Fortress CEO Sees New Demand for Funds

(Reuters)—Fortress Investment Group is raising money for new funds and benefiting from investors’ renewed demand for alternative assets like hedge and real estate funds, the firm’s Chief Executive said on Wednesday [Dec. 9].

“Capital is flowing back into hedge funds,” Daniel Mudd said at the Goldman Sachs U.S. Financial Services Conference. Demand is especially strong for funds specializing in distressed investments and global macro strategies, he said, adding that Fortress is raising money for distressed portfolios now.

Hedge fund assets surpassed $2 trillion in November for the first time in a year as investors slowly began adding new money and performance improved, data from showed Previous Reuters Story.

Mr. Mudd, who succeeded Fortress co-founder Wesley Edens as CEO in July Previous Reuters Story, also said the company recently raised $500 million for portfolio of Japanese real estate.

Fortress, one of only a handful of publicly traded private equity and hedge fund firms, manages $32 billion. It took a beating during the financial crisis. While the company’s stock price has surged 295% this year, it is still down 79% from where it began trading when Fortress went public in February 2007.

The share price was down 1.5% to $3.89 in morning trading on the New York Stock Exchange.

Mr. Mudd, a former CEO at Fannie Mae, said most of Fortress’ funds are close to reaching their high-water marks, meaning their values are expected to reach new highs, which would allow the company to begin charging incentive fees again.

“We have improved performance across the board in 2009,” Mr. Mudd told analysts at the conference.

(Reporting by Svea Herbst-Bayliss; editing by John Wallace)