(Adds details on earnings)
By Svea Herbst-Bayliss
BOSTON May 2 Och-Ziff Capital Management Group
reported a lower quarterly profit, but the hedge fund
still beat analysts' expectations as billions of dollars in new
money flowed into its portfolios and helped offset lower
earnings by its funds.
First-quarter distributable earnings, excluding costs
related to its November 2007 initial public offering, totaled
$127.8 million, down from $136.9 million a year ago, Och-Ziff
reported on Friday. The company earned 25 cents a share, less
than last year's 29 cents a share, but far more than the 16
cents Wall Street analysts had expected, according to Thomson
Och-Ziff also reported net income of $23.9 million, or 14
cents per share, compared to $30.0 million, 20 cents a share a
Lower incentive income and higher compensation and benefit
costs pushed down earnings as some of the company's hedge fund
portfolios did not fare as well during the first quarter when
markets gyrated. Incentive income, the fees that hedge funds
earn on top of management fees, stood at $59 million, compared
with $101.3 million a year ago.
But fresh demand from clients, including pension funds and
sovereign wealth funds around the world, who added $3.6 billion
in new money this year boosted assets under management to $43.5
billion on May 1. This marked a 24 percent increase from the end
of the first quarter in 2013.
Over the long term the company will be able to earn both
management fees and incentive fees off this larger pool of
During the first four months of the year, Och-Ziff's
flagship Master fund lost 0.93 percent while the OZ Europe
Master Fund dipped 1.33 percent and the OZ Asia Master Fund lost
9.18. Performance was driven mainly by credit-related strategies
in the first quarter. Bets on stocks underperformed as markets
moved more erratically amid worries about economic growth and
how central banks would react. Many hedge funds are nursing
losses for the year after a difficult first few months.
Och-Ziff will pay a dividend of 23 cents per share on May 19
to holders of record on May 12.
Its share price has fallen 17.23 percent this year.
(Reporting by Svea Herbst-Bayliss, Editing by Franklin Paul and