Quarterly report pursuant to Section 13 or 15(d)

Equity Securities, at Fair Value

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Equity Securities, at Fair Value
3 Months Ended
Mar. 31, 2013
Equity Securities, at Fair Value [Abstract]  
Equity Securities, at Fair Value
Equity Securities, at Fair Value
Equity securities consists of shares of Silver Bay common stock carried at fair value as a result of a fair value option election. In exchange for the contribution of the Company's equity interests in its wholly owned subsidiary, Two Harbors Property Investment LLC, to Silver Bay on December 19, 2012, the Company received 17,824,647 shares of common stock, or 47.7%, of Silver Bay at the initial public offering price of $18.50. The following table presents the carrying value of the Company's equity securities as of March 31, 2013 and December 31, 2012:
(in thousands)
March 31,
2013
 
December 31, 2012
Initial carrying value
$
329,756

 
$
329,756

Unrealized gain
39,214

 
5,882

Carrying value
$
368,970

 
$
335,638



On March 18, 2013, the Company declared a special dividend pursuant to which the 17,824,647 shares of Silver Bay common stock would be distributed, on a pro rata basis, to Two Harbors stockholders of record at the close of business on April 2, 2013. As a result, the unrealized gain of $7.8 million included in gain on investment securities on the condensed consolidated statement of comprehensive income for the three months ended March 31, 2013, represents the change in unrealized gain for the period from December 31, 2012 to declaration date, March 18, 2013. The remaining change in unrealized gain for the period from March 18, 2013 to March 31, 2013, was recognized as an adjustment to the dividend payable at March 31, 2013.