 1.25% per annum (with such interest rate, upon completion of the initial nine-month ramp-up period, increasing to three-month LIBOR plus 2.0% per annum). The Financing Facility contains standard covenant and event of default provisions (including loan-to-value ratio triggers) and foreclosure remedies upon such default in favor of the lender thereunder. The $40.0 million contributed by the Company to the SPE serves as first loss protection for the bank lending counterparty under the Financing Facility. In the event of default, the recourse to the Company is limited to its investment in the SPE. At March 31, 2016 and December 31, 2015, $155.5 million and $152.6 million, respectively, was outstanding under the Financing Facility. Consolidating Financial Data The following tables reflect the impact of the consolidated sponsored investment products and consolidated investment product in the Condensed Consolidated Balance Sheets as of March 31, 2016 and December 31, 2015: As of March 31, 2016
| Balance Before Consolidation of Investment Products |  | Consolidated Sponsored Investment Products-VOEs |  | Consolidated Sponsored Investment Product-VIE |  | Consolidated Investment Product - VIE |  | Eliminations and Adjustments (a) |  | Balances as Reported in Condensed Consolidated Balance Sheet
($ in thousands) |  |  |  |  |  |  |  |  |  |  |
Total cash and cash equivalents | $ | 50,402 |  |  | $ | 8,759 |  |  | $ | 289 |  |  | $ | 7,440 |  |  | $ | — |  |  | $ | 66,890 |
Total investments | 348,452 |  |  | 165,836 |  |  | 33,794 |  |  | 193,663 |  |  | (252,558 | ) |  | 489,187 |
All other assets | 159,796 |  |  | 59,896 |  |  | 4,033 |  |  | 1,585 |  |  | (83 | ) |  | 225,227 |
Total assets | $ | 558,650 |  |  | $ | 234,491 |  |  | $ | 38,116 |  |  | $ | 202,688 |  |  | $ | (252,641 | ) |  | $ | 781,304 |
Total liabilities | $ | 53,264 |  |  | $ | 17,323 |  |  | $ | 2,971 |  |  | $ | 162,018 |  |  | $ | (83 | ) |  | $ | 235,493 |
Redeemable noncontrolling interest | — |  |  | — |  |  | — |  |  | — |  |  | 40,425 |  |  | 40,425 |
Equity attributable to stockholders of the Company | 505,553 |  |  | 217,168 |  |  | 35,145 |  |  | 40,670 |  |  | (292,983 | ) |  | 505,553 |
Non-redeemable noncontrolling interest | (167 | ) |  | — |  |  | — |  |  | — |  |  | — |  |  | (167 | )
Total liabilities and equity | $ | 558,650 |  |  | $ | 234,491 |  |  | $ | 38,116 |  |  | $ | 202,688 |  |  | $ | (252,641 | ) |  | $ | 781,304 |
As of December 31, 2015
| Balance Before Consolidation of Investment Products |  | Consolidated Sponsored Investment Products-VOEs |  | Consolidated Sponsored Investment Product-VIE |  | Consolidated Investment Product - VIE |  | Eliminations and Adjustments (a) |  | Balances as Reported in Condensed Consolidated Balance Sheet
($ in thousands) |  |  |  |  |  |  |  |  |  |  |
Total cash and cash equivalents | $ | 87,574 |  |  | $ | 11,408 |  |  | $ | 458 |  |  | $ | 8,297 |  |  | $ | — |  |  | $ | 107,737 |
Total investments | 349,147 |  |  | 291,247 |  |  | 32,088 |  |  | 199,485 |  |  | (292,409 | ) |  | 579,558 |
All other assets | 162,673 |  |  | 8,281 |  |  | 268 |  |  | 1,467 |  |  | (255 | ) |  | 172,434 |
Total assets | $ | 599,394 |  |  | $ | 310,936 |  |  | $ | 32,814 |  |  | $ | 209,249 |  |  | $ | (292,664 | ) |  | $ | 859,729 |
Total liabilities | $ | 89,937 |  |  | $ | 15,181 |  |  | $ | 461 |  |  | $ | 171,084 |  |  | $ | (255 | ) |  | $ | 276,408 |
Redeemable noncontrolling interest | — |  |  | — |  |  | — |  |  | — |  |  | 73,864 |  |  | 73,864 |
Equity attributable to stockholders of the Company | 509,624 |  |  | 295,755 |  |  | 32,353 |  |  | 38,165 |  |  | (366,273 | ) |  | 509,624 |
Non-redeemable noncontrolling interest | (167 | ) |  | — |  |  | — |  |  | — |  |  | — |  |  | (167 | )
Total liabilities and equity | $ | 599,394 |  |  | $ | 310,936 |  |  | $ | 32,814 |  |  | $ | 209,249 |  |  | $ | (292,664 | ) |  | $ | 859,729 |
(a) | Adjustments include the elimination of intercompany transactions between the Company, its consolidated sponsored investment products and consolidated investment product, primarily the elimination of the investments, consolidated sponsored investment product equity, consolidated investment product equity and recording of any noncontrolling interest.
The following table reflects the impact of the consolidated sponsored investment products and consolidated investment products in the Condensed Consolidated Statement of Operations for the three months ended March 31, 2016 and 2015: For the Three Months Ended March 31, 2016
| Balance Before Consolidation of Investment Products |  | Consolidated Sponsored Investment Products-VOEs |  | Consolidated Sponsored Investment Product-VIE |  | Consolidated Investment Product - VIE |  | Eliminations and Adjustments (a) |  | Balances as Reported in Condensed Consolidated Statement of Operations
($ in thousands) |  |  |  |  |  |  |  |  |  |  |
Total operating revenues | $ | 80,504 |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | (209 | ) |  | $ | 80,295 |
Total operating expenses | 66,356 |  |  | 1,267 |  |  | 75 |  |  | 56 |  |  | (209 | ) |  | 67,545 |
Operating income (loss) | 14,148 |  |  | (1,267 | ) |  | (75 | ) |  | (56 | ) |  | — |  |  | 12,750 |
Total other non-operating income, net | 5,771 |  |  | 2,732 |  |  | 525 |  |  | 2,561 |  |  | (4,913 | ) |  | 6,676 |
Income before income taxes | 19,919 |  |  | 1,465 |  |  | 450 |  |  | 2,505 |  |  | (4,913 | ) |  | 19,426 |
Income taxes | 7,556 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 7,556 |
Net income | 12,363 |  |  | 1,465 |  |  | 450 |  |  | 2,505 |  |  | (4,913 | ) |  | 11,870 |
Noncontrolling interests | — |  |  | — |  |  | — |  |  | — |  |  | 493 |  |  | 493 |
Net income attributable to common stockholders | $ | 12,363 |  |  | $ | 1,465 |  |  | $ | 450 |  |  | $ | 2,505 |  |  | $ | (4,420 | ) |  | $ | 12,363 |
For the Three Months Ended March 31, 2015
| Balance Before Consolidation of Investment Products |  | Consolidated Sponsored Investment Products-VOEs |  | Consolidated Sponsored Investment Product-VIE |  | Consolidated Investment Product - VIE |  | Eliminations and Adjustments (a) |  | Balances as Reported in Condensed Consolidated Statement of Operations
($ in thousands) |  |  |  |  |  |  |  |  |  |  |
Total operating revenues | $ | 104,232 |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | (401 | ) |  | $ | 103,831 |
Total operating expenses | 78,471 |  |  | 1,182 |  |  | 37 |  |  | — |  |  | (401 | ) |  | 79,289 |
Operating income (loss) | 25,761 |  |  | (1,182 | ) |  | (37 | ) |  | — |  |  | — |  |  | 24,542 |
Total other non-operating income, net | 4,415 |  |  | 4,653 |  |  | 261 |  |  | — |  |  | (3,278 | ) |  | 6,051 |
Income before income taxes | 30,176 |  |  | 3,471 |  |  | 224 |  |  | — |  |  | (3,278 | ) |  | 30,593 |
Income taxes | 10,868 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 10,868 |
Net income | 19,308 |  |  | 3,471 |  |  | 224 |  |  | — |  |  | (3,278 | ) |  | 19,725 |
Noncontrolling interests | 34 |  |  | — |  |  | — |  |  | — |  |  | (417 | ) |  | (383 | )
Net income attributable to common stockholders | $ | 19,342 |  |  | $ | 3,471 |  |  | $ | 224 |  |  | $ | — |  |  | $ | (3,695 | ) |  | $ | 19,342 |
(a) | Adjustments include the elimination of intercompany transactions between the Company, its consolidated sponsored investment products and consolidated investment product, primarily the elimination of the investments, consolidated sponsored investment product equity, consolidated investment product equity and recording of any noncontrolling interest.
Nonconsolidated VIEs The Company has interests in certain entities that are variable interest entities that the Company does not consolidate as it is not the primary beneficiary of those entities. The Company is not the primary beneficiary as the Company's interest in the entities does not provide the Company with the power to direct the activities that most significantly impact the entities economic performance. At March 31, 2016, the carrying value and maximum risk of loss related to these VIEs was $6.1 million. Certain of the Company’s affiliates serve as the collateral manager for other collateralized loan and collateralized bond obligations (collectively, “CDOs”). The assets and liabilities of these CDOs reside in bankruptcy remote, special purpose entities in which the Company has no ownership in, nor holds any notes issued by, the CDOs and provides neither recourse nor guarantees. Accordingly, the Company’s financial exposure to these CDOs is limited only to the collateral investment management fees it earns which the Company has concluded are "at-market" fees. These CDOs are not consolidated as the Company does not have a variable interest in these CDOs.

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- Definition The entire disclosure for condensed financial statements. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 810 -SubTopic 10 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=18733093&loc=d3e5614-111684 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Section 10 -Paragraph f -Article 3 + Details
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