Oaktree Capital Group LLC (OAK:US), the world’s largest distressed-debt investor, reported a fourth- quarter profit after a loss a year earlier as it realized more gains on investments.
Net income was $39.3 million, or $1.30 a share, compared with a loss of $28.9 million, or $1.28 a share, a year ago, Los Angeles-based Oaktree said in a statement today. Assets under management declined to $77.1 billion from $81 billion at the end of the third quarter as the firm distributed capital to investors.
Oaktree, which went public last year, has told clients it’s targeting the lowest returns it has sought as it aims for gross returns of 15 percent in its distressed strategies, Chairman Howard Marks said in December. The firm is hunting for returns in the emerging markets, starting its first fund to buy dislocated debt in those countries, according to an investor letter obtained by Bloomberg News. The firm also plans to raise $3 billion for its latest distressed-debt fund that seeks to take control of companies, according to people familiar with the matter.
“Asset values are fairly reasonable,” Marks said yesterday at Credit Suisse Group AG’s financial services conference in Miami. “Equity price-to-earnings ratios are below average, high-yield bond spreads are generous and real estate prices are down. So that’s not a scary outlook.”
Oaktree reported results before U.S. markets opened for trading. The shares have advanced 16 percent to $49.90 since the firm’s April 11 initial public offering. Oaktree raised $380 million in the IPO, selling 8.84 million shares for $43 each, the bottom of the proposed range.
Adjusted net income, a measure of profit excluding some costs, rose to $220.4 million, or $1.36 a share, from $76.7 million, or 33 cents, a year ago, Oaktree said. Adjusted net income excludes some expenses, including noncash equity compensation and income taxes.
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