UPDATE 3-Och-Ziff Q1 profit up on higher fees

Tue May 4, 2010 10:06am EDT

* Distributed EPS 12 cents vs. Street view 9 cents

* Fees rise on higher assets under management (Adds CEO remarks, details from conference call)

BOSTON May 4 (Reuters) - Hedge fund company Och-Ziff Capital Management Group (OZM.N) reported higher-than-expected first-quarter profit on Tuesday as an increase in assets under management led to higher fees.

The New York-based company reported distributable earnings of $49.2 million, or 12 cents per share, compared with $27.2 million, or 7 cents a share, a year earlier.

Analysts on average had expected 9 cents per share, according to Thomson Reuters I/B/E/S.

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

"We think the capital inflow cycle for the hedge fund industry is underway, and that we're well positioned for growth," Chief Executive Daniel Och said on a conference call with investors.

The company estimated assets under management at $26 billion as of May 1, reflecting inflows of $1.6 billion for the year to date and performance-driven appreciation of $900 million. It had assets of $25.3 billion as of April 1, up from assets of $20.3 billion as of April 1, 2009.

Because of the inflows and gains, management fees for the first quarter rose to $102 million from $94 million in the same period a year earlier. The company also cited lower expenses and taxes.

Och-Ziff has tried to distinguish itself from rivals by not restricting investors' ability to withdraw cash, as many hedge funds did during the financial crisis.

First-quarter results were down from the fourth quarter, when Och-Ziff collects most of its incentive fees. On the conference call Och-Ziff also said it had reallocated $714 million from its Global Special Investments fund to its Master Fund, reflecting more interest in the latter fund from investors. (Reporting by Ross Kerber; editing by John Wallace and Derek Caney)

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