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, 2015

☐ 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, 2015
Class A Common Stock, .001 par value	(Including 705,050 restricted stock awards)	6,470,677
Class B Common Stock, .001 par value		19,218,814

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 March 31, 2015 and 2014
	- Six months ended March 31, 2015 and 2014

	Condensed Consolidated Statements of Comprehensive Income:
	- Three months ended March 31, 2015 and 2014
	- Six months ended March 31, 2015 and 2014

	Condensed Consolidated Statements of Financial Condition:
	- June 30, 2015
	- December 31, 2014
	- June 30, 2014

	Condensed Consolidated Statements of Equity:
	- Six months ended March 31, 2015 and 2014

	Condensed Consolidated Statements of Cash Flows:
	- Six months ended March 31, 2015 and 2014

	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,
	2015			2014			2015			2014
Revenues
Investment advisory and incentive fees	$	87,344		$	90,156		$	175,381		$	177,953
Distribution fees and other income		13,358			15,767			27,101			30,640
Institutional research services		2,002			2,373			4,067			4,180
Total revenues		102,704			108,296			206,549			212,773
Expenses
Compensation		43,402			44,045			87,896			87,942
Management fee		4,241			5,144			8,678			9,872
Distribution costs		13,120			15,023			27,403			28,986
Other operating expenses		6,992			6,547			13,678			11,937
Total expenses		67,755			70,759			137,655			138,737

Operating income		34,949			37,537			68,894			74,036
Other income (expense)
Net gain/(loss) from investments		3,895			9,610			10,853			16,554
Interest and dividend income		1,289			1,332			2,343			2,473
Interest expense		(1,963	)		(2,021	)		(3,982	)		(4,013	)
Total other income (expense), net		3,221			8,921			9,214			15,014
Income before income taxes		38,170			46,458			78,108			89,050
Income tax provision		14,123			17,135			29,302			31,751
Net income		24,047			29,323			48,806			57,299
Net income/(loss) attributable to noncontrolling interests		(54	)		373			(71	)		395
Net income attributable to GAMCO Investors, Inc.'s shareholders	$	24,101		$	28,950		$	48,877		$	56,904

Net income attributable to GAMCO Investors, Inc.'s shareholders per share:
Basic	$	0.96		$	1.14		$	1.95		$	2.24

Diluted	$	0.95		$	1.13		$	1.93		$	2.22

Weighted average shares outstanding:
Basic		25,065			25,381			25,098			25,431

Diluted		25,358			25,586			25,386			25,635

Dividends declared:	$	0.07		$	0.06		$	0.14		$	0.12

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,
	2015			2014			2015			2014

Net income	$	24,047		$	29,323		$	48,806		$	57,299
Other comprehensive income/(loss), net of tax:
Foreign currency translation		55			22			13			30
Net unrealized losses on securities available for sale (a)		(255	)		(1,728	)		(722	)		(4,425	)
Other comprehensive loss		(200	)		(1,706	)		(709	)		(4,395	)

Comprehensive income		23,847			27,617			48,097			52,904
Less: Comprehensive loss/(income) attributable to noncontrolling interests		(54	)		373			(71	)		395

Comprehensive income attributable to GAMCO Investors, Inc.	$	23,901		$	27,244		$	48,168		$	52,509

(a) Net of income tax benefit of ($150), ($1,015), ($424) and ($2,599),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,
	2015			2014			2014
ASSETS
Cash and cash equivalents	$	372,284		$	298,224		$	307,490
Investments in securities		144,008			259,537			225,596
Investments in sponsored registered investment companies		126,305			39,537			40,791
Investments in partnerships		108,950			107,637			107,896
Receivable from brokers		56,579			76,079			58,945
Investment advisory fees receivable		32,766			41,872			32,228
Income tax receivable		2,303			2,477			1,077
Other assets		22,791			41,067			30,779
Total assets	$	865,986		$	866,430		$	804,802

LIABILITIES AND EQUITY
Payable to brokers	$	48,858		$	43,409		$	19,859
Income taxes payable and deferred tax liabilities		21,266			27,939			31,029
Capital lease obligation		5,213			5,253			5,290
Compensation payable		68,889			39,983			68,908
Securities sold, not yet purchased		9,825			10,595			14,329
Mandatorily redeemable noncontrolling interests		1,281			1,302			1,339
Accrued expenses and other liabilities		30,964			29,657			32,194
Sub-total		186,296			158,138			172,948

5.875% Senior notes (due June 1, 2021)		100,000			100,000			100,000
Zero coupon subordinated debentures, Face value: $6.9 million at June 30, 2015, $13.1
million at December 31, 2014 and $13.2 million at June 30, 2014 (due December 31, 2015)		6,628			12,163			11,813
Total liabilities		292,924			270,301			284,761

Redeemable noncontrolling interests		5,943			68,334			22,806
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;
15,381,179, 15,341,433 and 15,108,373 issued, respectively; 6,506,477,
6,616,212 and 6,572,864 outstanding, respectively		14			14			14
Class B Common Stock, $0.001 par value; 100,000,000 shares authorized;
24,000,000 shares issued; 19,218,814, 19,239,260 and 19,325,820 shares
outstanding, respectively		19			19			19
Additional paid-in capital		297,494			291,681			287,879
Retained earnings		648,231			602,950			560,238
Accumulated other comprehensive income		24,305			25,014			25,844
Treasury stock, at cost (8,874,702, 8,725,221 and 8,535,509 shares, respectively)		(405,633	)		(394,617	)		(379,576	)
Total GAMCO Investors, Inc. stockholders' equity		564,430			525,061			494,418
Noncontrolling interests		2,689			2,734			2,817
Total equity		567,119			527,795			497,235

Total liabilities and equity	$	865,986		$	866,430		$	804,802

See accompanying notes.

GAMCO INVESTORS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY

UNAUDITED

(In thousands)

For the Three months ended June 30, 2015

				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, 2014	$	2,734		$	33	$	291,681	$	602,950		$	25,014		$	(394,617	)	$	527,795		$	68,334
Redemptions of
noncontrolling interests		-			-		-		-			-			-			-			(441	)
Contributions from
noncontrolling
interests		-			-		-		-			-			-			-			336
Consolidation of a consolidated
feeder fund and a partnership		-			-		-		-			-			-			-			996
Deconsolidation of offshore
fund		-			-		-		-			-			-			-			(63,256	)
Net income (loss)		(45	)		-		-		48,877			-			-			48,832			(26	)
Net unrealized gains on
securities available for sale,
net of income tax benefit ($400)		-			-		-		-			(681	)		-			(681	)		-
Amounts reclassified from
accumulated other
comprehensive income,
net of income tax benefit ($24)		-			-		-		-			(41	)		-			(41	)		-
Foreign currency translation		-			-		-		-			13			-			13			-
Dividends declared ($0.14 per
share)		-			-		-		(3,596	)		-			-			(3,596	)		-
Stock based compensation
expense		-			-		4,544		-			-			-			4,544			-
Exercise of stock options
including tax benefit ($102)		-			-		1,269		-			-			-			1,269			-
Purchase of treasury stock		-			-		-		-			-			(11,016	)		(11,016	)		-
Balance at June 30, 2015	$	2,689		$	33	$	297,494	$	648,231		$	24,305		$	(405,633	)	$	567,119		$	5,943

See accompanying notes.

GAMCO INVESTORS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY

UNAUDITED

(In thousands)

For the Three 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	)		-
Amount reclassed 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 CASH FLOWS

UNAUDITED

(In thousands)

	Six Months Ended
	June 30,
	2015			2014
Operating activities
Net income	$	48,806		$	57,299
Adjustments to reconcile net income to net cash provided by operating activities:
Equity in net gains from partnerships		(3,666	)		(2,884	)
Depreciation and amortization		318			336
Stock based compensation expense		4,544			3,397
Deferred income taxes		(1,902	)		(1,512	)
Tax benefit from exercise of stock options		102			349
Foreign currency translation gain/(loss)		13			30
Other-than-temporary loss on available for sale securities		-			69
Cost basis of donated securities		64			1,480
Gains on sales of available for sale securities		(30	)		(3,163	)
Accretion of zero coupon debentures		377			440
Loss on extinguishment of debt		310			74
(Increase) decrease in assets:
Investments in trading securities		14,686			9,899
Investments in partnerships:
Contributions to partnerships		(12,369	)		(12,098	)
Distributions from partnerships		15,060			3,077
Receivable from brokers		(28,406	)		(9,484	)
Investment advisory fees receivable		8,909			19,278
Income tax receivable and deferred tax assets		34			(632	)
Other assets		17,899			(4,739	)
Increase (decrease) in liabilities:
Payable to brokers		42,714			9,094
Income taxes payable and deferred tax liabilities		(4,208	)		(4,707	)
Compensation payable		28,904			34,240
Mandatorily redeemable noncontrolling interests		(20	)		(16	)
Accrued expenses and other liabilities		1,876			(405	)
Total adjustments		85,209			42,123
Net cash provided by operating activities	$	134,015		$	99,422

GAMCO INVESTORS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

UNAUDITED (continued)

(In thousands)

	Six Months Ended
	June 30,
	2015			2014
Investing activities
Purchases of available for sale securities	$	(41,603	)	$	(5,354	)
Proceeds from sales of available for sale securities		1,064			6,518
Return of capital on available for sale securities		252			561
Net cash provided by investing activities		(40,287	)		1,725

Financing activities
Contributions from redeemable noncontrolling interests		336			16,096
Redemptions of redeemable noncontrolling interests		(441	)		(470	)
Proceeds from exercise of stock options		-			1,637
Dividends paid		(3,510	)		(3,050	)
Repurchase of zero coupon subordinated debentures		(6,223	)		(612	)
Purchase of treasury stock		(11,016	)		(17,698	)
Net cash used in financing activities		(19,687	)		(4,097	)
Effect of exchange rates on cash and cash equivalents		(4	)		(11	)
Net increase in cash and cash equivalents		74,037			97,039
Cash and cash equivalents at beginning of period		298,224			210,451
Increase in cash from consolidation		10			-
Increase in cash from deconsolidation		13			-
Cash and cash equivalents at end of period	$	372,284		$	307,490
Supplemental disclosures of cash flow information:
Cash paid for interest	$	3,575		$	3,539
Cash paid for taxes	$	34,836		$	37,020

Non-cash activity:
- For the six months ended June 30, 2015 and June 30, 2014, the Company accrued dividends on restricted stock awards of $86 and $57, respectively. - On January 1, 2015, GAMCO Investors, Inc. was no longer deemed to have control over a certain offshore fund and a certain consolidated feeder fund which resulted in the deconsolidation of that offshore fund and consolidated feeder fund and an increase of approximately $13 of cash and cash equivalents, a decrease of approximately $63,280 of net assets and a decrease of $63,267 of noncontrolling interests. - On April 1, 2015, GAMCO Investors, Inc. was deemed to have control over a certain offshore fund and a certain partnership which resulted in the consolidation of that one offshore fund and one partnership and an increase of approximately $10 of cash and cash equivalents, an increase of approximately $986 of nets assets and an increase of approximately $996 of redeemable noncontrolling interest.

See accompanying notes.

GAMCO INVESTORS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2015

(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, 2014 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.

In June 2014, the FASB issued an accounting update clarifying that entities should treat performance targets that could be met after the requisite service period of a share-based payment award as performance conditions that affect vesting. Therefore, an entity would not record compensation expense (measured as of the grant date) for an award where transfer to the employee is contingent upon satisfaction of the performance target until it becomes probable that the performance target will be met. The guidance is effective for the Company beginning January 1, 2016. Early adoption is permitted. This guidance is not expected to have a material impact on the Company’s consolidated financial statements.

In February 2015, the FASB issued an accounting update amending the consolidation requirements under GAAP. This guidance is effective for the Company beginning January 1, 2016. Early adoption is permitted. The Company is continuing to analyze the impact, if any, that this update may have on its consolidated financial statements.

In May 2015, the FASB issued new guidance amending the current disclosure requirement for investments in certain entities that calculate net asset value per share. The guidance requires investments for which fair value is measured using the net asset value per share practical expedient be removed from the fair value hierarchy. Instead, those investment amounts shall be provided as a separate item to permit reconciliation of the fair value of investments included in the fair value hierarchy to the line items presented in the statement of financial position. This new guidance will be effective for the Company’s first quarter of 2016. The Company is currently evaluating the potential impact on its condensed consolidated financial statements and related disclosures.

B. Investment in Securities

Investments in securities at June 30, 2015, December 31, 2014 and June 30, 2014 consisted of the following:

	June 30, 2015				December 31, 2014				June 30, 2014
	Cost		Fair Value		Cost		Fair Value		Cost		Fair Value
	(In thousands)
Trading securities:
Government obligations	$	6,998	$	7,000	$	18,994	$	18,996	$	23,996	$	23,998
Common stocks		75,995		93,874		170,977		195,029		124,502		156,522
Mutual funds		2,505		3,623		2,432		3,498		2,418		3,532
Other investments		505		789		743		1,704		532		694
Total trading securities		86,003		105,286		193,146		219,227		151,448		184,746

Available for sale securities:
Common stocks		13,578		37,429		13,637		38,942		15,009		39,334
Mutual funds		627		1,293		681		1,368		700		1,516
Total available for sale securities		14,205		38,722		14,318		40,310		15,709		40,850

Total investments in securities	$	100,208	$	144,008	$	207,464	$	259,537	$	167,157	$	225,596

Securities sold, not yet purchased at June 30, 2015, December 31, 2014 and June 30, 2014 consisted of the following:

	June 30, 2015				December 31, 2014				June 30, 2014
	Proceeds		Fair Value		Proceeds		Fair Value		Proceeds		Fair Value
Trading securities:	(In thousands)
Common stocks	$	9,705	$	9,715	$	9,835	$	9,960	$	11,662	$	13,861
Other investments		3		110		1		635		170		468
Total securities sold, not yet purchased	$	9,708	$	9,825	$	9,836	$	10,595	$	11,832	$	14,329

Investments in sponsored registered investment companies at June 30, 2015, December 31,2014 and June 30, 2014 consisted of the following:

	June 30, 2015				December 31, 2014				June 30, 2014
	Cost		Fair Value		Cost		Fair Value		Cost		Fair Value
	(In thousands)
Trading securities:
Mutual funds	$	42,416	$	45,406	$	1	$	1	$	19	$	14
Total trading securities		42,416		45,406		1		1		19		14

Available for sale securities:
Closed-end funds		62,780		77,616		21,962		36,323		21,531		37,138
Mutual funds		1,887		3,283		1,898		3,213		1,931		3,639
Total available for sale securities		64,667		80,899		23,860		39,536		23,462		40,777

Total investments in sponsored
registered investment companies	$	107,083	$	126,305	$	23,861	$	39,537	$	23,481	$	40,791

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 consolidated 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, 2015 and 2014 (in thousands):

Amount							Affected Line Items	Reason for
Reclassified							in the Statements	Reclassification
from AOCI							Of Income	from AOCI
Three months ended June 30,
2015				2014
	$	5		$	1,551		Net gain/(loss) from investments	Realized gain on sale of AFS securities
		35			498		Other operating expenses/net gain from investments	Realized gain on donation of AFS securities
		-			(69	)	Net gain/(loss) from investments	OTT impairment of AFS securities
		40			1,980		Income before income taxes
		(15	)		(733	)	Income tax provision
	$	25		$	1,247		Net income

Amount							Affected Line Items	Reason for
Reclassified							in the Statements	Reclassification
from AOCI							Of Income	from AOCI
Six months ended June 30,
		2015			2014
	$	30		$	3,163		Net gain/(loss) from investments	Realized gain on sale of AFS securities
		35			3,639		Other operating expenses/net gain from investments	Realized gain on donation of AFS securities
		-			(69	)	Net gain/(loss) from investments	OTT impairment of AFS securities
		65			6,733		Income before income taxes
		(24	)		(2,491	)	Income tax provision
	$	41		$	4,242		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. At June 30, 2015, December 31, 2014 and June 30, 2014, we held derivative contracts on 288,000 equity shares, 3.8 million equity shares and 1.9 million equity shares, respectively, that are included in investments in securities or securities sold, not yet purchased on the condensed consolidated statements of financial condition. We had two, one and one foreign exchange contracts outstanding at June 30, 2015, December 31, 2014 and June 30, 2014, respectively, that are included in receivable from brokers or payable to brokers on the condensed consolidated statements of financial condition. Aside from one foreign exchange contract, 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 on the condensed consolidated statements of income. The one foreign exchange contract that is designated as a hedge was for a short of British Pounds to hedge the long investment that we have in our London Stock Exchange listed Gabelli Value Plus+ Trust Ltd. closed-end fund which is denominated in British Pounds. As the underlying investment that is being hedged is an available for sale security, the portion of the change in value of the closed-end fund that is currency related is recorded in net gain/(loss) from investments on the condensed consolidated statements of income and not in accumulated comprehensive income.

The following tables identify the fair values and gains and losses of all derivatives held by the Company (in thousands):

	Asset Derivatives Fair Value							Liability Derivatives Fair Value
	Balance Sheet Location	June 30, 2015		December 31, 2014		June 30, 2014		Balance Sheet Location	June 30, 2015		December 31, 2014		June 30, 2014
Derivatives designated as hedging instruments under FASB ASC 815-20
Foreign exchange contracts	Receivable from brokers	$	-	$	-	$	-	Payable to brokers	$	41,676	$	-	$	-
Sub total		$	-	$	-	$	-		$	41,676	$	-	$	-
Derivatives Not Designated As Hedging Instruments Under Fasb Asc 815-20
Equity contracts	Investments in securities	$	174	$	896	$	156	Securities sold, not yet purchased	$	110	$	635	$	456
Foreign exchange contracts	Receivable from brokers		-		-		-	Payable to brokers		5,103		5,470		6,823
Sub total		$	174	$	896	$	156		$	5,213	$	6,105	$	7,279
Total derivatives		$	174	$	896	$	156		$	46,889	$	6,105	$	7,279

Type of Derivative	Income Statement Location	Three Months ended							Six Months ended
		June 30, 2015				June 30, 2014			June 30, 2015				June 30, 2014
Foreign exchange contracts	Net gain/(loss) from investments		$	(697	)		$	53		$	(100	)		$	59
Equity contracts	Net gain/(loss) from investments			41				120			172				(167	)
Total			$	(656	)		$	173		$	72			$	(108	)

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, 2015	$	174	$	-	$	174	$	(107	)	$	-	$	67
December 31, 2014		896		-		896		(634	)		-		262
June 30, 2014	$	156	$	-	$	156	$	(156	)	$	-	$	-

							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, 2015	$	107	$	-	$	107	$	(107	)	$	-	$	-
December 31, 2014		634		-		634		(634	)		-		-
June 30, 2014	$	205	$	-	$	205	$	(156	)	$	-	$	49

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, 2015, December 31, 2014 and June 30, 2014:

	June 30, 2015
			Gross		Gross
			Unrealized		Unrealized
	Cost		Gains		Losses			Fair Value
	(In thousands)
Common stocks	$	13,578	$	23,851	$	-		$	37,429
Closed-end Funds		62,780		14,864		(28	)		77,616
Mutual funds		2,514		2,096		(34	)		4,576
Total available for sale securities	$	78,872	$	40,811	$	(62	)	$	119,621

	December 31, 2014
			Gross		Gross
			Unrealized		Unrealized
	Cost		Gains		Losses			Fair Value
	(In thousands)
Common stocks	$	13,637	$	25,305	$	-		$	38,942
Closed-end Funds		21,962		14,398		(37	)		36,323
Mutual funds		2,579		2,030		(28	)		4,581
Total available for sale securities	$	38,178	$	41,733	$	(65	)	$	79,846

	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

Unrealized changes in fair value, net of taxes, for the three months ended June 30, 2015 and June 30, 2014 of ($0.3) million in losses and ($1.7) million in losses, respectively, have been included in other comprehensive income, a component of equity, at June 30, 2015 and June 30, 2014. Return of capital on available for sale securities was $35,000 and $0.2 million for the three months ended June 30, 2015 and June 30, 2014, respectively. Proceeds from sales of investments available for sale were approximately $0.9 million and $2.6 million for the three months ended June 30, 2015 and June 30, 2014, respectively. For the three months ended June 30, 2015 and June 30, 2014, gross gains on the sale of investments available for sale amounted to $5,000 and $1.6 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, 2015 or June 30, 2014. Unrealized changes in fair value, net of taxes, for the six months ended June 30, 2015 and June 30, 2014 of $(0.7) million in losses and $(4.4) million in losses, respectively, have been included in other comprehensive income, a component of equity, at June 30, 2015 and June 30, 2014. Return of capital on available for sale securities was $0.3 million and $0.6 million for the six months ended June 30, 2015 and June 30, 2014, respectively. Proceeds from sales of investments available for sale were approximately $1.1 million and $6.5 million for the six months ended June 30, 2015 and June 30, 2014, respectively. For the six months ended June 30, 2015 and June 30, 2014, gross gains on the sale of investments available for sale amounted to $30,000 and $3.2 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, 2015 or June 30, 2014. The basis on which the cost of a security sold is determined using 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, 2015							December 31, 2014							June 30, 2014
			Unrealized							Unrealized							Unrealized
	Cost		Losses			Fair Value		Cost		Losses			Fair Value		Cost		Losses		Fair Value
(in thousands)
Cosed-end funds	$	146	$	(28	)	$	118	$	812	$	(37	)	$	775	$	-	$	-	$	-
Mutual Funds		303		(34	)		269		303		(28	)		275		-		-		-
Total	$	449	$	(62	)	$	387	$	1,115	$	(65	)	$	1,050	$	-	$	-	$	-

At June 30, 2015, there were three 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, 2015 were mutual funds and closed-end funds with diversified holdings across multiple companies and across multiple industries. One holding was impaired for one month, one holding was impaired for eight months and one holding was impaired for ten months at June 30, 2015. The value of these holdings at June 30, 2015 was $0.4 million.

At December 31, 2014, 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, 2014 were mutual funds and closed-end funds with diversified holdings across multiple companies and across multiple industries. One holding was impaired for one month, one for three months and two for four months at December 31, 2014. The value of these holdings at December 31, 2014 was $1.1 million.

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

There were no losses recognized on AFS securities for the three or six months ended June 30, 2015. 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.

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, 2015, December 31, 2014 and June 30, 2014 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, 2015 (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)		2015
Cash equivalents	$	372,079	$	-	$	-	$	372,079
Investments in partnerships		-		21,526		-		21,526
Investments in securities:
AFS - Common stocks		37,429		-		-		37,429
AFS - Mutual funds		1,293		-		-		1,293
Trading - Gov't obligations		7,000		-		-		7,000
Trading - Common stocks		92,954		-		920		93,874
Trading - Mutual funds		3,623		-		-		3,623
Trading - Other		318		173		298		789
Total investments in securities		142,617		173		1,218		144,008
Investments in sponsored registered investment companies:
AFS - Closed-end Funds		77,616		-		-		77,616
AFS - Mutual Funds		3,283		-		-		3,283
Trading - Mutual funds		45,406		-		-		45,406
Total investments in sponsored
registered investment companies		126,305		-		-		126,305
Total investments		268,922		21,699		1,218		291,839
Total assets at fair value	$	641,001	$	21,699	$	1,218