New York hedge fund Och-Ziff Capital Management Group posted a first-quarter loss as costs related to its November initial public offering pushed it into the red.
The firm reported a $268.1 million quarter due to $425.6 million in IPO expenses. In the same period last year, the then-private firm made an $85.2 million profit. Distributable earnings were $50 million—in line with analysts’ expectations—and economic income stood at $85.9 million, a 15% increase from the year-earlier period.
Assets under management were up 30% from the first quarter of last year, but were down marginally from the end of 2007. Och-Ziff manages $33.3 billion, as net inflows of $263 million were more than offset by investment losses of $398 million. All of the firm’s main hedge fund lost money in the first quarter, with its flagship OZ Master Fund down 0.84%, its OZ Europe Master Fund down 1.7$% and its OZ Asia Master Fund down 2.61%.
The poor performance left incentive fees down 95% compared to the fourth quarter of last year, at just $32 million. Management fees brought in $145.9 million.
In spite of the difficult quarter, firm founder and CEO Daniel Och expressed optimism, and unveiled plans for several new products and initiatives.
“We remain confident in our ability to grow assets under management, and we are making consistent progress toward achieving our growth objectives for 2008,” he said. “While we believe market conditions will remain challenging for the balance of this year, we continue to see considerable opportunities in the current environment for our time-tested investment approach.”
“We remain confident in our ability to attract new capital,” he added.
To that end, Och-Ziff is preparing several new products with the potential to become “multi-billion dollar” funds, including a mortgage fund and emerging markets fund.
The firm is also making “significant progress” on an African joint-venture.