Edgar Filing: GAMCO INVESTORS, INC. ET AL

SECURITIES & EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2014

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ___ to ___

Commission File No. 001-14761

GAMCO INVESTORS, INC.

(Exact name of Registrant as specified in its charter)

Delaware		13-4007862
(State of other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

One Corporate Center, Rye, NY		10580-1422
(Address of principle executive offices)		(Zip Code)

(914) 921-3700

Registrant's telephone number, including area code

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes  No 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer", "accelerated filer", and "smaller reporting company" in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer 		Accelerated filer 

Non-accelerated filer 		Smaller reporting company 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes  No 

Indicate the number of shares outstanding of each of the Registrant's classes of Common Stock, as of the latest practical date.

Class		Outstanding at July 31, 2014
Class A Common Stock, .001 par value		6,546,952
Class B Common Stock, .001 par value		19,325,820

INDEX

GAMCO INVESTORS, INC. AND SUBSIDIARIES


PART I.	FINANCIAL INFORMATION


Item 1.	Unaudited Condensed Consolidated Financial Statements

	Condensed Consolidated Statements of Income:
	- Three months ended June 30, 2014 and 2013
	- Six months ended June 30, 2014 and 2013

	Condensed Consolidated Statements of Comprehensive Income:
	- Three months ended June 30, 2014 and 2013
	- Six months ended June 30, 2014 and 2013

	Condensed Consolidated Statements of Financial Condition:
	- June 30, 2014
	- December 31, 2013
	- June 30, 2013

	Condensed Consolidated Statements of Equity:
	- Six months ended June 30, 2014 and 2013

	Condensed Consolidated Statements of Cash Flows:
	- Six months ended June 30, 2014 and 2013

	Notes to Unaudited Condensed Consolidated Financial Statements

Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations

Item 3.	Quantitative and Qualitative Disclosures About Market Risk (Included in Item 2)

Item 4.	Controls and Procedures

PART II.	OTHER INFORMATION

Item 1.	Legal Proceedings
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds
Item 6.	Exhibits

SIGNATURES

GAMCO INVESTORS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

UNAUDITED

(Dollars in thousands, except per share data)

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2014			2013			2014			2013
Revenues
Investment advisory and incentive fees	$	90,156		$	77,443		$	177,953		$	150,050
Distribution fees and other income		15,767			12,522			30,640			23,875
Institutional research services		2,373			2,325			4,180			4,546
Total revenues		108,296			92,290			212,773			178,471
Expenses
Compensation		44,045			37,759			87,942			73,411
Management fee		5,144			4,846			9,872			8,826
Distribution costs		15,023			11,871			28,986			22,881
Other operating expenses		6,547			6,030			11,937			10,842
Total expenses		70,759			60,506			138,737			115,960

Operating income		37,537			31,784			74,036			62,511
Other income (expense)
Net gain from investments		9,744			12,141			16,688			24,432
Interest and dividend income		1,332			2,507			2,473			3,852
Interest expense		(2,021	)		(2,796	)		(4,013	)		(6,284	)
Shareholder-designated contribution		(134	)		-			(134	)		(5,000	)
Total other income (expense), net		8,921			11,852			15,014			17,000
Income before income taxes		46,458			43,636			89,050			79,511
Income tax provision		17,135			15,724			31,751			28,919
Net income		29,323			27,912			57,299			50,592
Net income/(loss) attributable to noncontrolling interests		373			19			395			154
Net income attributable to GAMCO Investors, Inc.'s shareholders	$	28,950		$	27,893		$	56,904		$	50,438

Net income attributable to GAMCO Investors, Inc.'s shareholders per share:
Basic	$	1.14		$	1.09		$	2.24		$	1.96

Diluted	$	1.13		$	1.09		$	2.22		$	1.96

Weighted average shares outstanding:
Basic		25,381			25,679			25,431			25,710

Diluted		25,586			25,689			25,635			25,723

Dividends declared:	$	0.06		$	0.05		$	0.12		$	0.10

See accompanying notes.

GAMCO INVESTORS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

UNAUDITED

(Dollars in thousands, except per share data)

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2014			2013			2014			2013

Net income	$	29,323		$	27,912		$	57,299		$	50,592
Other comprehensive income/(loss), net of tax:
Foreign currency translation		22			1			30			(48	)
Net unrealized gains/(losses) on securities available for sale (a)		(1,728	)		(6,900	)		(4,425	)		(860	)
Other comprehensive income / (loss)		(1,706	)		(6,899	)		(4,395	)		(908	)

Comprehensive income		27,617			21,013			52,904			49,684
Less: Comprehensive income/(loss) attributable to noncontrolling interests		(373	)		(19	)		(395	)		(154	)

Comprehensive income attributable to GAMCO Investors, Inc.	$	27,244		$	20,994		$	52,509		$	49,530

(a) Net of income tax expense or (benefit) of ($1,015), ($4,052), ($2,599) and ($505),respectively.

See accompanying notes.

GAMCO INVESTORS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

UNAUDITED

(Dollars in thousands, except per share data)

	June 30,			December 31,			June 30,
	2014			2013			2013
ASSETS
Cash and cash equivalents	$	307,490		$	210,451		$	222,776
Investments in securities		225,596			231,228			220,440
Investments in sponsored registered investment companies		40,791			44,042			52,341
Investments in partnerships		107,896			95,992			94,535
Receivable from brokers		58,945			49,461			39,669
Investment advisory fees receivable		32,228			51,506			28,240
Income tax receivable		1,077			445			413
Other assets		30,779			26,360			25,087
Total assets	$	804,802		$	709,485		$	683,501

LIABILITIES AND EQUITY
Payable to brokers	$	19,859		$	10,765		$	14,986
Income taxes payable and deferred tax liabilities		31,029			39,846			27,864
Capital lease obligation		5,290			5,323			4,877
Compensation payable		68,908			34,663			59,643
Securities sold, not yet purchased		14,329			6,178			7,598
Mandatorily redeemable noncontrolling interests		1,339			1,355			1,322
Accrued expenses and other liabilities		32,194			32,511			31,971
Sub-total		172,948			130,641			148,261

5.5% Senior notes (repaid May 15, 2013)		-			0			0
5.875% Senior notes (due June 1, 2021)		100,000			100,000			100,000
Zero coupon subordinated debentures, Face value: $13.2 million at June 30, 2014, $13.8
million at December 31, 2013 and $20.5 million at June 30, 2013 (due December 31, 2015)		11,813			11,911			17,028
Total liabilities		284,761			242,552			265,289

Redeemable noncontrolling interests		22,806			6,751			7,021
Commitments and contingencies (Note J)
Equity
GAMCO Investors, Inc. stockholders' equity
Preferred stock, $.001 par value; 10,000,000 shares authorized;
none issued and outstanding
Class A Common Stock, $0.001 par value; 100,000,000 shares authorized;
15,108,373, 15,012,719 and 14,295,769 issued, respectively; 6,572,864,
6,701,930 and 6,095,806 outstanding, respectively		14			14			13
Class B Common Stock, $0.001 par value; 100,000,000 shares authorized;
24,000,000 shares issued; 19,325,820, 19,384,174 and 19,534,174 shares
outstanding, respectively		19			19			20
Additional paid-in capital		287,879			282,496			280,210
Retained earnings		560,238			506,441			456,163
Accumulated other comprehensive income		25,844			30,239			25,392
Treasury stock, at cost (8,535,509, 8,310,789 and 8,199,963 shares, respectively)		(379,576	)		(361,878	)		(353,385	)
Total GAMCO Investors, Inc. stockholders' equity		494,418			457,331			408,413
Noncontrolling interests		2,817			2,851			2,778
Total equity		497,235			460,182			411,191

Total liabilities and equity	$	804,802		$	709,485		$	683,501

See accompanying notes.

GAMCO INVESTORS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY

UNAUDITED

(In thousands)

For the six months ended June 30, 2014

				GAMCO Investors, Inc. stockholders
											Accumulated
						Additional					Other									Redeemable
	Noncontrolling			Common		Paid-in		Retained			Comprehensive			Treasury						Noncontrolling
	Interests			Stock		Capital		Earnings			Income			Stock			Total			Interests
Balance at December 31, 2013	$	2,851		$	33	$	282,496	$	506,441		$	30,239		$	(361,878	)	$	460,182		$	6,751
Redemptions of
noncontrolling interests		-			-		-		-			-			-			-			(470	)
Contributions from
noncontrolling
interests		-			-		-		-			-			-			-			16,096
Net income (loss)		(34	)		-		-		56,904			-			-			56,870			429
Net unrealized gains on
securities available for sale,
net of income tax benefit ($108)		-			-		-		-			(183	)		-			(183	)		-
Amounts reclassified from
accumulated other
comprehensive income,
net of income tax benefit ($2,491)		-			-		-		-			(4,242	)		-			(4,242	)		-
Foreign currency translation		-			-		-		-			30			-			30			-
Dividends declared ($0.12 per
share)		-			-		-		(3,107	)		-			-			(3,107	)		-
Stock based compensation
expense		-			-		3,397		-			-			-			3,397			-
Exercise of stock options
including tax benefit ($349)		-			-		1,986		-			-			-			1,986			-
Purchase of treasury stock		-			-		-		-			-			(17,698	)		(17,698	)		-
Balance at June 30, 2014	$	2,817		$	33	$	287,879	$	560,238		$	25,844		$	(379,576	)	$	497,235		$	22,806

See accompanying notes.

GAMCO INVESTORS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY

UNAUDITED

(In thousands)

For the six months ended June 30, 2013

				GAMCO Investors, Inc. stockholders
											Accumulated
						Additional					Other									Redeemable
	Noncontrolling			Common		Paid-in		Retained			Comprehensive			Treasury						Noncontrolling
	Interests			Stock		Capital		Earnings			Income			Stock			Total			Interests
Balance at December 31, 2012	$	3,326		$	33	$	280,089	$	408,295		$	26,300		$	(347,109	)	$	370,934		$	17,362
Redemptions of noncontrolling
interests		(524	)		-		-		-			-			-			(524	)		(13,394	)
Contributions from
noncontrolling
interests		-			-		-		-			-			-			-			2,875
Net income (loss)		(24	)		-		-		50,438			-			-			50,414			178
Net unrealized gains on
securities available for sale,
net of income tax ($3,477)		-			-		-		-			5,921			-			5,921			-
Amount reclassed from
accumulated other
comprehensive income,
net of income tax benefit ($3,982)		-			-		-		-			(6,781	)		-			(6,781	)		-
Foreign currency translation		-			-		-		-			(48	)		-			(48	)		-
Dividends declared ($0.10 per
share)		-			-		-		(2,570	)		-			-			(2,570	)		-
Stock based compensation
expense		-			-		29		-			-			-			29			-
Exercise of stock options
including tax benefit		-			-		92		-			-			-			92			-
Purchase of treasury stock		-			-		-		-			-			(6,276	)		(6,276	)		-
Balance at June 30, 2013	$	2,778		$	33	$	280,210	$	456,163		$	25,392		$	(353,385	)	$	411,191		$	7,021

See accompanying notes.

GAMCO INVESTORS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

UNAUDITED

(In thousands)

	Six Months Ended
	June 30,
	2014			2013
Operating activities
Net income	$	57,299		$	50,592
Adjustments to reconcile net income to net cash provided by operating activities:
Equity in net gains from partnerships		(2,884	)		1,418
Depreciation and amortization		336			406
Stock based compensation expense		3,397			29
Deferred income taxes		(1,512	)		1,421
Tax benefit from exercise of stock options		349			16
Foreign currency translation gain/(loss)		30			(48	)
Other-than-temporary loss on available for sale securities		69			14
Cost basis of donated securities		1,480			277
Gains on sales of available for sale securities		(3,163	)		(10,446	)
Accretion of zero coupon debentures		440			645
Loss on extinguishment of debt		74			137
(Increase) decrease in assets:
Investments in trading securities		9,899			2,538
Investments in partnerships:
Contributions to partnerships		(12,098	)		(8,221	)
Distributions from partnerships		3,077			9,818
Receivable from brokers		(9,484	)		10,986
Investment advisory fees receivable		19,278			14,189
Income tax receivable and deferred tax assets		(632	)		605
Other assets		(4,739	)		2,246
Increase (decrease) in liabilities:
Payable to brokers		9,094			640
Income taxes payable and deferred tax liabilities		(4,707	)		1,551
Compensation payable		34,240			49,108
Mandatorily redeemable noncontrolling interests		(16	)		(20	)
Accrued expenses and other liabilities		(405	)		5,530
Total adjustments		42,123			82,839
Net cash provided by operating activities	$	99,422		$	133,431

GAMCO INVESTORS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

UNAUDITED (continued)

(In thousands)

	Six Months Ended
	June 30,
	2014			2013
Investing activities
Purchases of available for sale securities	$	(5,354	)	$	(3,953	)
Proceeds from sales of available for sale securities		6,518			21,978
Return of capital on available for sale securities		561			625
Net cash provided by investing activities		1,725			18,650

Financing activities
Contributions from redeemable noncontrolling interests		16,096			2,875
Redemptions of redeemable noncontrolling interests		(470	)		(13,394	)
Redemption of 5.5% Senior Notes		-			(99,000	)
Redemptions of noncontrolling interests		-			(524	)
Proceeds from exercise of stock options		1,637			76
Dividends paid		(3,050	)		(2,570	)
Repurchase of zero coupon subordinated debentures		(612	)		(1,119	)
Purchase of treasury stock		(17,698	)		(6,275	)
Net cash used in financing activities		(4,097	)		(119,931	)
Effect of exchange rates on cash and cash equivalents		(11	)		18
Net increase in cash and cash equivalents		97,039			32,168
Cash and cash equivalents at beginning of period		210,451			190,608
Cash and cash equivalents at end of period	$	307,490		$	222,776
Supplemental disclosures of cash flow information:
Cash paid for interest	$	3,539		$	6,262
Cash paid for taxes	$	37,020		$	25,165

Non-cash activity:
- For the six months ended June 30, 2014 and June 30, 2013, the Company accrued dividends on restricted stock awards of $57 and $0, respectively.

See accompanying notes.

GAMCO INVESTORS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2014

(Unaudited)

A. Significant Accounting Policies

Basis of Presentation

Unless we have indicated otherwise, or the context otherwise requires, references in this report to "GAMCO Investors, Inc.," "GAMCO," "the Company," "GBL," "we," "us" and "our" or similar terms are to GAMCO Investors, Inc., its predecessors and its subsidiaries.

The unaudited interim condensed consolidated financial statements of GAMCO included herein have been prepared in conformity with generally accepted accounting principles ("GAAP") in the United States for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include all the information and footnotes required by U.S. GAAP in the United States for complete financial statements. In the opinion of management, the unaudited interim condensed consolidated financial statements reflect all adjustments, which are of a normal recurring nature, necessary for a fair presentation of financial position, results of operations and cash flows of GAMCO for the interim periods presented and are not necessarily indicative of a full year's results.

The condensed consolidated financial statements include the accounts of GAMCO and its subsidiaries. Intercompany accounts and transactions are eliminated.

These condensed consolidated financial statements should be read in conjunction with our audited consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2013 from which the accompanying condensed consolidated financial statements were derived.

Use of Estimates

The preparation of the condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported on the condensed consolidated financial statements and accompanying notes. Actual results could differ from those estimates.

Recent Accounting Developments

In May 2014, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2014-09, "Revenue from Contracts with Customers," which supersedes the revenue recognition requirements in the Accounting Standards Codification ("Codification") Topic 605, Revenue Recognition, and most industry-specific guidance throughout the Industry Topics of the Codification. The core principle of the new ASU No. 2014-09 is for companies to recognize revenue from the transfer of goods or services to customers in amounts that reflect the consideration to which the company expects to be entitled in exchange for those goods or services. The new standard provides a five-step approach to be applied to all contracts with customers and also requires expanded disclosures about revenue recognition. The ASU is effective for annual reporting periods beginning after December 15, 2016, including interim periods and is to be retrospectively applied. Early adoption is not permitted. The Company is currently evaluating this guidance and the impact it will have on its consolidated financial statements.

B. Investment in Securities

Investments in securities at June 30, 2014, December 31, 2013 and June 30, 2013 consisted of the following:

	June 30, 2014				December 31, 2013				June 30, 2013
	Cost		Fair Value		Cost		Fair Value		Cost		Fair Value
	(In thousands)
Trading securities:
Government obligations	$	23,996	$	23,998	$	37,986	$	37,994	$	27,986	$	27,996
Common stocks		124,502		156,522		96,225		124,634		137,600		155,088
Mutual funds		2,418		3,532		21,074		23,285		1,074		1,675
Other investments		532		694		287		582		470		719
Total trading securities		151,448		184,746		155,572		186,495		167,130		185,478

Available for sale securities:
Common stocks		15,009		39,334		13,389		43,046		14,077		33,478
Mutual funds		700		1,516		843		1,687		843		1,484
Total available for sale securities		15,709		40,850		14,232		44,733		14,920		34,962

Total investments in securities	$	167,157	$	225,596	$	169,804	$	231,228	$	182,050	$	220,440

Securities sold, not yet purchased at June 30, 2014, December 31, 2013 and June 30, 2013 consisted of the following:

	June 30, 2014				December 31, 2013				June 30, 2013
	Proceeds		Fair Value		Proceeds		Fair Value		Proceeds		Fair Value
Trading securities:	(In thousands)
Common stocks	$	11,662	$	13,861	$	5,319	$	6,023	$	7,668	$	7,381
Other investments		170		468		-		155		71		217
Total securities sold, not yet purchased	$	11,832	$	14,329	$	5,319	$	6,178	$	7,739	$	7,598

Investments in sponsored registered investment companies at June 30, 2014, December 31,2013 and June 30, 2013 consisted of the following:

	June 30, 2014				December 31, 2013				June 30, 2013
	Cost		Fair Value		Cost		Fair Value		Cost		Fair Value
	(In thousands)
Trading securities:
Mutual funds	$	19	$	14	$	19	$	10	$	19	$	11
Total trading securities		19		14		19		10		19		11

Available for sale securities:
Closed-end funds		21,531		37,138		23,100		40,624		28,435		49,162
Mutual funds		1,931		3,639		1,951		3,408		2,040		3,168
Total available for sale securities		23,462		40,777		25,051		44,032		30,475		52,330

Total investments in sponsored
registered investment companies	$	23,481	$	40,791	$	25,070	$	44,042	$	30,494	$	52,341

Management determines the appropriate classification of debt and equity securities at the time of purchase and reevaluates such designation as of the date of each statement of financial condition. Investments in United States Treasury Bills and Notes with maturities of greater than three months at the time of purchase are classified as investments in securities, and those with maturities of three months or less at the time of purchase are classified as cash equivalents. The portion of investments in securities held for resale in anticipation of short-term market movements are classified as trading securities. Trading securities are stated at fair value, with any unrealized gains or losses reported in current period earnings. Available for sale ("AFS") investments are stated at fair value, with any unrealized gains or losses, net of taxes, reported as a component of equity except for losses deemed to be other than temporary ("OTT") which are recorded as realized losses in the condensed consolidated statements of income.

The following table identifies all reclassifications out of accumulated other comprehensive income ("AOCI") into income for the three and six months ended June 30, 2014 and 2013 (in thousands):

Amount							Affected Line Item	Reason for
Reclassified							in the Statements	Reclassification
from AOCI							Of Income	from AOCI
Three months ended June 30,
2014				2013
	$	1,551		$	9,849		Net gain from investments	Realized gain on sale of AFS securities
		498			181		Other operating expenses/net gain from investments	Realized gain on donation of AFS securities
		(69	)		(14	)	Net gain from investments	OTT impairment of AFS securities
		1,980			10,016		Income before income taxes
		(733	)		(3,706	)	Income tax provision
	$	1,247		$	6,310		Net income

Amount							Affected Line Item	Reason for
Reclassified							in the Statements	Reclassification
from AOCI							Of Income	from AOCI
Six months ended June 30,
		2014			2013
	$	3,163		$	10,446		Net gain from investments	Realized gain on sale of AFS securities
		3,639			331		Other operating expenses/net gain from investments	Realized gain on donation of AFS securities
		(69	)		(14	)	Net gain from investments	OTT impairment of AFS securities
		6,733			10,763		Income before income taxes
		(2,491	)		(3,982	)	Income tax provision
	$	4,242		$	6,781		Net income

The Company recognizes all derivatives as either assets or liabilities measured at fair value and includes them in either investments in securities or securities sold, not yet purchased on the condensed consolidated statements of financial condition. From time to time, the Company and/or the partnerships and offshore funds that the Company consolidates will enter into hedging transactions to manage their exposure to foreign currencies and equity prices related to their proprietary investments. For the three months ended June 30, 2014 and 2013, the Company had transactions in equity derivatives which resulted in net gains of $120,000 and net losses of $1,000, respectively. For the six months ended June 30, 2014 and 2013, the Company had transactions in equity derivatives which resulted in net losses of $167,000 and net gains of $280,000, respectively. At June 30, 2014, December 31, 2013 and June 30, 2013, we held derivative contracts on 1.9 million equity shares, 1.3 million equity shares and 1.5 million equity shares, respectively, and the fair value was ($299,000), $120,000 and $122,000, respectively; these are included in investments in securities in the condensed consolidated statements of financial condition. These transactions are not designated as hedges for accounting purposes, and therefore changes in fair values of these derivatives are included in net gain/(loss) from investments in the condensed consolidated statements of income.

The Company is a party to enforceable master netting arrangements for swaps entered into as part of the investment strategy of the Company's proprietary portfolio. They are typically not used as hedging instruments. These swaps, while settled on a net basis with the counterparties, major U.S. financial institutions, are shown gross in assets and liabilities on the condensed consolidated statements of financial condition. The swaps have a firm contract end date and are closed out and settled when each contract expires.

							Gross Amounts Not Offset in the
							Statements of Financial Condition
	Gross		Gross Amounts		Net Amounts of
	Amounts of		Offset in the		Assets Presented
	Recognized		Statements of		in the Statements of		Financial			Cash Collateral
	Assets		Financial Condition		Financial Condition		Instruments			Received		Net Amount
Swaps:	(in thousands)
June 30, 2014	$	156	$	-	$	156	$	(156	)	$	-	$	-
December 31, 2013		275		-		275		(155	)		-		120
June 30, 2013	$	237	$	-	$	237	$	(177	)	$	-	$	60

							Gross Amounts Not Offset in the
							Statements of Financial Condition
	Gross		Gross Amounts		Net Amounts of
	Amounts of		Offset in the		Liabilities Presented
	Recognized		Statements of		in the Statements of		Financial			Cash Collateral
	Liabilities		Financial Condition		Financial Condition		Instruments			Pledged		Net Amount
Swaps:	(in thousands)
June 30, 2014	$	205	$	-	$	205	$	(156	)	$	-	$	49
December 31, 2013		155		-		155		(155	)		-		-
June 30, 2013	$	177	$	-	$	177	$	(177	)	$	-	$	-

The following is a summary of the cost, gross unrealized gains, gross unrealized losses and fair value of available for sale investments as of June 30, 2014, December 31, 2013 and June 30, 2013:

	June 30, 2014
			Gross		Gross
			Unrealized		Unrealized
	Cost		Gains		Losses		Fair Value
	(In thousands)
Common stocks	$	15,009	$	24,325	$	-	$	39,334
Closed-end Funds		21,531		15,607		-		37,138
Mutual funds		2,631		2,524		-		5,155
Total available for sale securities	$	39,171	$	42,456	$	-	$	81,627

	December 31, 2013
			Gross		Gross
			Unrealized		Unrealized
	Cost		Gains		Losses			Fair Value
	(In thousands)
Common stocks	$	13,389	$	29,657	$	-		$	43,046
Closed-end Funds		23,100		17,654		(130	)		40,624
Mutual funds		2,794		2,325		(24	)		5,095
Total available for sale securities	$	39,283	$	49,636	$	(154	)	$	88,765

	June 30, 2013
			Gross		Gross
			Unrealized		Unrealized
	Cost		Gains		Losses			Fair Value
	(In thousands)
Common stocks	$	14,077	$	19,401	$	-		$	33,478
Closed-end Funds		28,435		20,773		(46	)		49,162
Mutual funds		2,883		1,850		(81	)		4,652
Total available for sale securities	$	45,395	$	42,024	$	(127	)	$	87,292

Unrealized changes in fair value, net of taxes, for the three months ended June 30, 2014 and June 30, 2013 of $1.7 million in losses and $6.9 million in losses, respectively, have been included in other comprehensive income, a component of equity, at June 30, 2014 and June 30, 2013. Return of capital on available for sale securities was $238,000 and $14,000 for the three months ended June 30, 2014 and June 30, 2013, respectively. Proceeds from sales of investments available for sale were approximately $2.6 million and $16.6 million for the three months ended June 30, 2014 and June 30, 2013, respectively. For the three months ended June 30, 2014 and June 30, 2013, gross gains on the sale of investments available for sale amounted to $1.6 million and $9.8 million, respectively, and were reclassified from other comprehensive income into net gain from investments in the condensed consolidated statements of income. There were no losses on the sale of investments available for sale for the three months ended June 30, 2014 or June 30, 2013. Unrealized changes in fair value, net of taxes, for the six months ended June 30, 2014 and June 30, 2013 of $4.4 million in losses and $0.9 million in losses, respectively, have been included in other comprehensive income, a component of equity, at June 30, 2014 and June 30, 2013. Return of capital on available for sale securities was $0.6 million and $0.6 million for the six months ended June 30, 2014 and June 30, 2013, respectively. Proceeds from sales of investments available for sale were approximately $6.5 million and $22.0 million for the six months ended June 30, 2014 and June 30, 2013, respectively. For the six months ended June 30, 2014 and June 30, 2013, gross gains on the sale of investments available for sale amounted to $3.2 million and $10.4 million, respectively, and were reclassified from other comprehensive income into net gain from investments in the condensed consolidated statements of income. There were no losses on the sale of investments available for sale for the six months ended June 30, 2014 or June 30, 2013.The basis on which the cost of a security sold is determined is specific identification.

Investments classified as available for sale that are in an unrealized loss position for which other-than-temporary impairment has not been recognized consisted of the following:

	June 30, 2014						December 31, 2013							June 30, 2013
			Unrealized						Unrealized							Unrealized
	Cost		Losses		Fair Value		Cost		Losses			Fair Value		Cost		Losses			Fair Value
(in thousands)
Cosed-end funds	$	-	$	-	$	-	$	912	$	(130	)	$	782	$	1,449	$	(46	)	$	1,403
Mutual Funds		-		-		-		303		(24	)		279		365		(72	)		293
Total	$	-	$	-	$	-	$	1,215	$	(154	)	$	1,061	$	1,814	$	(118	)	$	1,696

At June 30, 2014, there were no holdings in loss positions which were not deemed to be other than temporarily impaired.

At December 31, 2013 there were four holdings in loss positions which were not deemed to be other-than-temporarily impaired due to the length of time that they had been in a loss position and because they passed scrutiny in our evaluation of issuer-specific and industry-specific considerations. In these specific instances, the investments at December 31, 2013 were open-end funds and closed-end funds with diversified holdings across multiple companies and across multiple industries. One holding was impaired for one month, one for two months, one for four months and one for seven months at December 31, 2013. The value of these holdings at December 31, 2013 was $1.1 million.

At June 30, 2013, there were four holdings in loss positions which were not deemed to be other-than-temporarily impaired due to the length of time that they had been in a loss position and because they passed scrutiny in our evaluation of issuer-specific and industry-specific considerations. In these specific instances, the investments at June 30, 2013 were closed-end funds with diversified holdings across multiple companies and across multiple industries. All holdings were impaired for one month at June 30, 2013. The value of these holdings at June 30, 2013 was $1.7 million.

For the three and six months ended June 30, 2014, there were $69,000 of losses on available for sale securities deemed to be other than temporary and a loss has been recorded in net gain from investments. For the three and six months ended June 30, 2013, there was $14,000 of losses on available for sale securities deemed to be other than temporary in the condensed consolidated statements of income.

C. Fair Value

The following tables present information about the Company's assets and liabilities by major categories measured at fair value on a recurring basis as of June 30, 2014, December 31, 2013 and June 30, 2013 and indicates the fair value hierarchy of the valuation techniques utilized by the Company to determine such fair value:

Assets and Liabilities Measured at Fair Value on a Recurring Basis as of June 30, 2014 (in thousands)

	Quoted Prices in Active		Significant Other		Significant		Balance as of
	Markets for Identical		Observable		Unobservable		June 30,
Assets	Assets (Level 1)		Inputs (Level 2)		Inputs (Level 3)		2014
Cash equivalents	$	307,154	$	-	$	-	$	307,154
Investments in partnerships		-		24,855		-		24,855
Investments in securities:
AFS - Common stocks		39,334		-		-		39,334
AFS - Mutual funds		1,516		-		-		1,516
Trading - Gov't obligations		23,998		-		-		23,998
Trading - Common stocks		155,805		1		716		156,522
Trading - Mutual funds		3,532		-		-		3,532
Trading - Other		243		157		294		694
Total investments in securities		224,428		158		1,010		225,596
Investments in sponsored registered investment companies:
AFS - Closed-end Funds		37,138		-		-		37,138
AFS - Mutual Funds		3,639		-		-		3,639
Trading - Mutual funds		14		-		-		14
Total investments in sponsored
registered investment companies		40,791		-		-		40,791
Total investments		265,219		25,013		1,010		291,242
Total assets at fair value	$	572,373	$	25,013	$	1,010	$	598,396
Liabilities
Trading - Common stocks	$	13,861	$	-	$	-	$	13,861
Trading - Other		-		468		-		468
Securities sold, not yet purchased	$	13,861	$	468	$	-	$	14,329

Assets and Liabilities Measured at Fair Value on a Recurring Basis as of December 31, 2013 (in thousands)

	Quoted Prices in Active		Significant Other		Significant		Balance as of
	Markets for Identical		Observable		Unobservable		December 31,
Assets	Assets (Level 1)		Inputs (Level 2)		Inputs (Level 3)		2013
Cash equivalents	$	209,913	$	-	$	-	$	209,913
Investments in partnerships		-		25,253		-		25,253
Investments in securities:
AFS - Common stocks		43,046		-		-		43,046
AFS - Mutual funds		1,687		-		-		1,687
Trading - Gov't obligations		37,994		-		-		37,994
Tradi