Wednesday, 30 July 2014
Last updated 9 hours ago
May 3 2012 | 9:51am ET
Fortress Investment Group saw its first-quarter distributable earnings fall by 45%, even as its assets jumped and its costs fell sharply.
The New York-based alternative investments giant said its pretax distributable earnings fell to $57 million from $103 million in the year-earlier period. Using generally accepted accounting principles, the firm’s net loss was $24 million, less than one-tenth the $255 million loss it suffered in the first quarter of 2010.
Fortress said the big drop in its loss was due to the expiration of a principals’ agreement—and its compensation provisions—at the end of last year.
The firm said its assets under management rose from $43.7 billion at the end of the fourth quarter to $46.4 billion at the end of the first, thanks to its “largest single-quarter capital raise since 2008.” Interim CEO Randal Nardone, who took over when former CEO Daniel Mudd resigned in January to battle a Securities and Exchange Commission lawsuit stemming from his tenure at Fannie Mae, noted that Fortress’ assets “grew to an all-time high of over $46 billiom,” despite paying out $1 billion in redemptions in the first quarter.
Those redemptions cut Fortress’ performance fee income by more than half, to $52 million. All told, pretax earnings from its hedge fund, credit and private equity portfolios dropped from $103 million to $57 million.
Most of Fortress’ funds did well in the first quarter, with the exception of its commodities fund, which lost 8.7%. Its Macro Fund added 6%, its Asia Macro Fund 5.8% and its Drawbridge Special Opportunities Fund 4.2%.
Fortress, which despite the troubles still managed to top analysts’ expectations, said it would pay a five cent dividend for the first quarter.
Jul 8 2014 | 10:48am ET
The surge in derivatives regulation is among the most complex challenges facing the financial services industry today. Northern Trust’s Joshua Satten recently spoke with FINalternatives to share insights into the challenges presented by new regulation and explore how the industry is responding. Read more…