Fortress Posts Third Quarter Loss

NEW YORK (Reuters) – Fortress Investment Group LLC (FIG.N), a listed hedge fund and private equity giant, posted a third quarter loss on Friday as management fees tracked a decline in total assets.

Fortress shares were down 5 percent or 23 cents at $4.34 in morning trading.

Fortress said its net loss attributable to Class A shareholders was $59 million, or 43 cents a share, in the quarter, compared with a loss of $57 million, or 66 cents, in the year-earlier period.

Revenue came in at $143.7 million, down from $185.2 million a year earlier, mainly on lower management fees. Analysts had expected revenue of $123 million, according to Thomson Reuters I/B/E/S, and pretax distributed earnings of 9 cents a share. Pretax distributed earnings were 11 cents a share, the company said.

Like other hedge fund firms, Fortress was hit hard last fall as waves of cash-strapped investors tried to withdraw their money. At the end of the quarter Fortress managed $32 billion in assets, down from $34.3 billion a year earlier as it tried to block redemptions.

On a conference call with analysts, Fortress Chief Executive Daniel Mudd was upbeat, noting its assets under management were 21 percent higher than their low of $26.5 billion at the end of March. “After all the gloom and doom, I think we may be going into a golden age of alternatives,” he said.

Other hedge fund managers have also reported the return of new money as markets rebounded this year. Many industry watchers say last year’s worst-ever returns and record redemptions are safely behind them.

The stock has plunged 81 percent since going public at the peak of the buyout bubble in early 2007, though it has surged fourfold from a record low in December last year.

(Reporting by Joseph A. Giannone and Ross Kerber; Editing by Derek Caney, Phil Berlowitz)