Och-Ziff Capital Management Group LLC (OZM:US), the hedge-fund manager run by Daniel Och, reported a 15 percent increase in second-quarter profit on higher performance and management fees and lower taxes.
Distributable profit, a measure excluding costs related to Och-Ziff’s 2007 initial public offering, increased to $77.5 million, or 16 cents a share, from $67.2 million, or 15 cents a share, a year earlier, the New York-based company said today in a statement. Earnings beat (OZM:US) the 13 cent average estimate of nine analysts surveyed by Bloomberg.
Och-Ziff, known for its multistrategy hedge funds that bet on everything from rising and falling stock prices to mergers and bankruptcies, has expanded into credit strategies and long-short equity as it seeks to attract clients. Investors deposited a net $895 million into the firm’s funds in the second quarter and market appreciation added $680 million, bolstering fees.
“Pension funds remain our largest source of new capital on a year-to-date basis through Aug. 1, and private banks have also been a substantial contributor to our net inflows,” Och said in the statement. “Reception by fund investors to our dedicated credit platforms continues to be strong.”
Clients pulled about $200 million since the end of June, which was more than offset by about $300 million in performance gains, bringing assets as of Aug. 1 to a record $36.7 billion.
Och-Ziff rose 0.3 percent to $11.52 at 9:31 a.m. in New York, bringing gains this year to 21 percent. The 20-member Standard & Poor’s index of custody banks and asset managers has risen 31 percent in the same period.
Och-Ziff’s distributable earnings don’t comply with generally accepted accounting principles. The firm reported net income (OZM:US) of $4.9 million, or 3 cents a share. That compares with a loss of $116.2 million, or 82 cents a share, a year earlier.
Och-Ziff’s OZ Master Fund gained 2.4 percent in the second quarter, the firm said in the statement. The OZ Europe Master Fund rose 1 percent, and the OZ Asia Master Fund advanced 2.8 percent. Dan Manor, a Hong Kong-based partner who oversaw Asia long-short equity investments, left Och-Ziff, a person with knowledge of his departure said in May.
“We took advantage of the sell-off in corporate credit markets and added to existing distressed positions that we believe were oversold in the dislocation” during the second quarter, Och said on a conference call today.
Collateralized loan obligations represented about two-thirds of Och-Ziff’s asset growth in the first half of the year, Chief Financial Officer Joel Frank said during the conference call. CLOs are a type of collateralized debt obligation that pool high-yield, high-risk loans and slice them into securities of varying risk and return.
Och, a former Goldman Sachs Group Inc. trader, left the firm in 1994 to start a hedge fund for Ziff Brothers Investments LLC, which managed the Ziff family’s publishing fortune. He oversaw money solely for the Ziffs for five years and then opened his fund to outside investors in 1999.
Och-Ziff has made $10.9 billion for clients investing in the firm’s funds since inception, according to a report by LCH Investments NV earlier this year.
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