Och-Ziff Profit Drops Amid Lower Incentive Income

0
Och-Ziff Profit Drops Amid Lower Incentive Income

Och-Ziff Capital Management Group LLC (NYSE:OZM) unveiled its third-quarter results today with profit falling 10% on the back of lower performance fees and higher compensation and taxes. The New York-based hedge fund’s assets under management were $46.8 billion as of Sept. 30, as compared with $40.2 billion a year earlier.

Growth in management-fee revenue

Och-Ziff Capital Management Group LLC (NYSE:OZM) reported a profit of $23.2 million, or 9 cents a Class A a share, down from $28.9 million, or 15 cents a share, a year earlier. The hedge fund’s total revenue grew 9.3% to $306.7 million.

[Exclusive] DG Value Underperforms In H1, Sees Growing Number Of Distressed Opportunities

Dov Gertzulin's DG Capital has had a rough start to the year. According to a copy of the firm's second-quarter investor update, which highlights the performance figures for its two main strategies, the flagship value strategy and the concentrated strategy, during the first half of 2022, both funds have underperformed their benchmarks this year. The Read More

The institutional alternative asset manager’s revenue from management fees grew 22% to $171.9 million, and the income of consolidated Och-Ziff funds increased 60% to $106.5 million.

The hedge fund’s distributable profit, a measure excluding some costs pertaining to Och-Ziff’s 2007 initial public offering, dropped to $116.7 million, or 23 cents a share, from $130.3 million, or 27 cents, a year earlier.

The hedge fund’s incentive income, which is tied to how well the firm’s funds perform, dropped 61% to $28 million, partly offset by a 22% increase in management fees, which rise or fall with the amount of money overseen.

Daniel Och, who runs the hedge fund, said in a statement: “We continued to grow the assets in our dedicated credit, real estate and long-short equity products.” He added: “We believe that we are benefiting from the secular trend of the largest investors increasing their allocations to leading alternative asset managers across multiple asset classes.”

Och-Ziff’s negative flow in October

Tracking the hedge fund’s third-quarter performance, RBC Capital Markets said in today’s research report that the hedge fund continues to generate positive net flows in the third quarter, though flows turned negative in October.

The RBC analysts note that Och-Ziff Capital Management Group LLC (NYSE:OZM)’s top line growth of 9% exceeded their expectation. However, they point out that the hedge fund’s management fee revenues grew at a lower pace than their expectations. The analysts also pointed out that Och-Ziff’s incentive income of $60.5 million in the September quarter effortlessly exc