Fortress Investment Group LLC said first-quarter profit
increased due to a one-time asset transfer, while incentive income
halved and management fees fell.
Results missed analysts' expectations.
The New York-based asset manager is known for distressed lending
runs funds that bet on global financial and economic trends.
Fortress operates in four business units--private equity, credit,
liquid markets and its traditional asset management business Logan
Circle Partners--and had $69.9 billion in assets under management
as of March 31, up 3% since the end of December.
Hedge funds had a strong start to the year, rising 2.1% on
average during the first quarter, but several factors upended
winning bets beginning in late March: the dollar reversed course
against the euro as investors began to doubt the Fed would raise
rates this summer, oil began to bounce, and growing concerns over a
Greek default shot German bond yields higher.
Fortress's Macro Fund, meanwhile, has been rocked by a series of
bad bets since last year. In February, the company disclosed nearly
$800 million in redemptions from its flagship hedge fund. The fund,
managed by closely-followed Michael Novogratz, had $3.2 billion is
assets under management at the start of the year.
Net returns for the Macro fund fell 4.7% in the first quarter
and are down 8% this year, following a 1.6% loss in 2014, the
company said Thursday.
In all for the three months ended March 31, Fortress reported a
profit of $87 million, or 15 cents a share, up from $9 million, or
a penny a share, a year earlier. The company said the increase was
mainly due to a $198 million increase in other income on account of
a transfer of its interest in Graticule Asset Management.
Revenue declined 4.2% to $227 million.
Analysts projected 18 cents in earnings per share and $255
million in revenue.
"We had a very active start to the year," said Chief Executive
Randy Nardone. "With $1.2 billion of gross embedded incentive
income not yet recognized in earnings and nearly $11 billion of dry
powder for us to put to work, we see great prospects for growth and
value creation."
Management fees fell 5.4% $139 million, primarily due to lower
management fees from liquid hedge funds and private-equity funds,
the company said.
Incentive income more than halved from a year earlier and
totaled $51 million. Fortress pointed to lower incentive income
from credit private-equity funds and credit hedge funds as the
culprit.
Shares in the company, up 1% this year through Wednesday's
close, were inactive in premarket trading.
Write to Lisa Beilfuss at lisa.beilfuss@wsj.com
Access Investor Kit for Fortress Investment Group LLC
Visit
http://www.companyspotlight.com/partner?cp_code=P479&isin=US34958B1061
Subscribe to WSJ: http://online.wsj.com?mod=djnwires