Oct 31 Fortress Investment Group on
Thursday reported its profits rose slightly in the third quarter
due to higher management fees across its various fund products
but the firm was hampered by lower income fees in its hedge fund
Fortress, one of a handful of publicly traded alternative
asset managers, reported pre-tax distributable earnings inched
up just over 1.5 percent to $65 million, or 13 cents per share,
from $64 million, or 12 cents per share, a year earlier.
Pre-tax distributable income is the company's preferred way
to measure performance because it excludes large quarterly
compensation costs stemming from the equity interest of
principals who took the company public in 2007.
The New York-based asset manager recorded its "highest first
three quarters of distributable earnings since 2007," Chief
Executive Officer Randy Nardone said in the earnings statement.
Management fees climbed to $136 million, from $116 million a
year earlier, an increase of about 17 percent.
However, incentive income dropped 35 percent to $42 million,
compared to $65 million a year ago. Fortress attributed the
lower incentive income to losses in some of its hedge funds. The
Fortress Macro Funds fell 3 percent in the third quarter and the
Fortress Asia Macro Funds lost 1.1 percent.
"We gave back some returns in the third quarter, which is
never acceptable to a team focused on delivering strong and
consistent absolute returns" said Mike Novogratz, co-chief
investment officer of the macro fund, in the earnings statement.
Those hedge funds are still in the black for the year, with
the Macro Fund up 10 percent through September 30 and the Asia
Macro Fund up 12.7 percent, beating the average 5.5 percent
return of hedge funds over the same period.
Fortress announced a third-quarter dividend of 6 cents per
Assets under management rose 6 percent to $58 billion by the
end of the third quarter.