Fortress Loss Grows In Best Fundraising Quarter In Three Years

Aug 5 2010 | 1:14pm ET

Fortress Investment Group’s second-quarter loss more than doubled, the alternative investments giant said today. But all of the firm’s other numbers were pointed in the right direction.

New York-based Fortress said that its quarterly loss grew from $45 million to $92 million. But its pretax distributable earnings jumped from $59 million to $73 million, easily topping analysts’ expectations in its “most successful capital raising quarter in three years,” according to CEO Daniel Mudd.

Fortress took in $1.9 billion in new money on the quarter, including “5% of all hedge fund inflows in the quarter,” Mudd said. The inflows allowed the firm to close two funds, its $800 million Japan real-estate fund and its $2.6 billion Credit Opportunities Funds II in July.

“There is a great liquidation story going to play out in the next three-to-five years,” Mudd said. “Large-scale downsizing is still to come. We believe the value of offloading non-core assets or platform could be as high as 20 to 30 times what we experienced in the loan crisis. There will be tons of low-hanging fruits.”

Unlike the second quarter of last year, Fortress actually earned some incentive fees, taking in $50 million. Its assets under management grew to $41.7 billion from $30.2 billion in the first quarter, mostly thanks to its acquisition of hedge fund Logan Circle Partners.

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