Fortress Investment Group Closing It’s Macro Hedge Fund

Fortress Investment Group Stock Falls after News of Closing It’s Macro Hedge Fund.

Fortress Investment Group plans to close down its macro hedge fund after two years of losses, including a 17.5 percent swoon this year through September. Hedge fund manager Mike Novogratz Novogratz is expected to leave Fortress.

Mike Novogratz

Mike Novogratz

Hedge fund manager Fortress, which is also in the private-equity business, and hedge fund manager Och-Ziff Capital Management Group went public in 2007.

Fortress went public at $18.50 a share and jumped to $31 in its first day of trading on Feb. 9, 2007, eight months before the market’s pre-financial-crisis peak. Fortress closed today at $5.44, down 71 percent from its offering price. Och-Ziff went public at $32 a share in November 2007 and has also lost about three-quarters of its value since.
Fortress shares have been moribund even as the broader S&P 500 recovered from the financial crisis.
Fortress’s adjusted earnings per share fell 44 percent in 2014 after surging 193 percent in 2013, holding steady in 2012, dropping 32 percent in 2011 and, well, you get the idea. Its quarterly revenue has missed or beat consensus analyst estimates by about 16 percent, on average, while Och-Ziff’s has been off by about 13 percent. By comparison, People’s United Financial — a bank with a market value not much bigger than Och-Ziff — has surprised on revenue by an average of less than 4.5 percent.

Both hedge funds Fortress and Och-Ziff have been doomed to trade at single-digit forward P/E ratios for most of the past five years. Even those low valuations, coupled with a dividend yield of almost 6 percent for Fortress and more than 7 percent for Och-Ziff, have not seemed to attract much in the way of value-hunting daredevils.

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