Fortress Investment posts wider 3rd-qtr loss

Alternative asset manager Fortress Investment Group LLC said Friday its third-quarter loss deepened as it cut expenses and recorded a big gain on affiliate investments.
NOV 06, 2009
Alternative asset manager Fortress Investment Group LLC said Friday its third-quarter loss deepened as it cut expenses and recorded a big gain on affiliate investments. For the three months ended Sept. 30, the company posted a loss of $58.6 million, or 43 cents per share, compared with a loss of $57.4 million, or 66 cents per share in the year-ago period. The latest quarter's results reflect 12 percent more shares outstanding. Pretax distributable earnings, which exclude charges such as a special compensation agreement for principals of the firm, totaled $57 million, or 11 cents per share. Fortress paid out $240 million in the second quarter as part of the compensation agreement. Analysts polled by Thomson Reuters, on average, expected profit of 9 cents per share. Analysts do not always include special charges in their estimates. Revenue slid 22 percent to $143.7 million from $185.1 million last year. Wall Street had forecast revenue of $123.2 million. The revenue drop reflected a 31 percent decline in management fees to $106.9 million. Incentive income from affiliates, however, jumped more than tenfold, to $7.6 million, from $718,000 in the year-ago quarter. Expense reimbursements from affiliates doubled, to $25 million, from $12.5 million last year. Fortress cut expenses by 3 percent to $397.6 million, including the principal's compensation payout. Net realized losses narrowed to $408,000, from $2.5 million last year, and the company recorded a net realized gain from affiliate investments of $315,000, versus a $671,000 loss last year. Fortress' loss also narrowed because of $20.3 million gain from affiliate investments. During the same quarter last year, Fortress recorded a $7 million loss from affiliate investments. Assets under management fell 7 percent to $32 billion from $34.3 billion last year. Customers redeemed $766 million in cash during the quarter, primarily from hedge funds managed by Fortress. Fortress shares slipped 28 cents, or 6.1 percent, to $4.29 in afternoon trading. The stock has changed hands between 77 cents and $8.30 in the past 52 weeks, and has more than tripled since the start of the year.

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