Och-Ziff Capital Management Group LLC (NYSE:OZM) reported its first quarter financial results, which was described by an analyst at RBC Capital Markets as a mixed bag in a note to investors today.

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RBC Capital Markets analyst Bulent Ozcan commented that he was impressed by the capital raised by Och-Ziff Capital Management Group LLC (NYSE:OZM), but he perceived that performance issues could persist.

Ozcan noted that the different positive developments achieve by the firm year to date, however he emphasized that they are “getting increasingly worried that a turnaround cannot be achieved quickly.”

He noted that the April fund performance reported by Och-Ziff Capital Management Group LLC (NYSE:OZM) today left them wondering if it will be able to repeat its strong performance last year.

Och-Ziff Capital financial results

Och-Ziff Capital Management Group LLC (NYSE:OZM) reported distributable earnings of $127.8 million or $0.25 per adjusted class A shares, higher than the $0.17 estimated by RBC Capital Markets and the $0.16 Street consensus estimate for the first quarter.

Its distributable earnings were 7% lower compared with $136.9 million or $0.29 per adjusted class A shares delivered in the year-ago quarter.

The firm said it has $43.5 billion estimated assets under management as of May 1, 2014. Och-Ziff Capital Management Group LLC (NYSE:OZM) said the year-to-date net returns of Oz Master Fund was -0.93%, OZ Europe Master Fund was -1.33%, and the OZ Asia Master Fund was -9.18% through April 30.

Daniel S. Och, chairman and CEO of Och-Ziff Capital Management Group LLC (NYSE:OZM) said, “The first quarter of this year was marked by challenging equity market conditions and increased volatility globally, and these conditions persisted into April.”

Positive developments

Ozcan noted that Och-Ziff Capital Management Group LLC (NYSE:OZM) did an excellent job in raising capital, and continues to gain traction with pension funds and private banks. He expected that the momentum with such investors will remain strong.

He also observed that the firm’s business is more diversified and perceived attractive opportunities to deploy capital in credit strategies and in real estate. In addition, he noted that the management of Och-Ziff Capital Management Group LLC (NYSE:OZM) did not acknowledge the performance issue and it is focused on turning around its performance.

Reasons behind uncertainty on Och-Ziff quick turnaround

Ozcan explained that they are uncertain with the quick turnaround of Och-Ziff Capital Management Group LLC (NYSE:OZM) because of the fact that China Cinda Asset Management Co Ltd (HKG:1359), which has a meaningful position in the firm’s portfolio has a lock period set to expire on June 12. According to him, the shares of Cinda declined 12% since its IPO. He said Och-Ziff will not be able to sell its stake in Cinda until the expiration of the lock up period.

Furthermore, Ozcan said, “While this might be a one-off item, it cannot be ignored that the Asia Macro fund has been underperforming and that disposing of emerging market shares could pose its own challenges given low liquidity.”

RBC Capital Markets reduced its 2014 performance fee revenue estimate for Och-Ziff Capital Management Group LLC (NYSE:OZM) from $880 million to $650 million, and stock price target from $19 to $16.  The shares of the firm are trading $11.95 per share, down by more than 2% at the time of this writing around 2:06 P.M. in New York.