Och-Ziff Capital Management Group LLC a hedge fund run by Daniel Och, reported a 94% drop in profit in the fourth quarter due to bad performance. Most of Och-Ziff Capital’s hedge funds lost money in 2011 and had to lose out on performance fees. Management signals that three of its four funds lost up to 4.9% due to the European financial crisis. However, the capital management group said they were able to recuperate from $300 million in redemptions.
Och commented on the released financials with, “Last year was particularly volatile, characterized by the most difficult market conditions since 2008”. No doubt last year was a very challenging environment especially with the US debt ceiling debate and the ongoing European debt crisis.
Clint Carlson's Carlson Capital Double Black Diamond fund returned 3.34% in August net of fees. Following this performance, the fund is up 8.82% year-to-date net, according to a copy of the firm's August investor update, which ValueWalk has been able to review. On a gross basis, the Double Black Diamond fund added 4.55% in August Read More
The report also showed a rather unfortunate statistic for Och-Ziff in that investors redeemed $38 billion in the 4th quarter to bring a total of $28.8 billion under management. The firm lost over half its total assets in the 4th quarter as investors grew weary of poor performance and looking for different opportunities. On top of that the firm sold 33.3 million shares of its stock at $7.50 a share on November 17, a 19% discount from where the company had announced it would sell its stock to repay a $622 million loan that is due in July. Och, in December, said that the move was premature and could have been held longer. However, the firm has had a strong start to 2012 mostly due to the fact that S&P 500 is up 4.4%.
Individual fund wise, the firm’s flagship fund the OZ Master Fund, gained a measly 0.1% last quarter. Its OZ European Master Fund lost 1.5%, OZ Asia Master Fund declined 0.2%, and The OZ Global Special Investments Master Fund increased 0.5%. The firm was under fire for its ownership of Greek debt. Investors grew weary of its possible role on squeezing Greek officials into drawing and passing a deal to create a plan on its debt load situation. The firm responded by saying that its exposure to Greek debt was very miniscule and that it has not and will not take any action by pressing Greek officials on a debt deal.
Its been a wild 2011 for Och-Ziff Capital Management but 2012 has proven to be a strong start for the firm as all four funds are up at least 1.3%. However, that poor 4th quarter of a loss of $137 million, or $1.17 a share will be a black eye for the firm for some time to come. I advise to steer clear of its stock and its funds until conditions improve.