JMP » Topics » Principal Transactions

This excerpt taken from the JMP 8-K filed Nov 4, 2009.

Principal Transactions

Principal transactions generated a net realized and unrealized gain of $6.0 million for the quarter, compared to a net realized and unrealized loss of $2.7 million for the third quarter of 2008. For the nine months ended September 30, 2009, principal transactions generated a net realized and unrealized gain of $15.4 million, compared to a net realized and unrealized loss of $4.8 million for the nine months ended September 30, 2008. The gain for the third quarter of 2009 was due to both the performance of the company’s investments in funds managed by Harvest Capital Strategies and the recovery of unrealized losses on the company’s investments in publicly-traded New York Mortgage Trust, Inc. and Hercules Technology Growth Capital, Inc.

For the quarter ended September 30, 2009, the company recovered unrealized losses of $2.3 million on its investment in New York Mortgage Trust and $0.6 million on its investment in Hercules Technology Growth Capital, versus recording an unrealized loss of $3.1 million and an unrealized gain of $0.3 million, respectively, for the quarter ended September 30, 2008. The recovery of net unrealized losses on these two investments totaled $2.9 million for the third quarter of 2009, equivalent to $0.07 per share after tax and noncontrolling interest, versus the recording of net unrealized losses totaling $2.8 million, equivalent to $0.07 per share after tax and noncontrolling interest, for the third quarter of 2008.

This excerpt taken from the JMP 8-K filed Aug 6, 2009.

Principal Transactions

Principal transactions generated a net realized and unrealized gain of $6.5 million for the quarter, compared to a net realized and unrealized loss of $0.7 million for the second quarter of 2008. For the six months ended June 30, 2009, principal transactions generated a net realized and unrealized gain of $9.4 million, compared to a net realized and unrealized loss of $2.1 million for the six months ended June 30, 2008. The gain for the second quarter of 2009 was due both to the performance of the company’s investments in funds managed by Harvest Capital Strategies and to a recovery of unrealized losses on the company’s investments in publicly-traded New York Mortgage Trust, Inc. and Hercules Technology Growth Capital, Inc.

 

© 2009 JMP Group Inc.    2


For the quarter ended June 30, 2009, the company recovered unrealized losses of $2.1 million on its investment in New York Mortgage Trust and $1.5 million on its investment in Hercules Technology Growth Capital, compared to an unrealized gain of $0.5 million and an unrealized loss of $0.8 million, respectively, for the quarter ended June 30, 2008. The recovery of net unrealized losses on these two investments totaled $3.6 million for the second quarter of 2009, equivalent to $0.09 per share after tax and noncontrolling interest, compared to a net unrealized loss of $0.3 million, equivalent to $0.01 per share after tax and noncontrolling interest, for the second quarter of 2008.

These excerpts taken from the JMP 10-Q filed May 8, 2009.

Principal transactions

Principal transaction revenues include realized and unrealized net gains and losses resulting from our principal investments in equity and other securities for the Company’s account and in equity-linked warrants received from certain investment banking assignments, as well as limited partner investments in private funds managed by third parties and our investment in NYMT. Principal transaction revenues also include earnings (or losses) attributable to investment partnership interests held by our asset management subsidiary, HCS, which are accounted for using the equity method of accounting.

 

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The Company’s principal transaction revenues for these categories for the three months ended March 31, 2009 and 2008 are as follows:

 

     Three Months Ended March 31,  
     2009     2008  

Equity and other securities

   $ 64,900     $ (3,257,144 )

Warrants and other investments

     (79,463 )     (38,258 )

Investment partnerships

     2,904,201       1,915,521  
                

Total principal transaction revenues

   $ 2,889,638     $ (1,379,881 )
                

Principal Transactions

Principal transaction revenues includes realized and unrealized net gains and losses resulting from our principal investments, which includes investments in equity and other securities for our own account and as the general partner of funds managed by us, warrants we may receive from certain investment banking assignments, as well as limited partner investments in private funds managed by third parties. In addition, we invest a portion of our capital in a portfolio of equity securities managed by HCS and in side-by-side investments in the funds managed by us. In certain cases, we also co-invest alongside our institutional clients in private transactions resulting from our investment banking business.

Principal Transactions

Principal transaction revenues increased $4.3 million from a loss of $1.4 million for the quarter ended March 31, 2008 to a gain of $2.9 million for the quarter ended March 31, 2009. The increase was primarily due to a $3.3 million increase in equity and other security transaction revenues from a loss of $3.2 million for the first quarter of 2008 to a gain of $0.1 million for the first quarter of 2009. In addition, gain on investments in partnerships increased $1.0 million from $1.9 million for the first quarter of 2008 to $2.9 million for the first quarter of 2009. The $3.3 million increase in equity and other security transaction revenues was primarily related to unrealized gain/loss on our convertible preferred security and equity security investments in NYMT, which reflected a loss of $2.3 million for the first quarter of 2008 compared to a gain of $1.2 million for the first quarter of 2009. Of the $2.3 million loss for the first quarter of 2008, $0.5 million was related to JMPRT’s investment in NYMT convertible preferred security, which was consolidated in the Company’s Consolidated Statement of Operations for the quarter ended March 31, 2008 but not consolidated in the Company’s Consolidated Statement of Operations for the quarter ended March 31, 2009.

 

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This excerpt taken from the JMP 8-K filed May 7, 2009.

Principal Transactions

Principal transactions generated a net realized and unrealized gain of $2.9 million, compared to a net realized and unrealized loss of $1.4 million for the quarter ended March 31, 2008. The gain for the first quarter of 2009 was primarily due to the performance of the company’s investments in funds managed by its asset management arm, Harvest Capital Strategies.

Included among principal transactions are JMP Group’s investments in publicly-traded New York Mortgage Trust, Inc. (NASDAQ: NYMT) and Hercules Technology Growth Capital, Inc. (NASDAQ: HTGC). In the first quarter of 2009, JMP Group had an unrealized gain of $1.2 million on its investment in New York Mortgage Trust and an unrealized loss of $1.3 million on its investment in Hercules Technology Growth Capital, versus unrealized losses of $2.3 million and $0.7 million, respectively, in the first quarter of 2008. For the quarter ended March 31, 2009, the net unrealized loss on these two investments totaled $0.1 million, equivalent to $0.00 per share after tax and minority interest, compared to a net unrealized loss of $3.0 million, equivalent to $0.08 per share after tax and minority interest, for the quarter ended March 31, 2008.

 

© 2009 JMP Group Inc.    2


These excerpts taken from the JMP 10-K filed Mar 9, 2009.

Principal Transactions

Principal transaction revenues includes realized and unrealized net gains and losses resulting from our principal investments, which includes investments in equity and other securities for our own account and as the general partner of funds managed by us, warrants we may receive from certain investment banking assignments, as well as limited partner investments in private funds managed by third parties. In addition, we invest a portion of our capital in a portfolio of equity securities managed by HCS and in side-by-side investments in the funds managed by us. In certain cases, we also co-invest alongside our institutional clients in private transactions resulting from our investment banking business.

Principal Transactions

Principal transaction revenues decreased $7.6 million from a gain of $2.9 million for the year ended December 31, 2007 to a loss of $4.7 million for the year ended December 31, 2008. The decrease was primarily due to a loss of $6.8 million from our equity security investments during the year ended December 31, 2008, mostly related to a $6.5 million unrealized loss from our convertible preferred security and equity security investments in NYMT, offset by net unrealized gain of $2.0 million from our partnership interests in the hedge funds and funds of funds managed by HCS, which are accounted for using the equity method of accounting.

Principal Transactions

Principal transaction revenues of $0.5 million were comprised of $0.7 million of realized and unrealized gains from the company’s investment of its own capital in the hedge funds and fund of funds managed by HCS and the realized and unrealized loss of $0.2 million from equity investments in publicly traded securities. This $0.5 million was 1.7 % of total revenues for the period ended May 15, 2007 and 18.4 % of the total principal transaction revenues for the twelve month pro forma combined Predecessor/Successor period ended December 31, 2007.

Principal Transactions

Principal transaction revenues of $2.4 million were comprised of $1.8 million of realized and unrealized gains from the company’s investment of its own capital in the hedge funds and fund of funds managed by HCS and the realized and unrealized gains of $0.6 million from equity investments in publicly held securities. During the period, using some of the proceeds from the initial public offering the Company invested an additional $12.3 million in the hedge funds and fund of funds managed by HCS. The $2.4 million of principal transaction revenues was 3.7 % of total revenues for the period from May 16, 2007 through December 31, 2007 and 81.6 % of the total principal transaction revenues for the twelve month pro forma combined Predecessor/Successor period ended December 31, 2007.

Principal Transactions

FACE="Times New Roman" SIZE="2">Principal transaction revenues decreased $7.6 million from a gain of $2.9 million for the year ended December 31, 2007 to a loss of $4.7 million for the year ended December 31, 2008. The decrease was
primarily due to a loss of $6.8 million from our equity security investments during the year ended December 31, 2008, mostly related to a $6.5 million unrealized loss from our convertible preferred security and equity security investments in
NYMT, offset by net unrealized gain of $2.0 million from our partnership interests in the hedge funds and funds of funds managed by HCS, which are accounted for using the equity method of accounting.

STYLE="margin-top:18px;margin-bottom:0px">Interest, Dividends and Other Income

Interest,
dividends and other income increased $1.1 million, or 19.5%, from $5.8 million for the year ended December 31, 2007 to $6.9 million for the year ended December 31, 2008. Interest and dividends comprised $0.8 million of the increase and was
primarily due to the dividend earned from our investment in NYMT convertible preferred securities, as well as interest from our loans and notes receivable and from investing of proceeds from our initial public offering in short duration AAA rated
securities. Other income increased $0.3 million from the year ended December 31, 2007 primarily from revenue sharing arrangements with, and fees earned to raise capital for third-party investment partnerships or funds.

STYLE="margin-top:18px;margin-bottom:0px">Expenses

Principal Transactions

Principal transaction revenues decreased $1.3 million from $4.3 million for the year ended December 31, 2006 to $2.9 million for the year ended December 31, 2007. The decrease was due to a decrease in gains from equity investments in publicly held securities of $1.6 million, partially offset by an increase of $0.2 million in gains from investment partnerships, attributable to the performance of the funds managed by us, and a slight decrease in losses related to the value of warrant positions, which reflect the market performance of the companies in which we hold warrants.

Principal Transactions

STYLE="margin-top:6px;margin-bottom:0px; text-indent:4%">Principal transaction revenues of $0.5 million were comprised of $0.7 million of realized and unrealized gains from the company’s investment of its
own capital in the hedge funds and fund of funds managed by HCS and the realized and unrealized loss of $0.2 million from equity investments in publicly traded securities. This $0.5 million was 1.7 % of total revenues for the period ended May 15,
2007 and 18.4 % of the total principal transaction revenues for the twelve month pro forma combined Predecessor/Successor period ended December 31, 2007.

SIZE="2">Interest, Dividends and Other Income

Interest, dividends and other income were $1.6 million, or 4.9 % of total revenues for
the period ended May 15, 2007 and 27.2 % of the total interest, dividends and other income for the twelve month pro forma combined Predecessor/Successor period ended December 31, 2007.

STYLE="margin-top:12px;margin-bottom:0px">Expenses

Principal Transactions

FACE="Times New Roman" SIZE="2">Principal transaction revenues of $2.4 million were comprised of $1.8 million of realized and unrealized gains from the company’s investment of its own capital in the hedge funds and fund of funds managed by HCS
and the realized and unrealized gains of $0.6 million from equity investments in publicly held securities. During the period, using some of the proceeds from the initial public offering the Company invested an additional $12.3 million in the hedge
funds and fund of funds managed by HCS. The $2.4 million of principal transaction revenues was 3.7 % of total revenues for the period from May 16, 2007 through December 31, 2007 and 81.6 % of the total principal transaction revenues for the twelve
month pro forma combined Predecessor/Successor period ended December 31, 2007.

Principal Transactions


Principal transaction revenues decreased $1.3 million from $4.3 million for the year ended December 31, 2006 to $2.9 million for the year ended
December 31, 2007. The decrease was due to a decrease in gains from equity investments in publicly held securities of $1.6 million, partially offset by an increase of $0.2 million in gains from investment partnerships, attributable to the
performance of the funds managed by us, and a slight decrease in losses related to the value of warrant positions, which reflect the market performance of the companies in which we hold warrants.

STYLE="margin-top:18px;margin-bottom:0px">Interest, Dividends and Other Income

Interest,
dividends and other income increased $2.0 million, or 54.3%, from $3.7 million for the year ended December 31, 2006 to $5.8 million for the same period in 2007. The increase was primarily attributable to

 


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investing a portion of proceeds from our initial public offering in short duration AAA rated securities, as well as to higher market interest rates, more
active cash management, and an increased capital allocation to our investment portfolio, which returned higher interest and dividend income as a percent of total invested capital.

FACE="Times New Roman" SIZE="2">Expenses

Principal transactions

Principal transaction revenues include realized and unrealized net gains and losses resulting from our principal investments in equity and other securities for the Company’s account and in equity-linked warrants received from certain investment banking assignments, as well as limited partner investments in private funds managed by third parties and our investment in NYMT. Principal transaction revenues also include earnings (or losses) attributable to investment partnership interests held by our asset management subsidiary, HCS, which are accounted for using the equity method of accounting.

The Company’s principal transaction revenues for these categories for the years ended December 31, 2008, 2007 and 2006 are as follows:

 

           Year Ended December 31, 2007        
     Year Ended
December 31,
2008
    January 1, 2007
through May 15,
2007
    May 16, 2007
through December 31,
2007
    Year Ended
December 31,
2006
 
     Successor     Predecessor     Successor     Successor  

Equity and other securities

   $ (6,766,367 )   $ (135,301 )   $ 659,496     $ 2,163,542  

Warrants and other investments

     124,085       11,904       (25,009 )     (95,754 )

Investment partnerships

     1,985,214       664,648       1,769,864       2,220,536  
                                

Total principal transaction revenues

   $ (4,657,068 )   $ 541,251     $ 2,404,351     $ 4,288,324  
                                
This excerpt taken from the JMP 8-K filed Feb 26, 2009.

Principal Transactions

Principal transactions generated a net realized and unrealized loss of $4.7 million, compared to a net realized and unrealized gain of $2.8 million for 2007. The loss for 2008 was primarily due to unrealized losses of $6.5 million and $2.0 million on equity investments in New York Mortgage Trust and Hercules Technology Growth Capital, respectively, which were partially offset by the performance of investments managed for the company’s own account.

This excerpt taken from the JMP 10-Q filed Nov 4, 2008.

Principal Transactions

Principal transaction revenues decreased $6.0 million from a gain of $1.2 million for the nine months ended September 30, 2007 to a loss of $4.8 million for the nine months ended September 30, 2008. The decrease was primarily due to a loss of $6.0 million from our equity security investments during the nine months ended September 30, 2008, mostly related to a $4.9 million unrealized loss from our convertible preferred security and equity security investments in NYMT.

This excerpt taken from the JMP 8-K filed Nov 4, 2008.

Principal Transactions

Principal transactions generated a net realized and unrealized loss of $2.7 million, compared to a gain of $0.9 million for the third quarter of 2007. The loss for the quarter ended September 30, 2008 was primarily due to an unrealized loss of $3.1 million on the company’s common and convertible preferred stock investments in New York Mortgage Trust, Inc. (NASDAQ: NYMT), which was partially offset by net realized and unrealized gains of $0.5 million on investments in funds managed by the company’s asset management arm, Harvest Capital Strategies (formerly known as JMP Asset Management).

This excerpt taken from the JMP 10-Q filed Aug 7, 2008.

Principal Transactions

Principal transaction revenues decreased $2.4 million from a gain of $0.4 million for the six months ended June 30, 2007 to a loss of $2.1 million for the six months ended June 30, 2008. The decrease was primarily due to a loss of $2.8 million from investments in equity and other securities related to our convertible preferred security and equity security investments in NYMT for the six months ended June 30, 2008 compared to a loss of $0.4 million for the six months ended June 30, 2007. In addition, there was a $0.2 million decrease from investment partnerships, attributable to the performance of the funds managed by us in which we invest a portion of our capital. The decrease was partially offset by an increase of $0.2 million in gains related to the value of warrant positions.

 

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This excerpt taken from the JMP 10-Q filed May 9, 2008.

Principal Transactions

Principal transaction revenues decreased $1.3 million from a loss of $0.1 million for the quarter ended March 31, 2007 to a loss of $1.4 million for the quarter ended March 31, 2008. The decrease was primarily due to increased losses from investments in equity and other securities of $2.8 million, which resulted in part from unrealized losses in our convertible preferred security and equity security investments in NMTR, for which we recognized $0.8 million and $1.5 million in unrealized losses, respectively, for the quarter ended March 31, 2008. The decrease was also due to an increase of $0.1 million in losses related to the value of warrants received from certain investment banking assignments, as well as limited partner investments in private funds managed by third parties. The increase in losses was partially offset by an increase in gains of $1.5 million from investment partnerships, attributable to the performance of the funds managed by us in which we invest a portion of our capital.

These excerpts taken from the JMP 10-K filed Mar 13, 2008.

Principal Transactions

Principal transaction revenues increased $6.3 million from a loss of $2.0 million for the year ended December 31, 2005 to a gain of $4.3 million for the year ended December 31, 2006. This increase was in part due to an increase in gains on equity investments in publicly-held securities of $1.7 million, from $0.1 million for the year ended December 31, 2005 to $1.8 million for the year ended December 31, 2006. The increase was also attributable to an increase in gains on investment partnerships of $3.2 million from a loss of $0.6 million for the year ended December 31, 2005 to a gain of $2.6 million for the year ended December 31, 2006. These gains were partially offset by unrealized losses in 2005 and 2006 of $1.5 million and $0.1 million, respectively, on warrant positions we had received from clients in certain investment banking assignments.

Principal Transactions

FACE="Times New Roman" SIZE="2">Principal transaction revenues increased $6.3 million from a loss of $2.0 million for the year ended December 31, 2005 to a gain of $4.3 million for the year ended December 31, 2006. This increase was in
part due to an increase in gains on equity investments in publicly-held securities of $1.7 million, from $0.1 million for the year ended December 31, 2005 to $1.8 million for the year ended December 31, 2006. The increase was also
attributable to an increase in gains on investment partnerships of $3.2 million from a loss of $0.6 million for the year ended December 31, 2005 to a gain of $2.6 million for the year ended December 31, 2006. These gains
were partially offset by unrealized losses in 2005 and 2006 of $1.5 million and $0.1 million, respectively, on warrant positions we had received from clients in certain investment banking assignments.

STYLE="margin-top:18px;margin-bottom:0px">Interest, Dividends and Other

Interest, dividends
and other increased $2.0 million, or 118.4%, from $1.7 million for the year ended December 31, 2005 to $3.7 million for the same period in 2006. The increase was attributable to increased interest rates and more actively managed cash, which
returned higher yields.

This excerpt taken from the JMP 10-Q filed Nov 8, 2007.

Principal Transactions

Principal transaction revenues decreased $1.2 million from a gain of $2.4 million for the nine months ended September 30, 2006 to a gain of $1.2 million for the nine months ended September 30, 2007. The decrease was due to a decline in gains from equity investments in publicly-held securities of $1.4 million, partially offset by an increase of $0.3 million in gains related to the value of warrant positions, which reflect the market performance of the companies for which we hold warrants. The nine months ended September 30, 2007 also included the recovery of $0.6 million of previously written off private securities.

This excerpt taken from the JMP 10-Q filed Aug 10, 2007.

Principal Transactions

Principal transaction revenues decreased $0.7 million from a gain of $1.1 million for the six months ended June 30, 2006 to a gain of $0.4 million for the six months ended June 30, 2007. The decrease was due to a decline in gains from equity investments in publicly-held securities of $0.8 million, partially offset by a decrease of $0.1 million in losses related to the value of warrant positions, which reflect the market performance of the companies for which we hold warrants. The six months ended June 30, 2007 also included the recovery of $0.6 million of previously written off private securities.

 

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This excerpt taken from the JMP 10-Q filed Jun 21, 2007.

Principal Transactions

Principal transaction revenues decreased $0.2 million from a gain of $0.1 million for the quarter ended March 31, 2006 to a loss of $0.1 million for the quarter ended March 31, 2007. The decrease was due to an increase in unrealized loss from equity investments in publicly-held securities of $0.2 million, and a decrease of $0.2 million in unrealized gain related to the value of warrant positions, both of which reflect the market performance of the companies that we are invested in or for which we hold warrants. The losses were partially offset by a gain of $0.2 million due to unrealized and realized gains in investment partnerships, attributable to the performance of the funds managed by us.

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