Shares of investment manager
Fortress Investment Group LLC
) gained more than 1% after it reported first-quarter 2014
pre-tax distributable earnings of 21 cents per share on May 1.
Results outpaced the Zacks Consensus Estimate of 18 cents and
came in a penny ahead of the year-ago number.
AFFIL MANAGERS (AMG): Free Stock Analysis
AMERIPRISE FINL (AMP): Free Stock Analysis
FRANKLIN RESOUR (BEN): Free Stock Analysis
FORTRESS INVEST (FIG): Free Stock Analysis
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With this, Fortress Investment delivered positive earnings
surprises in 3 of the trailing 4 quarters with an average beat of
Results were primarily driven by increased revenues. A strong
balance sheet position and improved management fee paying assets
under management (AUM) were among the positives for the quarter.
However, higher expenses were on the downside.
On a GAAP basis, net income came in at $6 million, significantly
down from the prior-quarter net income of $67 million.
Total revenue increased 27% year over year to $310 million in the
reported quarter. The increase was primarily driven by the Media
Business owing to the consolidation of New Media, partly offset
by lower management fees from affiliates. It also surpassed the
Zacks Consensus Estimate of $212 million.
Other income plummeted to $9 million from $70 million in the
prior-year quarter. The slump in other income was primarily
attributable to unrealized losses of $5 million, while the
prior-year quarter reaped unrealized gains of $36 million. Also,
lower earnings from equity method investees led to the decline.
Total expenses was up 39% year over year to $307 million. This
was mainly due to allied expenses incurred in Media Business for
the consolidation of New Media in Feb 2014. Also, the rise was
due to increased costs related to compensation and benefits and
general, administrative and other expenses.
As of Mar 31, 2014, management fee paying AUM increased 12% year
over year to $62.5 billion. Notably, the Logan Circle division
witnessed net client inflows of $0.5 billion.
As of Mar 31, 2014, total uncalled capital came in at $6.6
billion, which is available for common investment purposes.
As of Mar 31, 2014, cash and cash equivalents were $184.6
million, compared with $364.6 million as of Dec 31, 2013. Debt
obligation stood at $125 million in the quarter. Notably, there
was no debt obligation outstanding in the prior quarter.
The company repurchased around 60.6 million shares at a price of
$6.00 per share, representing around 12% of total dividend-paying
We remain encouraged owing to the company's consistent organic
growth. However, the rising expenses along with the macroeconomic
headwinds across the industry remain concerns.
Performance of Other Investment Management Firms
Among other asset managers,
Franklin Resources Inc.
) March-quarter results missed the Zacks Consensus Estimate,
Affiliated Managers Group Inc.
Ameriprise Financial, Inc.
) outpaced the Zacks Consensus Estimate.