Hedge fund stalwart Och-Ziff Capital Management Group LLC (NYSE:OZM)’s reported positive second-quarter earnings on Tuesday, July 5th, with strong revenue from management fees and income of consolidated funds.
Chairman and CEO Daniel S. Och spoke at a conference call Tuesday, saying that that upward momentum across products drove up assets under management. Och also mentioned that he anticipates pension funds and other institutions to invest more with alternative asset managers, which should benefit the firm during this period of expansion.
Details on the 2Q earnings report
Och-Ziff Capital Management Group LLC (NYSE:OZM) turned in a profit of $10.7 million, or five cents per Class A share in the latest period, almost tripling its profit of $3.8 million, or two cents a share, in 2Q 2013. The important metric of distributable earnings rose to 18 cents per Class A share from 16 cents a share, in line with analyst consensus views.
Total revenue for the firm was up 15% to $262.5 million, largely fueled by burgeoning management fees.
Revenues from management fees soared 19% to more than $164 million. Incentive income slid 52% to $10.9 million, and the income of consolidated Och-Ziff funds was up a solid 27% to $87.3 million.
Och-Ziff Capital Management Group LLC (NYSE:OZM)’s assets under management hit $45.9 billion as of June 30, compared to $36.6 billion at the end of June 2013.
RBC rates Och-Ziff Outperform
RBC Capital markets dashed off a quick investors note following the Och-Ziff Capital Management Group LLC (NYSE:OZM) 2Q earnings report. The firm noted that O-Z’s top line growth of 10% was somewhat below their expectations because of lower incentive income in the June quarter.
RBC lead analyst Bulent Ozcan also pointed out that the $159.7 million in management fees were above his estimate of $158.3 million. He further noted that management fees were up 18% year over year, while total AuM surged by 25%. The increased fees are likely related to the addition of lower fee earnings assets under management.
Och-Ziff reported net flows of $2.6 billion for the quarter and RBC had estimated inflows of just $853 million. Year to date net inflows were set to top $4.5 billion as of August 1, 2014.
The RBC analysts also note that Och-Ziff’s BoD declared a $0.17 dividend for the second quarter, a big bump up from the $0.14 paid in the second quarter of 2013.
Finally, the RBC report reiterates the firm’s Outperform rating and $13.85 price target on Och-Ziff Capital Management Group LLC (NYSE:OZM).