Three major mid sized asset managers posted 2Q 2013 earnings this week. Och-Ziff Capital Management Group LLC (NYSE:OZM), AUM $36.6 billion, beat analyst estimates and reported distributable earnings of $0.16/share, 15 percent higher than its previous year mark, and coming off much better than the $0.14 consensus estimate.
MAN GROUP PLC (LON:EMG) (OTCMKTS:MNGPF), AUM $52 billion, also reported Q2 earnings today, the largest publicly traded hedge fund suffered through eighth consecutive months of net outflows. Despite of poor performance in its hedge fund strategies, Man Group has managed to post a profit in the last quarter. The adjusted pre-tax earnings of Man Group came up to $134 million, a 10 percent increase to the income of the year ago quarter.
Fortress Investment raises highest capital
The most star studded earnings report so far has come from Fortress Investment Group LLC (NYSE:FIG), AUM $55.6 billion, the asset manager was up 196 percent in its pre-tax earnings in the last quarter, with an EPS of $0.30 or $148 million. While MAN GROUP PLC (LON:EMG) (OTCMKTS:MNGPF) struggled through outflows, Fortress managed to raise billions in the last quarter and continues to do so. FIG closed its $1.1 billion Fortress MSR Opportunities Fund, raised $470 million in July and another $300 million on the day of its earnings conference call.
This gives the asset manager $6.6 billion in unused capital and the flexibility to deploy in more investments. Och-Ziff Capital Management Group LLC (NYSE:OZM) managed inflows of $1.8 billion in the first seven months of this year. RBC Capital Markets’ Bulent Ozcan and Eric Berg wrote in a note today that they expect Och-Ziff to diversify their business and become more than a hedge fund going forward.
Man Group, on the other hand, has suffered through redemptions of $11 billion over the last six months, the net loss to assets under management was $5 billion, the hedge fund has $52 billion at the end of June.
Performance of hedge funds
Man Group’s AHL Diversified Futures Fund took a loss of 8.4 percent in the first half of this year and is down 7 percent YTD through July 30. In contrast Fortress has done well in its macro strategies, Fortress Macro Fund is up 13 percent through June whereas Fortress Asia was up 12.8 percent in this first half of the year. Och-Ziff’s OZ Master Fund has also done well, the hedge fund is up 7.6 percent through July whereas Och-Ziff Europe Master Fund is up 6.7 percent in the same period.
The Blackstone Group L.P. (NYSE:BX), a large private equity firm, also reported earnings earlier in July. Blackstone reported +200 percent increase in EPS in last quarter, earnings jumped from $0.19/share in 2Q 2012 to $0.62/share in 2Q 2103. However since Blackstone manages close to $500 billion, its scope is too large to be compared to smaller asset managers.
Fortress, Blackstone, Apollo say this is the time to sell
Meanwhile private equity firms are encouraging everyone to sell, Devin Banerjee reports for Bloomberg. Fortress Investment, Apollo Global Management LLC (NYSE:APO) and The Blackstone Group L.P. (NYSE:BX) have said that this is the time to reap the profits as stock market has reached new highs. The managers of multi billion dollar funds for these firms have a common opinion on what investors should be doing at this time. “This is a better time for selling our existing investments than making new investments, there’s been more uncertainty that’s been fed into the markets,” said FIG’s Pete Briger.
Blackstone said the same over its earnings conference call, “With credit markets hot and equities strong, this is a better time for selling assets than for buying”, said President Hamilton James.