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INVESTMENTS | 12 Months Ended
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Mar. 31, 2012
INVESTMENTS [Abstract] |
INVESTMENTS | 3. INVESTMENTS We record our investments at fair value as determined in good faith by our Board of Directors in accordance with GAAP. When available, we base the fair value of our investments on directly observable market prices or on market data derived for comparable assets. For all other investments, inputs used to measure fair value reflect management's best estimate of assumptions that would be used by market participants in pricing the investments in a hypothetical transaction. The levels of fair value inputs used to measure our investments are characterized in accordance with the fair value hierarchy established by the Accounting Standard Codification ("ASC"). We use judgment and consider factors specific to the investment in determining the significance of an input to a fair value measurement. While management believes our valuation methodologies are appropriate and consistent with market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different estimate of fair value at the reporting date. The three levels of the fair value hierarchy and investments that fall into each of the levels are described below:
| · | Level 1: Investments whose values are based on unadjusted quoted prices in active markets for identical assets or liabilities that we have the ability to access. We use Level 1 inputs for publicly traded unrestricted securities. Such investments are valued at the closing price for listed securities and at the lower of the closing bid price or the closing sale price for NASDAQ securities on the valuation date.
| · | Level 2: Investments whose values are based on observable inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. These inputs may include quoted prices for the identical instrument in non-active markets, quoted prices for similar instruments in active markets and similar data. We did not value any of our investments using Level 2 inputs as of March 31, 2012 and 2011.
| · | Level 3: Investments whose values are based on prices or valuation techniques that require inputs that are both unobservable and significant to the overall fair value measurement. These inputs reflect management's own assumptions about the assumptions a market participant would use in pricing the investment. We use Level 3 inputs for measuring the fair value of approximately 56.9% of our investments. See "Notes to Consolidated Schedule of Investments" (c) on page 48 for the investment policy used to determine the fair value of these investments.
As required by ASC 820, when the inputs used to measure a fair value fall within different levels of the hierarchy, the level within the fair value measurement is categorized based on the lowest level input that is significant to the fair value measurement which may include inputs that are observable (Levels 1 and 2) and unobservable (Level 3). Therefore, gains and losses for such investments categorized within the Level 3 table below may include changes in fair value that are attributable to both observable inputs (Levels 1 and 2) and unobservable (Level 3). We conduct reviews of fair value hierarchy classifications on a quarterly basis. Changes in the observability of valuation inputs may result in a reclassification of certain investments. In March 2012, Form S-3 registration statements of Alamo Group Inc. (NYSE: ALG), Encore Wire Corporation (NASDAQ: WIRE), and Heelys Inc. (NASDAQ: HLYS) were filed with the Securities and Exchange Commission, or SEC. Due to these recent registrations with the SEC, the common stock of Alamo Group Inc., Encore Wire Corporation, and Heelys Inc. was transferred from Level 3 to Level 1 under ASC 820. As a result of these registrations becoming effective with the SEC, restrictions in the sale of the common stock of these companies imposed by Rule 144 of the Securities Act were lifted and valuation discounts previously applied to these holdings were removed. Had the prior period discounts been applied to ALG, WIRE, HLYS, our resulting net asset value would have been $597,793,096, or $159.22 per share at March 31, 2012. This would have represented increases of 12.3% over the March 31, 2011 net asset values. As of March 31, 2012 and 2011, 56.9% and 94.5%, respectively, of our portfolio investments were categorized as Level 3. Fair value determination of each portfolio investment required one or more of the following unobservable inputs:
| · | Financial information obtained from each portfolio company, including unaudited statements of operations and balance sheets for the most recent period available as compared to budget numbers;
| · | Audited financial information is obtained from each portfolio company, annually;
| · | Current and projected financial condition of the portfolio company;
| · | Current and projected ability of each portfolio company to service its debt obligations;
| · | Current liquidity of the investment;
| · | Projected operating results of the portfolio company;
| · | Current information regarding any offers to purchase the investment;
| · | Current ability of the portfolio company to raise any additional financing, as needed;
| · | Changes in the economic environment which may have a material impact on the operating results of the portfolio company;
| · | Internal occurrences that may have an impact (both positive and negative) on the operating performance of the portfolio company;
| · | Qualitative assessment of key management; and
| · | Other factors deemed relevant.
The following fair value hierarchy tables set forth our investment portfolio by level as of March 31, 2012 and March 31, 2011 (in millions):
|  |  |  |  | Fair Value Measurements at 3/31/12 Using |
Asset Category |  | Total |  |  | Quoted Prices in Active Markets for Identical Assets (Level 1) |  |  | Significant Other Observable Inputs (Level 2) |  |  | Significant Unobservable Inputs (Level 3) |
Debt |  | $ | 11.2 |  |  | $ | − |  |  | $ | − |  |  | $ | 11.2 |
Partnership Interests |  |  | 11.0 |  |  |  | − |  |  |  | − |  |  |  | 11.0 |
Preferred Equity |  |  | 33.9 |  |  |  | − |  |  |  | − |  |  |  | 33.9 |
Common Equity |  |  | 502.4 |  |  |  | 240.7 |  |  |  | − |  |  |  | 261.7 |
Total Investments |  | $ | 558.5 |  |  | $ | 240.7 |  |  | $ | − |  |  | $ | 317.8 |
|  |  |  |  | Fair Value Measurements at 3/31/11 Using |
Asset Category |  | Total |  |  | Quoted Prices in Active Markets for Identical Assets (Level 1) |  |  | Significant Other Observable Inputs (Level 2) |  |  | Significant Unobservable Inputs (Level 3) |
Debt |  | $ | 12.7 |  |  | $ | − |  |  | $ | − |  |  | $ | 12.7 |
Partnership Interests |  |  | 9.5 |  |  |  | − |  |  |  | − |  |  |  | 9.5 |
Preferred Equity |  |  | 45.8 |  |  |  | − |  |  |  | − |  |  |  | 45.8 |
Common Equity |  |  | 421.3 |  |  |  | 26.8 |  |  |  | − |  |  |  | 394.5 |
Total Investments |  | $ | 489.3 |  |  | $ | 26.8 |  |  | $ | − |  |  | $ | 462.5 |
Changes in Fair Value Levels We monitor the availability of observable market data to assess the appropriate classification of financial instruments within the fair value hierarchy. Changes in economic conditions or model based valuation techniques may require the transfer of financial instruments from one fair value to another. In March 2012, Form S-3 registration statements of Alamo Group, Inc. (NYSE: ALG), Encore Wire Corporation (NASDAQ: WIRE) and Heelys Inc. (NASDAQ: HLYS) were filed with the Securities and Exchange Commission ("SEC"). As a result of these registrations becoming effective, restrictions in the sale of common stock of these companies imposed by Rule 144 of the Securities Exchange Act of 1933 were lifted, and discounts on the common stocks of these entities were subsequently removed. Due to these recent registrations with the SEC, we transferred $227 million securities from Level 3 to Level 1 under the fair value hierarchy of ASC 820. The following table provides a summary of changes in the fair value of investments measured using Level 3 inputs during the years ended March 31, 2012 and 2011 (in millions):
|  | Fair Value 3/31/11 |  |  | Net Unrealized Appreciation (Depreciation) |  |  | New Investments |  |  | Divestitures |  |  | Net Changes from Unrealized to Realized |  |  | Conversion of Security from Debt to Equity |  |  | Transfer out of Level 3 |  |  | Fair Value at 3/31/12 |
Debt |  | $ | 12.7 |  |  | $ | (4.6 | ) |  | $ | 6.6 |  |  | $ | (1.0 | ) |  | $ | (2.5 | ) |  | $ | 0.0 |  |  |  | - |  |  | $ | 11.2 |
Partnership Interest |  | $ | 9.5 |  |  | $ | 0.2 |  |  | $ | 1.3 |  |  | $ | 0.0 |  |  | $ | 0.0 |  |  | $ | 0.0 |  |  |  | - |  |  | $ | 11.0 |
Preferred Equity |  | $ | 45.8 |  |  | $ | (2.9 | ) |  | $ | 6.3 |  |  | $ | (6.1 | ) |  | $ | (9.2 | ) |  | $ | 0.0 |  |  |  | - |  |  | $ | 33.9 |
Common Equity |  | $ | 394.5 |  |  | $ | 87.0 |  |  | $ | 0.0 |  |  | $ | 0.0 |  |  | $ | 7.3 |  |  | $ | 0.0 |  |  | $ | 227.1 |  |  | $ | 261.7 |
Total Investments |  | $ | 462.5 |  |  | $ | 79.7 |  |  | $ | 14.2 |  |  | $ | (7.1 | ) |  | $ | (4.4 | ) |  | $ | 0.0 |  |  | $ | 227.1 |  |  | $ | 317.8 |
|  | Fair Value 3/31/10 |  |  | Net Unrealized Appreciation (Depreciation) |  |  | Net Changes from Unrealized to Realized |  |  | New Invest- ments |  |  | Divesti- tures |  |  | Conversion of Security from Debt to Equity |  |  | Fair Value 3/31/11 |
Debt |  | $ | 14.6 |  |  | $ | 0.1 |  |  | $ | 0.9 |  |  | $ | 4.2 |  |  | $ | (4.2 | ) |  | $ | (2.9 | ) |  | $ | 12.7 |
Partnership Interest |  |  | 8.6 |  |  |  | − |  |  |  | − |  |  |  | 0.9 |  |  |  | − |  |  |  | − |  |  |  | 9.5 |
Preferred Equity |  |  | 35.3 |  |  |  | 2.9 |  |  |  | 6.9 |  |  |  | 4.7 |  |  |  | (6.9 | ) |  |  | 2.9 |  |  |  | 45.8 |
Common Equity |  |  | 398.4 |  |  |  | 63.4 |  |  |  | (66.5 | ) |  |  | 3.7 |  |  |  | (4.5 | ) |  |  | − |  |  |  | 394.5 |
Total Investments |  | $ | 456.9 |  |  | $ | 66.4 |  |  | $ | (58.7 | ) |  | $ | 13.5 |  |  | $ | (15.6 | ) |  | $ | − |  |  | $ | 462.5 |
The total unrealized gains included in earnings that related to assets still held at report date for the years ended March 31, 2012 and 2011 were $96,949,860 and $76,132,546, respectively.

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- Definition The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 820 -SubTopic 10 -Section 50 -Paragraph 5 -URI http://asc.fasb.org/extlink&oid=6925170&loc=d3e19296-110258 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 159 -Paragraph 17-22, 27, 28 -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy. Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 825 -SubTopic 10 -Section 50 -Paragraph 10 -URI http://asc.fasb.org/extlink&oid=6947722&loc=d3e13433-108611 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 107 -Paragraph 15C, 15D -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy. Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 825 -SubTopic 10 -Section 50 -Paragraph 28 -URI http://asc.fasb.org/extlink&oid=6957238&loc=d3e14064-108612 Reference 6: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 825 -SubTopic 10 -Section 50 -Paragraph 16 -URI http://asc.fasb.org/extlink&oid=6947722&loc=d3e13504-108611 Reference 7: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 107 -Paragraph 15A -Subparagraph a-d -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy. Reference 8: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 825 -SubTopic 10 -Section 50 -Paragraph 21 -URI http://asc.fasb.org/extlink&oid=6947722&loc=d3e13537-108611 Reference 9: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 133 -Paragraph 44A, 44B -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy. Reference 10: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 820 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=6925170&loc=d3e19207-110258 Reference 11: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 825 -SubTopic 10 -Section 50 -Paragraph 30 -URI http://asc.fasb.org/extlink&oid=6957238&loc=d3e14172-108612 Reference 12: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 107 -Paragraph 3, 10, 14, 15 -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy. Reference 13: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 107 -Paragraph 15B -Subparagraph a, b -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy. Reference 14: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 157 -Paragraph 32, 33, 34 -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy. + Details
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