Add the Fortress Investment Group to the list of alternative investment firms who ended 2012 flush with strong earnings.
Fortress more than doubled its profit in the fourth quarter, to $107 million, as the value of its investments showed good growth. That quarterly profit amounted to 20 cents per dividend-paying share, surpassing the average analyst estimate of 14 cents a share, according to Standard & Poor’s Capital IQ. For the year, the firm earned $278 million, up from $242 million.
Fortress’ profit was reported as pre-tax distributable earnings, a measure used by alternative investment shops to track payouts to their limited partners. Using generally accepted accounting principles, the firm swung to a quarterly profit of $222 million from a loss a year ago.
Those healthy results reflect the generally improving condtions for private equity firms and hedge funds, which are benefiting from stable, rising markets and an abundance of cheap financing. Publicly traded investment shops like the Blackstone Group, Kohlberg Kravis Roberts and Apollo Global Management all posted big gains in profitability for last three months of 2012.
“We set and achieved aggressive objectives for 2012, and broad-based momentum built into the close of the year and carried into 2013,†Randal Nardone, Fortress’ interim chief executive, said in a statement. “Our fourth quarter distrib! utable earnings were the highest we have recorded in two years, and we believe only begin to reflect the potential of our company.â€
For Fortress, which runs both hedge funds and private equity funds, virtually all its businesses had gains.
Its mainstay hedge funds reported a big swing into profitability with earnings of $30 million, as they reported improved investment performance. The firm’s macro hedge funds reported a gain of 6 percent for the quarter and 17.8 percent for the year, while its Asia macro funds were up 9.5 percent for the quarter and 21.2 percent for the year.
The division that invests in debt posted $46 million in profit, up 59 percent, as the firm continued to benefit from frothy credit markets and distressed institutions selling off their holdings at discounted prices. Fortress’ private equity funds reported a slight gain in profits, to $31 million, as their holdings’ value rose 3.9 percent in the quarter.
The firm’s traditional asset management arm, Logn Circle, narrowed its loss for the quarter, to $3 million, as it reported a rise in management fees. Fortress also said that it raised $1.5 billion in capital for its core businesses for the quarter and $6.7 billion for the year.
