UPDATE 1- Fortress profit rises, beats Wall Street forecast

Fri Nov 2, 2012 8:06am EDT

Nov 2 (Reuters) - Hedge fund firm Fortress Investment Group's quarterly profit rose roughly 49 percent in the third quarter, helped by strong performances in its hedge, credit and private equity funds, and beating Wall Street expectations.

New York-based Fortress, one of a handful of publicly traded alternative asset managers, on Friday reported pretax distributable earnings of $64 million, or 12 cents per dividend-paying share, up from $43 million, or 8 cents per share, a year earlier.

On that basis, analysts on average were expecting distributable earnings of 11 cents per dividend-paying share, according to Thomson Reuters I/B/E/S.

Fortress said pretax distributable income was the best way to measure its performance because it excludes large quarterly compensation costs stemming from the equity interest of principals who took the company public in 2007.

The firm posted gains across its various portfolios, with the Drawbridge Special Opportunities Fund rising more than 5 percent and the Fortress Macro Funds gaining about 3 percent. Fortress also said its private equity fund valuations had risen 9.4 percent in the third quarter.

The company announced a third-quarter dividend of 5 cents per share.

Fortress reported net income of $1 million attributable to Class A shareholders, compared with a year-earlier loss of $142 million. It said the improvement was due mainly to a reduction in costs associated with a "principals' agreement" that expired at the end of 2011.

Total assets under management rose to $51.5 billion as of Sept. 30 from roughly $48 billion on June 30.

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