UPDATE 2-Och-Ziff earnings beat estimates, shares surge

Thu Aug 2, 2012 12:52pm EDT

* Distributable profit 15 cents/share vs Street view 13 cents

* Assets under management up $1 bln in past month

* Shares jump 7 pct

By Svea Herbst-Bayliss

BOSTON, Aug 2 (Reuters) - Och-Ziff Capital Management posted higher-than-expected quarterly earnings on Thursday as its investment funds delivered strong returns, sending its stock up 7 percent.

New York-based Och-Ziff also unveiled a new incentive plan to keep partners locked in for years to come, and said it expects to keep attracting assets even in tough times.

The company's steady and conservative investment style has long made it a favorite with sovereign wealth funds and large U.S. state pension plans. Chief Executive Daniel Och said on a conference call that he expects inflows to keep coming.

During the first six months of the year, Och-Ziff's flagship OZ Master fund, which boasts $20.7 billion in assets, returned 4.88 percent, more than twice the industry average of 2.10 percent.

Och-Ziff was careful to adjust early in the second quarter amid fresh problems in Europe, Och said, noting that investors have been loyal to the firm in part because it has protected them against heavy losses during turbulent times.

For the second quarter, the company reported distributable earnings of $67.2 million, or 15 cents a share, beating Wall Street's expectations by 2 cents a share. A year ago the company earned 16 cents a share.

Assets under management stood at $29.3 billion at the end of the quarter, steady with a year ago . AUM climbed to $30.3 billion on Aug. 1, growing largely because of strong returns, the company said.

Och-Ziff reported a net loss of $116.2 million, or 82 cents a share, for the second quarter, related largely to expenses from its initial public offering. A year ago the net loss was $93.4 million, or 96 cents a share.

It declared a quarterly dividend of 14 cents a share, up from 10 cents in the first quarter.

The company's new partner incentive plan ties discretionary annual cash awards to performance and limits share sales by partners.

Och-Ziff shares surged 7.3 percent to $7.63 in early-afternoon trading. Through Wednesday, the shares were down 14 percent this year.