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CNN Money – Hedge fund firm Och-Ziff Capital Management Group reported a wider second-quarter net loss Tuesday and lower-than-expected distributable earnings, a number analysts look at closely.
The New York-based firm, one of only a small number of publicly traded hedge fund firms, said its net loss grew to $88.3 million, or $1.15 per diluted Class A share because it earned less in management fees as assets under management shrunk. A year ago, Och-Ziff earned $60.8 million, or 82 cents per share.
Reuters – Och-Ziff Capital Management Group, a U.S. hedge fund giant banged up by last year’s market turmoil, said its funds continued their 2009 revival with June gains, although assets under management slipped once again.
The New York firm estimated total assets fell by $800 million in June to $20.7 billion, continuing the contraction of a firm that managed nearly $34 billion last August.
Bloomberg – Daniel Och had about 35 percent of his $20 billion of hedge-fund assets in cash during the first quarter because he suspects global stock markets will start falling again.
“The world will not just bounce back to where it was,” Och, the 48-year-old chief executive officer of New York-based Och-Ziff Capital Management Group LLC, wrote last month in a letter to investors, referring to the gain of almost 35 percent in the Standard & Poor’s 500 Index since March 9. “We continue to believe that economic recovery will be a long process.”
OZ Master, Och-Ziff’s biggest hedge fund, rose 6.3 percent this year through April after losing 15.5 percent last year. The S&P 500 fell 3.4 percent in the first four months of 2009 after dropping 38 percent in 2008.
Bloomberg – Executives at buyout, venture-capital and hedge-fund firms will pay an estimated $24 billion more in taxes over nine years if President Barack Obama gets his way.
Obama’s 2010 budget proposal, released today, proposes raising taxes on the managers by treating carried interest, the portion of profits they take from successful investments, as ordinary income instead of capital gains. That change would boost the tax rate, starting in 2011, to 39.6 percent for most executives from the 15 percent they now pay.
The proposal applies to partnerships that receive a portion of the profits they make for their clients. It will likely reignite a debate begun in 2007 amid the biggest buyout boom in history, when firms including Blackstone Group LP and Och-Ziff Capital Management Group raised their profiles through public stock listings. While the House of Representatives approved the tax change that year, the measure wasn’t taken up by the Senate.
“Obama and his team are up for a fight here,” said George Teixeira, a managing director with accounting firm RSM McGladrey in New York. “They’re missing key components of what these industries do.”
The change could hurt funds’ abilities to hire and retain managers, Teixeira said. The majority of pay at hedge funds and private-equity firms is drawn from their share of clients’ profits, typically 20 percent of the gains.
“If they have an incentive to give, they can keep their talent,” he said. “If that’s not there, it’s going to be tough to keep people.”
Bloomberg - GLG Partners Inc., the hedge-fund firm founded as a unit of Lehman Brothers Holdings Inc., and Och- Ziff Capital Management Group LLC reported lower fourth-quarter profits as their funds posted losses.
GLG’s profit excluding acquisition costs dropped 78 percent to $28.2 million, or 9 cents a share, from $127 million, or 38 cents, a year earlier, the London-based company said in a statement today. That compares with an average estimate of 6 cents a share, according to four analysts surveyed by Bloomberg. Assets fell to $15 billion from $17.3 billion in September and $24.6 billion a year earlier, dragged down by losses.
Reuters - Two years ago, investors scrambled to snap up shares in elite hedge fund firms, eager for a piece of the lucrative action. What they got instead were big losses.
Starting in early 2007, when hedge fund and private equity firms were minting cash, four private investment firms cracked open the door to let in small investors. Fortress Investment Group LLC, Och-Ziff Capital Management Group, Blackstone Group LP and GLG Partners Inc led a new class of firms that let ordinary investors ride the wave of hedge fund riches.
