(Bloomberg) — Fortress Investment Group LLC, the first publicly traded private equity and hedge fund manager in the U.S., said fourth-quarter profit rose 1.7 percent as its credit funds sold investments at a profit and its biggest hedge funds gained.
Pretax distributable earnings increased to $123 million, or 28 cents a share, from $121 million, or 24 cents, a year earlier, New York-based Fortress said in a statement Thursday. The results exceeded the 20-cent per-share average estimate by five analysts in a Bloomberg survey.
Fortresss credit business, run by Pete Briger, earned 65 percent more in the quarter than a year earlier as its private equity-style credit funds sold assets and collected a share of profits for beating performance benchmarks. The firm said it expects to raise $5 billion, the maximum amount agreed to with investors, for its fourth credit opportunities fund.
We have great visibility and optimism about the value we can create and distribute in the coming years, Chief Executive Officer Randy Nardone said in the statement.
Fortress shares rose 2.2 percent to $8.25 at 9:32 a.m. in New York. The stock is down 56 percent since the companys February 2007 initial public offering, when it sold shares at $18.50 apiece to become the first U.S.-listed buyout and hedge fund manager.
Macro Fund
Fortresss largest hedge funds rose in the fourth quarter after slumping earlier in the year. The Fortress macro fund, which invests across products and geographies, gained 3.4 percent in the quarter and lost 1.6 percent for the year. The firms Asia macro fund rose 3.1 percent in the quarter and declined 1.2 percent in the year. Industrywide, macro hedge funds slipped 0.1 percent in 2014, according to data compiled by Bloomberg.
The Fortress macro fund, run by Mike Novogratz, has lost 5.8 percent this year through Feb. 20, the firm said in the statement. Novogratz is dropping a dedicated stock-picking strategy within the fund, according to a Feb. 17 letter to investors.
Fortresss distributable earnings differ from U.S. generally accepted accounting principles. Under those rules, known as GAAP, the companys net income attributable to Class A shareholders was $61 million, or 24 cents a share, compared with $146 million, or 49 cents, a year earlier.
Assets under Fortresss management rose 2.3 percent in the quarter to $67.5 billion, from $66 billion at the end of the third quarter, as the firm raised money for its traditional asset management group and distributed $1.2 billion to investors.
Fortress said it will pay stockholders a dividend of 38 cents a share on March 17, bringing its 2014 distribution to 80 cents a share, or all of its distributable earnings after tax.
