10-Q 1 vrts-20230930.htm 10-Q VRTS 09.30.2023 vrts-20230930
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
☒QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2023
OR
☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from              to             
Commission File Number: 001-10994  
vrtslogo2019a02.jpg
VIRTUS INVESTMENT PARTNERS, INC.
(Exact name of registrant as specified in its charter)
Delaware 26-3962811
(State or other jurisdiction of
incorporation or organization)		 (I.R.S. Employer
Identification No.)
One Financial Plaza, Hartford, CT 06103
(Address of principal executive offices, including Zip Code)
(800) 248-7971
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, $0.01 par value VRTSThe NASDAQ Stock Market LLC
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 every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes  ☒    No  ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.
 
Large accelerated filer☒Accelerated filer☐
Non-accelerated filer☐Smaller reporting company☐
Emerging growth company☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐ 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ☐    No  ☒
The number of shares outstanding of the registrant’s common stock was 7,184,989 as of October 27, 2023.









VIRTUS INVESTMENT PARTNERS, INC.
INDEX
 
  Page
Item 1.
Item 2.
Item 3.
Item 4.
Item 1.
Item 1A.
Item 2.
Item 5.
Item 6.
"We," "us," "our," the "Company," and "Virtus" as used in this Quarterly Report on Form 10-Q (the "10-Q") refer to Virtus Investment Partners, Inc., a Delaware corporation, and its subsidiaries.


PART I – FINANCIAL INFORMATION
 
Item 1.    Financial Statements
Virtus Investment Partners, Inc.
Condensed Consolidated Balance Sheets
(Unaudited)
(in thousands, except share data)September 30,
2023		December 31,
2022
Assets:
Cash and cash equivalents$195,403 $338,234 
Investments152,349 100,330 
Accounts receivable, net107,014 99,274 
Assets of consolidated investment products ("CIP")
Cash and cash equivalents of CIP209,747 250,301 
Cash pledged or on deposit of CIP683 644 
Investments of CIP2,069,215 2,190,113 
Other assets of CIP34,481 45,445 
Furniture, equipment and leasehold improvements, net25,503 19,123 
Intangible assets, net452,338 442,519 
Goodwill397,098 348,836 
Deferred taxes, net23,659 23,171 
Other assets97,809 94,944 
Total assets$3,765,299 $3,952,934 
Liabilities and Equity
Liabilities:
Accrued compensation and benefits$161,745 $181,805 
Accounts payable and accrued liabilities32,740 33,200 
Dividends payable16,860 15,812 
Contingent consideration 94,421 128,400 
Debt273,815 255,025 
Other liabilities93,134 87,827 
Liabilities of CIP
Notes payable of CIP1,943,949 2,083,314 
Securities purchased payable and other liabilities of CIP184,817 230,897 
Total liabilities2,801,481 3,016,280 
Commitments and Contingencies (Note 14)
Redeemable noncontrolling interests96,266 113,718 
Equity:
Equity attributable to Virtus Investment Partners, Inc.:
Common stock, $0.01 par value, 1,000,000,000 shares authorized; 12,160,311 shares issued and 7,182,763 shares outstanding at September 30, 2023; and 12,033,247 shares issued and 7,181,554 shares outstanding at December 31, 2022
122 120 
Additional paid-in capital1,295,988 1,286,244 
Retained earnings (accumulated deficit)190,615 130,261 
Accumulated other comprehensive income (loss)(373)(358)
Treasury stock, at cost, 4,977,548 and 4,851,693 shares at September 30, 2023 and December 31, 2022, respectively
(624,248)(599,248)
Total equity attributable to Virtus Investment Partners, Inc.862,104 817,019 
Noncontrolling interests5,448 5,917 
Total equity 867,552 822,936 
Total liabilities and equity$3,765,299 $3,952,934 

The accompanying notes are an integral part of these condensed consolidated financial statements.
1
Virtus Investment Partners, Inc.
Condensed Consolidated Statements of Operations
(Unaudited)
Three Months Ended
September 30,		Nine Months Ended
September 30,
(in thousands, except per share data)2023202220232022
Revenues
Investment management fees$184,869 $172,850 $529,326 $564,691 
Distribution and service fees14,333 15,746 42,618 52,912 
Administration and shareholder service fees19,069 20,563 55,668 66,889 
Other income and fees1,000 1,102 3,069 3,516 
Total revenues219,271 210,261 630,681 688,008 
Operating Expenses
Employment expenses101,587 88,230 304,895 283,583 
Distribution and other asset-based expenses24,157 26,818 73,332 88,247 
Other operating expenses30,494 31,096 94,707 94,367 
Operating expenses of consolidated investment products ("CIP")553 538 1,613 1,927 
Change in fair value of contingent consideration— — (6,800)2,900 
Restructuring expense691 4,015 691 4,015 
Depreciation expense1,504 938 4,134 2,835 
Amortization expense15,382 14,609 45,581 43,895 
Total operating expenses174,368 166,244 518,153 521,769 
Operating Income (Loss)44,903 44,017 112,528 166,239 
Other Income (Expense)
Realized and unrealized gain (loss) on investments, net(1,918)(2,493)2,469 (16,018)
Realized and unrealized gain (loss) of CIP, net(1,013)(8,440)(2,853)(43,443)
Other income (expense), net128 (659)(1,062)199 
Total other income (expense), net(2,803)(11,592)(1,446)(59,262)
Interest Income (Expense)
Interest expense(6,222)(3,557)(17,444)(8,661)
Interest and dividend income2,872 1,013 8,785 1,870 
Interest and dividend income of investments of CIP49,803 28,644 144,501 71,436 
Interest expense of CIP(38,218)(20,356)(112,153)(46,860)
Total interest income (expense), net8,235 5,744 23,689 17,785 
Income (Loss) Before Income Taxes50,335 38,169 134,771 124,762 
Income tax expense (benefit)12,181 10,754 31,794 43,969 
Net Income (Loss)38,154 27,415 102,977 80,793 
Noncontrolling interests(7,248)4,265 (3,190)1,348 
Net Income (Loss) Attributable to Virtus Investment Partners, Inc.$30,906 $31,680 $99,787 $82,141 
Earnings (Loss) per Share—Basic$4.26 $4.33 $13.72 $11.05 
Earnings (Loss) per Share—Diluted$4.19 $4.25 $13.50 $10.76 
Weighted Average Shares Outstanding—Basic7,258 7,308 7,272 7,434 
Weighted Average Shares Outstanding—Diluted7,379 7,463 7,393 7,636 

The accompanying notes are an integral part of these condensed consolidated financial statements.
2
Virtus Investment Partners, Inc.
Condensed Consolidated Statements of Comprehensive Income
(Unaudited)
 
 Three Months Ended
September 30,		Nine Months Ended
September 30,
(in thousands)2023202220232022
Net Income (Loss)$38,154 $27,415 $102,977 $80,793 
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustment, net of tax of $82 and $31 for the three months ended September 30, 2023 and 2022, respectively and $5 and $280 for the nine months ended September 30, 2023 and 2022
(226)(504)(15)(791)
Other comprehensive income (loss)(226)(504)(15)(791)
Comprehensive income (loss)37,928 26,911 102,962 80,002 
Comprehensive (income) loss attributable to noncontrolling interests(7,248)4,265 (3,190)1,348 
Comprehensive Income (Loss) Attributable to Virtus Investment Partners, Inc.$30,680 $31,176 $99,772 $81,350 
The accompanying notes are an integral part of these condensed consolidated financial statements.
3
Virtus Investment Partners, Inc.
Condensed Consolidated Statements of Cash Flows
(Unaudited)

 Nine Months Ended
September 30,
(in thousands)20232022
Cash Flows from Operating Activities:
Net income (loss)$102,977 $80,793 
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation expense, intangible asset and other amortization51,017 48,143 
Stock-based compensation20,072 19,267 
Amortization of deferred commissions1,261 3,653 
Payments of deferred commissions(1,105)(1,789)
Equity in earnings of equity method investments810 (527)
Distributions from equity method investments1,789 2,239 
Right of use asset— 3,222 
Realized and unrealized (gains) losses on investments, net(2,459)16,056 
Sales (purchases) of investments, net(24,881)(8,396)
Change in fair value of contingent consideration(6,800)2,900 
Deferred taxes, net2,735 (5,500)
Changes in operating assets and liabilities:
Accounts receivable, net and other assets3,441 32,940 
Accrued compensation and benefits, accounts payable, accrued liabilities and other liabilities(38,966)(76,639)
Operating activities of consolidated investment products ("CIP"):
Realized and unrealized (gains) losses on investments of CIP, net(1,769)41,312 
Purchases of investments by CIP(905,184)(601,749)
Sales of investments by CIP1,028,251 595,451 
Net proceeds (purchases) of short-term investments and securities sold short by CIP(168)(655)
Change in other assets and liabilities of CIP(1,181)4,129 
Net cash provided by (used in) operating activities229,840 154,850 
Cash Flows from Investing Activities:
Capital expenditures(6,438)(5,495)
Acquisition of businesses, net of cash acquired of $4,395 and $8,443 for the nine months ended September 30, 2023 and 2022, respectively
(108,999)(19,944)
Change in cash and cash equivalents of CIP due to consolidation (deconsolidation), net(267)(308)
Purchase of equity method investment(11,645)— 
Net cash provided by (used in) investing activities(127,349)(25,747)
Cash Flows from Financing Activities:
Borrowings on credit agreement50,000 — 
Repayments on credit agreement(32,063)(12,062)
Common stock dividends paid(38,385)(35,244)
Repurchase of common shares(25,000)(80,000)
Payment of contingent consideration(27,179)(33,036)
Taxes paid related to net share settlement of restricted stock units(13,436)(16,450)
Affiliate equity sales (purchases)(20,784)(11,089)
Net contributions from (distributions to) noncontrolling interests5,967 (1,091)
Financing activities of CIP:
Payments on borrowings by CIP(317,362)(129,996)
Borrowings by CIP132,473 — 
Net cash provided by (used in) financing activities(285,769)(318,968)
Effect of exchange rate changes on cash, cash equivalents and restricted cash(68)(650)
Net increase (decrease) in cash, cash equivalents and restricted cash(183,346)(190,515)
Cash, cash equivalents and restricted cash, beginning of period589,179 586,145 
Cash, cash equivalents and restricted cash, end of period$405,833 $395,630 
Non-Cash Investing Activities:
Contingent consideration$— $1,200 
Non-Cash Financing Activities:
Increase (decrease) to noncontrolling interests due to consolidation (deconsolidation) of CIP, net$(7,170)$(338)
Common stock dividends payable$13,788 $12,014 

(in thousands)September 30,
2023		December 31, 2022
Reconciliation of cash, cash equivalents and restricted cash
Cash and cash equivalents$195,403 $338,234 
Cash of CIP209,747 250,301 
Cash pledged or on deposit of CIP683 644 
Cash, cash equivalents and restricted cash at end of period$405,833 $589,179 

The accompanying notes are an integral part of these condensed consolidated financial statements.
4
Virtus Investment Partners, Inc.
Condensed Consolidated Statements of Changes in Stockholders' Equity
(Unaudited)
Permanent EquityTemporary Equity
 Common StockAdditional
Paid-in
Capital		Retained Earnings (Accumulated
Deficit)		Accumulated
Other
Comprehensive
Income (Loss)		Treasury StockTotal
Attributed To
Virtus Investment Partners, Inc.		Non-
controlling
Interests		Total
Equity		Redeemable
Non-
controlling
Interests
(in thousands, except per share data)SharesPar ValueSharesAmount
Balances at June 30, 20227,275,337 $120 $1,275,907 $88,196 $(267)4,747,951 $(579,248)$784,708 $6,997 $791,705 $139,147 
Net income (loss)— — — 31,680 — — — 31,680 151 31,831 (4,416)
Foreign currency translation adjustments— — — — (504)— — (504)— (504)— 
Net subscriptions (redemptions) and other— — 2,035 — — — — 2,035 (414)1,621 (10,289)
Cash dividends declared ($1.65 per common share)
— — — (12,552)— — — (12,552)— (12,552)— 
Repurchases of common shares(50,422)— — — — 50,422 (10,000)(10,000)— (10,000)— 
Issuance of common shares related to employee stock transactions7,058 — — — — — — — — — — 
Taxes paid on stock-based compensation— — (1,166)— — — — (1,166)— (1,166)— 
Stock-based compensation— — 5,004 — — — — 5,004 — 5,004 — 
Balances at September 30, 20227,231,973 $120 $1,281,780 $107,324 $(771)4,798,373 $(589,248)$799,205 $6,734 $805,939 $124,442 
Balances at June 30, 20237,254,786 $122 $1,286,775 $174,011 $(147)4,903,533 $(609,248)$851,513 $5,196 $856,709 $110,399 
Net income (loss)— — — 30,906 — — — 30,906 671 31,577 6,577 
Foreign currency translation adjustments— — — — (226)— — (226)— (226)— 
Net subscriptions (redemptions) and other— — 3,218 — — — — 3,218 (419)2,799 (20,710)
Cash dividends declared ($1.90 per common share)
— — — (14,302)— — — (14,302)— (14,302)— 
Repurchases of common shares(74,015)— — — — 74,015 (15,000)(15,000)— (15,000)— 
Issuance of common shares related to employee stock transactions1,992 — — — — — — — — — — 
Taxes paid on stock-based compensation— — (214)— — — — (214)— (214)— 
Stock-based compensation— — 6,209 — — — — 6,209 — 6,209 — 
Balances at September 30, 20237,182,763 $122 $1,295,988 $190,615 $(373)4,977,548 $(624,248)$862,104 $5,448 $867,552 $96,266 

Permanent EquityTemporary Equity
 Common StockAdditional
Paid-in
Capital		Retained Earnings (Accumulated
Deficit)		Accumulated
Other
Comprehensive
Income (Loss)		Treasury StockTotal
Attributed To
Virtus Investment Partners, Inc.		Non-
controlling
Interests		Total
Equity		Redeemable
Non-
controlling
Interests
(in thousands, except per share data)SharesPar ValueSharesAmount
Balances at December 31, 20217,506,151 $119 $1,276,424 $60,962 $20 4,400,596 $(509,248)$828,277 $8,350 $836,627 $138,965 
Net income (loss)— — — 82,141 — — — 82,141 (184)81,957 (1,164)
Foreign currency translation adjustments— — — — (791)— — (791)— (791)— 
Net subscriptions (redemptions) and other— — 2,035 — — — — 2,035 (1,432)603 (13,359)
Cash dividends declared ($4.65 per common share)
— — — (35,779)— — — (35,779)— (35,779)— 
Repurchases of common shares(397,777)— — — — 397,777 (80,000)(80,000)— (80,000)— 
Issuance of common shares related to employee stock transactions123,599 1 (1)— — — — — — — — 
Taxes paid on stock-based compensation— — (16,450)— — — — (16,450)— (16,450)— 
Stock-based compensation— — 19,772 — — — — 19,772 — 19,772 — 
Balances at September 30, 20227,231,973 $120 $1,281,780 $107,324 $(771)4,798,373 $(589,248)$799,205 $6,734 $805,939 $124,442 
Balances at December 31, 20227,181,554 $120 $1,286,244 $130,261 $(358)4,851,693 $(599,248)$817,019 $5,917 $822,936 $113,718 
Net income (loss)— — — 99,787 — — — 99,787 786 100,573 2,404 
Foreign currency translation adjustments— — — — (15)— — (15)— (15)— 
Net subscriptions (redemptions) and other— — 3,218 — — — — 3,218 (1,255)1,963 (19,856)
Cash dividends declared ($5.20 per common share)
— — — (39,433)— — — (39,433)— (39,433)— 
Repurchases of common shares(125,855)— — — — 125,855 (25,000)(25,000)— (25,000)— 
Issuance of common shares related to employee stock transactions127,064 2 (2)— — — — — — — — 
Taxes paid on stock-based compensation— — (13,436)— — — — (13,436)— (13,436)— 
Stock-based compensation— — 19,964 — — — — 19,964 — 19,964 — 
Balances at September 30, 20237,182,763 $122 $1,295,988 $190,615 $(373)4,977,548 $(624,248)$862,104 $5,448 $867,552 $96,266 

The accompanying notes are an integral part of these condensed consolidated financial statements.

5
Virtus Investment Partners, Inc.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
1. Organization and Business
Virtus Investment Partners, Inc. (the "Company," "we," "us," "our" or "Virtus"), a Delaware corporation, operates in the investment management industry through its subsidiaries.

The Company provides investment management and related services to institutions and individuals. The Company's investment strategies are offered to institutional clients through separate accounts and pooled, or commingled, structures. The Company’s retail investment management services are provided to individuals through products consisting of: mutual funds registered pursuant to the Investment Company Act of 1940, as amended ("U.S. retail funds"); Undertaking for Collective Investment in Transferable Securities and Qualifying Investor Funds (collectively, "global funds") and collectively with U.S. retail funds, variable insurance funds, and exchange-traded funds ("ETFs"), (the "open-end funds"); closed-end funds (collectively, with open-end funds, the "funds"); and retail separate accounts that include intermediary-sold and private client accounts. The Company also provides subadvisory services to other investment advisers and serves as the collateral manager for structured products.


2. Basis of Presentation and Significant Accounting Policies
Basis of Presentation
The unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") for interim financial information. Accordingly, they do not include all of the information and notes required by GAAP for complete financial statements. In the opinion of management, these financial statements contain all adjustments, consisting only of normal recurring adjustments, necessary for a fair statement of the Company’s financial condition and results of operations. Operating results for the nine months ended September 30, 2023 are not necessarily indicative of the results that may be expected for the year ending December 31, 2023.

These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022 (the "2022 Annual Report on Form 10-K") filed with the Securities and Exchange Commission (the "SEC"). The Company’s significant accounting policies, which have been consistently applied, are summarized in its 2022 Annual Report on Form 10-K.


3. Revenues
The Company's revenues are recognized when a performance obligation is satisfied, which occurs when control of the services is transferred to customers. Investment management fees, distribution and service fees, and administration and shareholder service fees are generally calculated as a percentage of average net assets of the investment portfolios managed. The net asset values from which these fees are calculated are variable in nature and subject to factors outside of the Company's control, such as additional investments, withdrawals and market performance. Because of this, these fees are considered constrained until the end of the contractual measurement period (monthly or quarterly), which is when asset values are generally determinable.

Investment Management Fees by Source    
The following table summarizes investment management fees by source:
 Three Months Ended
September 30,		Nine Months Ended
September 30,
(in thousands)2023202220232022
Investment management fees
Open-end funds$80,294 $80,234 $229,721 $262,486 
Closed-end funds14,673 15,773 44,025 48,887 
Retail separate accounts44,441 39,154 127,323 134,069 
Institutional accounts45,461 37,689 128,257 119,249 
Total investment management fees$184,869 $172,850 $529,326 $564,691 
    
6

4. Acquisitions
AlphaSimplex Group, LLC
On April 1, 2023, the Company completed the acquisition of AlphaSimplex Group, LLC ("AlphaSimplex"), which was accounted for in accordance with Accounting Standards Codification ("ASC") 805, Business Combinations ("ASC 805"). The total purchase price paid of $113.4 million was allocated to the assets acquired and liabilities assumed based upon their estimated fair values at the date of the acquisition. Goodwill of $48.3 million and intangible assets of $55.4 million were recorded for the acquisition. The Company expects $103.7 million of the purchase price, related to goodwill and intangibles, to be tax deductible over 15 years. The purchase price allocation is based upon preliminary information and is subject to change if additional information becomes available. The final fair value of the net assets acquired may result in adjustments to certain assets and liabilities, including goodwill. The revenues and operating income of AlphaSimplex were not material to the Company's results of operations for the three and nine months ended September 30, 2023.

The following table summarizes the identified acquired assets and liabilities assumed as of the AlphaSimplex acquisition date:
April 1, 2023
(in thousands)
Assets:
Cash and cash equivalents$4,395 
Investments8,567 
Accounts receivable5,422 
Furniture, equipment and leasehold improvements4,161 
Intangible assets55,400 
Goodwill48,262 
Other assets9,126 
Total Assets135,333 
Liabilities:
Accounts payable and accrued liabilities21,939 
Total Liabilities21,939 
Total Net Assets Acquired$113,394 

Identifiable Intangible Assets Acquired
In connection with the allocation of the AlphaSimplex purchase price, the Company identified the following intangible assets:
April 1, 2023
Approximate Fair Value
(in thousands)
Weighted Average of Useful Life
(in years)
Definite-lived intangible assets:
Investment management agreements52,000 10.5
Trade names3,400 9.0
Total definite-lived intangible assets$55,400 
The fair value of investment management agreements was estimated using a discounted cash flow method and the fair value of the trade names was estimated using a royalty savings method, each of which was prepared with the assistance of an independent valuation firm.

Stone Harbor Investment Partners
On January 1, 2022, the Company acquired Stone Harbor Investment Partners, LLC ("Stone Harbor"), which was accounted for in accordance with ASC 805. The total purchase price of $30.1 million was allocated to the assets acquired and liabilities assumed, based upon their estimated fair values at the date of the acquisition, as well as goodwill of $10.3 million and definite-lived intangible assets of $10.8 million.


7
5. Goodwill and Intangible Assets, Net
Activity in goodwill was as follows:
(in thousands)
Balance at December 31, 2022$348,836 
Acquisitions48,262 
Balance at September 30, 2023$397,098 

Below is a summary of intangible assets, net:
Definite-LivedIndefinite-LivedTotal
(in thousands)Gross Book ValueAccumulated AmortizationNet Book ValueNet Book ValueNet Book Value
Balances at December 31, 2022$756,028 $(355,807)$400,221 $42,298 $442,519 
Additions55,400 — 55,400 — 55,400 
Intangible amortization— (45,581)(45,581)— (45,581)
Balances at September 30, 2023$811,428 $(401,388)$410,040 $42,298 $452,338 

Definite-lived intangible asset amortization for the remainder of fiscal year 2023 and succeeding fiscal years is estimated as follows:
Fiscal Year
Amount
(in thousands)
Remainder of 2023$15,445 
202456,739 
202551,971 
202650,991 
202747,890 
2028 and thereafter187,004 
Total$410,040 


6. Investments
Investments consist primarily of investments in the Company's sponsored products. The Company's investments, excluding the assets of consolidated investment products ("CIP") discussed in Note 16, at September 30, 2023 and December 31, 2022 were as follows:
(in thousands)September 30, 2023December 31, 2022
Investment securities - fair value$118,464 $76,999 
Equity method investments (1)22,557 11,448 
Nonqualified retirement plan assets11,328 10,154 
Other investments— 1,729 
Total investments$152,349 $100,330 
(1)     The Company's equity method investments are valued on a three-month lag based upon the availability of financial information. On January 1, 2023, the Company made an additional investment in an existing minority interest in an affiliated manager for $11.6 million including transaction costs.

Investment Securities - fair value
Investment securities - fair value consist of investments in the Company's sponsored funds and separately managed accounts. The composition of the Company’s investment securities - fair value was as follows:
8
9
September 30, 2023December 31, 2022
(in thousands)CostFair ValueCostFair Value
Investment Securities - fair value
Sponsored funds$82,156 $76,958 $67,472 $62,744 
Equity securities15,829 17,167 13,440 14,255 
Debt securities24,339 24,339 — — 
Total investment securities - fair value$122,324 $118,464 $80,912 $76,999 

For the three and nine months ended September 30, 2023, the Company recognized net realized losses of $0.1 million and net realized gains $2.1 million, respectively, related to its investment securities - fair value. For the three and nine months ended September 30, 2022, the Company recognized net realized gains of $0.4 million and $0.4 million, respectively, related to its investment securities - fair value.


7. Fair Value Measurements
The Company’s assets and liabilities measured at fair value on a recurring basis, excluding the assets and liabilities of CIP discussed in Note 16, as of September 30, 2023 and December 31, 2022 by fair value hierarchy level were as follows:
September 30, 2023  
(in thousands)Level 1Level 2Level 3Total
Assets
Cash equivalents$157,635 $— $— $157,635 
Investment securities - fair value
Sponsored funds76,958 — — 76,958 
Equity securities17,167 — — 17,167 
Debt securities— — 24,339 24,339 
Nonqualified retirement plan assets11,328 — — 11,328 
Total assets measured at fair value$263,088 $— $24,339 $287,427 
Liabilities
Contingent consideration$— $— $54,910 $54,910 
Total liabilities measured at fair value$— $— $54,910 $54,910 

December 31, 2022  
(in thousands)Level 1Level 2Level 3Total
Assets
Cash equivalents$287,126 $— $— $287,126 
Investment securities - fair value
Sponsored funds62,744 — — 62,744 
Equity securities14,255 — — 14,255 
Nonqualified retirement plan assets10,154 — — 10,154 
Total assets measured at fair value$374,279 $— $— $374,279 
Liabilities
Contingent consideration$— $— $78,100 $78,100 
Total liabilities measured at fair value$— $— $78,100 $78,100 
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The following is a discussion of the valuation methodologies used for the Company’s assets measured at fair value:
Cash equivalents represent investments in money market funds. Cash investments in money market funds are valued using published net asset values and are classified as Level 1.

Sponsored funds represent investments in open-end funds, closed-end funds and ETFs for which the Company acts as the investment manager. The fair value of open-end funds is determined based on their published net asset values and are categorized as Level 1. The fair value of closed-end funds and ETFs is determined based on the official closing price on the exchange on which they are traded and are categorized as Level 1.

Equity securities represent securities traded on active markets, are valued at the official closing price (typically the last sale or bid) on the exchange on which the securities are primarily traded and are categorized as Level 1.

Nonqualified retirement plan assets represent mutual funds within the Company's nonqualified retirement plan whose fair value is determined based on their published net asset value and are categorized as Level 1.

Debt securities represent investments in senior secured bank loans and are based on evaluated quotations received from independent pricing services and are categorized as Level 2 or Level 3.

Contingent consideration represents liabilities associated with the Company's business combinations. The estimated fair values are measured with simulation models using unobservable market data inputs prepared with the assistance of an independent valuation firm. These liabilities are categorized as Level 3.

Cash, accounts receivable, accounts payable and accrued liabilities equal or approximate fair value based on the short-term nature of these instruments.

The following tables present a reconciliation of beginning and ending balances of recurring fair value measurements classified as Level 3 assets and liabilities:
Three Months Ended
September 30,		Nine Months Ended
September 30,
(in thousands)2023202220232022
Assets
Balance at beginning of period$— $— $— $— 
Purchases (sales), net24,339 — 24,339 — 
Balance at end of period$24,339 $— $24,339 $— 
Liabilities
Balance at beginning of period$54,910 $72,980 $78,100 $88,400 
Additions for acquisition— — — 1,200 
Reduction for payments made— — (16,390)(19,520)
Increase (reduction) of liability related to re-measurement of fair value— — (6,800)2,900 
Balance at end of period$54,910 $72,980 $54,910 $72,980 


8. Equity Transactions
Dividends Declared
On August 16, 2023, the Company declared a quarterly cash dividend of $1.90 per common share to be paid on November 15, 2023 to stockholders of record at the close of business on October 31, 2023.

Common Stock Repurchases
During the three and nine months ended September 30, 2023, the Company repurchased 74,015 and 125,855 common shares, respectively, at a weighted average price of $202.63 and $198.61 per share, respectively, for a total cost, including fees and expenses, of $15.0 million and $25.0 million, respectively, under its share repurchase program. As of September 30, 2023, 702,497 shares remained available for repurchase. Under the terms of the program, the Company may repurchase shares of its
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common stock from time to time at its discretion through open market repurchases, privately negotiated transactions and/or other mechanisms, depending on price and prevailing market and business conditions. The program, which has no specified term, may be suspended or terminated at any time.


9. Accumulated Other Comprehensive Income (Loss)
The changes in accumulated other comprehensive income (loss) were as follows:
Nine Months Ended
September 30,
(in thousands)20232022
Balance at beginning of period$(358)$20 
Net current-period other comprehensive income (loss) (1)(15)(791)
Balance at end of period$(373)$(771)
(1)     Consists of foreign currency translation adjustments, net of tax of $5 and $280 for the nine months ended September 30, 2023 and 2022, respectively.


10. Stock-Based Compensation
Equity-based awards, including restricted stock units ("RSUs"), performance stock units ("PSUs"), stock options and unrestricted shares of common stock, may be granted to officers, employees and directors of the Company pursuant to the Company's Omnibus Incentive and Equity Plan (the "Omnibus Plan"). At September 30, 2023, 478,711 shares of common stock remained available for issuance of the 3,370,000 shares that are authorized for issuance under the Omnibus Plan.     
Stock-based compensation expense is summarized as follows:
Three Months Ended September 30,Nine Months Ended September 30,
(in thousands)2023202220232022
Stock-based compensation expense$7,668 $5,148 $20,072 $19,267 

Restricted Stock Units
Each RSU entitles the holder to one share of common stock when the restriction expires. RSUs may be time-vested or performance-contingent (PSUs) that convert into RSUs after the performance measurement is complete and generally vest in one to three years. Shares that are issued upon vesting are newly issued shares from the Omnibus Plan and are not issued from treasury stock.
RSU activity, inclusive of PSUs, for the nine months ended September 30, 2023 is summarized as follows: 
Number
of Shares		Weighted Average
Grant Date
Fair Value
Outstanding at December 31, 2022377,087 $178.21 
Granted207,206 $160.10 
Forfeited(35,341)$146.07 
Settled(199,880)$119.68 
Outstanding at September 30, 2023349,072 $204.23 

For the nine months ended September 30, 2023 and 2022, a total of 77,583 and 77,508 RSUs, respectively, were withheld by the Company as a result of net share settlements to settle minimum employee tax withholding obligations. The Company paid $13.4 million and $16.5 million for the nine months ended September 30, 2023 and 2022, respectively, in minimum employee tax withholding obligations related to RSUs withheld for the net share settlements. These net s