BOSTON, Feb 7 (Reuters) - Och-Ziff Capital Management Group LLC reported sharply higher quarterly profit that beat Wall Street expectations after the investment management company’s incentive income surged on strong returns at its funds.
The company reported fourth-quarter distributable earnings, excluding costs related to its November 2007 initial public offering, of $351.3 million, or 77 cents. That beat the Wall Street estimate of 72 cent a share, according to Thomson Reuters I/B/E/S.
In 2011 when dramatic market movements made for difficult trading conditions, Och-Ziff reported $16.8 million, or 4 cents a share, in distributable earnings for the quarter.
Incentive income, or the fees that hedge fund managers earn when their funds perform well, increased by 13 times to $568 million at the end of the fourth quarter as the firm’s flagship OZ Master Fund returned 11.6 percent for the full year after having been off 0.5 percent in 2011.
Strong earnings helped boost the company’s dividend to 75 cents per share, far more than the 66 cents Wall Street expected. In the third quarter, the company paid out a 12 cent dividend.
Calling last year’s investment returns “strong” and forecasting a “strong start to 2013,” Chief Executive Daniel Och said the firm, one of a handful of publicly traded hedge funds, is poised to grab a bigger market share as more investors look to put money into hedge funds.
Already one of the industry’s biggest firms, the New York-based company had $33.1 billion in assets as of Feb. 1, 2013 for public pension funds, including the states of Massachusetts and Florida, endowments and wealthy investors.