Och-Ziff Capital Management Group LLC (OZM), the hedge-fund firm run by Daniel Och, said second-quarter profit rose 17 percent on higher management fees.
Distributable profit, a measure excluding costs related to Och-Ziff’s 2007 initial public offering, increased to $90.4 million, or 18 cents a share, from $77.5 million, or 16 cents, a year earlier, the New York-based company said today in a statement. Earnings per share matched the average estimate of eight analysts surveyed by Bloomberg.
Higher management fees were partially offset by lower incentive income, which is tied to the performance of the firm’s funds. The firm, known for its multistrategy hedge funds that bet on everything from rising and falling stock prices to mergers and bankruptcies, managed $45.7 billion as of Aug. 1, and has sought to expand its credit, real estate and long-short equities businesses to attract clients.
“Our assets under management have grown rapidly due to the strong momentum across our products,” Och said in the statement. “Globally, we believe that pension funds and other institutions will continue to increase their allocations to alternative asset managers, and that we will be a substantial beneficiary of this secular trend as we further expand and diversify our business.”
Investors deposited a net $2.6 billion into Och-Ziff funds in the second quarter, bringing assets as of June 30 to $45.9 billion. Clients redeemed about $252.9 million since the end of the quarter through Aug. 1.
Och-Ziff reported earnings before the start of regular trading in New York. The shares declined 6.4 percent this year through yesterday. The firm disclosed in March that U.S. regulators are investigating whether it broke bribery laws in accepting an investment from a sovereign wealth fund.
Och-Ziff received subpoenas starting in 2011 from the U.S. Securities and Exchange Commission as part of a probe into possible violations of the Foreign Corrupt Practices Act, the company said in a regulatory filing. The Justice Department has requested information from Och-Ziff as part of the same investigation, according to the filing. The sovereign fund is the Libyan Investment Authority, a person with knowledge of the matter said at the time.
Och-Ziff’s distributable earnings don’t comply with generally accepted accounting principles. The firm reported net income of $10.7 million, or 5 cents a share. That compares with net income of $3.8 million, or 2 cents a share, a year earlier.
Och-Ziff’s OZ Master Fund fell 0.1 percent in July and gained 2 percent this year, the firm said in a filing yesterday. The OZ Europe Master Fund rose 0.3 percent last month, paring year-to-date losses to 1.7 percent and the OZ Asia Master Fund climbed 2.4 percent in July and declined 4.4 percent in 2014.
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.
To contact the editors responsible for this story: Christian Baumgaertel at email@example.com Josh Friedman, Pierre Paulden