BOSTON (Reuters) – Fortress Investment Group LLC (FIG.N: Quote, Profile, Research) reported a quarterly loss on Thursday and its share price fell sharply after its hedge fund business suffered in turbulent market conditions.
The 10-year-old company, one of only a handful of publicly traded hedge and private equity firms, reported a first-quarter net loss of $69 million, or 74 cents, compared with net income of $62.1 million a year earlier.
Pretax distributable earnings, which analysts follow more closely, stood at $58 million, or 13 cents per share, below Wall Street's 14 cent-per-share forecast, according Thomson Reuters. This compares with last year's $220 million.
The miss, coupled with the stock's recent gains, prompted investors to sell, sending Fortress' stock price down 6.6 percent, or 97 cents, to $13.59 in midday trading.
Fortress shares began trading on the New York Stock Exchange in February 2007 after being offered to the public at
The company said revenue shrunk to $200.9 million from $416.3 million a year ago, even though the revenue it earned on management fees from its affiliates surged 48 percent to $145 million, as assets under management climbed 46 percent to $34.2 billion.
During the first quarter, Fortress' liquid hedge funds earned $15 million, half the $30 million they earned a year ago. The company said a 56 percent jump in assets to $9.3 billion fueled most of the earnings.
While assets have declined in recent quarters, this is no surprise given the overall market's drop, executives said on a conference call, adding they expect to see ongoing demand for the company's funds.
“If the stock responds negatively to the headline miss, we see this as an excellent opportunity to buy a premier alternative manager at an attractive price,” Bank of America analyst Michael Hecht wrote in a research note.
During the first quarter, Fortress, one of only a handful of publicly traded hedge and private equity companies, said it raised $2.6 billion in capital. It raised an additional $1.8 billion since the end of the quarter.
Those numbers are encouraging considering hedge funds' terrible performance during the first quarter when heavy losses prompted many industry analysts to speculate that a trickle of redemptions might swell into a flood.
(Reporting by Svea Herbst-Bayliss, editing by John Wallace and Maureen Bavdek)