UPDATE 2-Och-Ziff quarterly earnings beat expectations

Thu Feb 11, 2010 8:01am EST

* Q4 shr $0.69 vs estimate $0.33

* Assets under management $23.1 bln at yr-end (Adds details about earnings, CEO quote)

BOSTON Feb 11 (Reuters) - Hedge fund company Och-Ziff Capital Management Group LLC (OZM.N) on Thursday reported higher-than-expected quarterly earnings because it collected more incentive fees as its portfolios delivered strong returns.

The New York-based company reported distributable earnings of $281.4 million or 69 cents per share, beating analysts' average forecast of 33 cents. A year earlier, the company reported distributable earnings of $28.9 million or 7 cents.

Och-Ziff, which went public in November 2007, highlights distributable earnings -- income from the Och-Ziff Funds segment minus adjustable income taxes -- as the best measure of its performance.

At the end of December, Och-Ziff reported $23.1 billion in assets under management, up 4 percent from the previous quarter but down 14 percent from a year earlier when investors began pulling money out of hedge funds at the height of the financial crisis.

For Och-Ziff, which distinguished itself from many rivals by not restricting investors' ability pull out, money began to flow in again during the last weeks of the year.

In the last quarter, the firm's assets climbed $802 million, boosted by $305 million in net new money and $497 million in performance related appreciation.

Three of Och-Ziff's four portfolios reported double-digit gains with the OZ Asia Master Fund turning in the best performance with a 33.96 percent gain.

"We surpassed the high-water marks on our assets under management with our OZ Master Fund having one its best years ever and our Asia Master Fund achieving record performance," Chairman and Chief Executive Officer Dan Och said in a statement.

High water marks are the performance hurdles that money losing funds must pass in order to resume collecting incentive fees. During the financial crisis many funds were below their high water marks.

Total revenue jumped 214 percent to $440.6 million and incentive income, which hedge funds collect when their portfolios are doing well, surged to $345.6 million from $6.7 million a year earlier.

The company's fourth-quarter net loss narrowed to $47.2 million to from $112.2 million a year earlier. The loss was partly tied to non-cash expenses related to the amortization of equity-based compensation. (Reporting by Svea Herbst-Bayliss, editing by Gerald E. McCormick and Derek Caney)

Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.