Och-Ziff Capital Management LLC's assets fell a precipitous $11.3 billion over the past six quarters after redemptions drained the firm's most liquid investment strategies in its flagship hedge fund family.
The fate of the firm is resting in the hands of institutional investors that are deciding whether to remain with the New York-based manager after it settled federal charges Sept. 29 relating to violations of the Foreign Corrupt Practices Act over bribes paid to Libyan officials by a subsidiary.
What is apparent from the Och-Ziff's quarterly earnings reports is that the assets have fallen 23.4% to $37 billion as of Nov. 1 from the peak of $48.3 billion as of March 31, 2015.
The U.S. Department of Justice and the Securities and Exchange Commission began a joint investigation of the company in 2011, but it wasn't until the third quarter of 2015 that OZ's firmwide assets began to drop significantly. Assets have fallen every quarter since, a combination of net outflows and modestly positive to negative performance.
The firm's six multistrategy hedge funds have borne the brunt of investor withdrawals, with assets declining 31% or $10.5 billion to $23.4 billion as of Sept. 30 from $33.9 billion on March 31, 2015, with outflows balanced by modest investment gains, Pensions & Investments' analysis of OZ quarterly reports showed.
In addition to net outflows, gross inflows into Och-Ziff's multistrategy hedge funds were “substantially lower this year,” Daniel S. Och, chairman and CEO, told analysts during a second-quarter earnings call.
“We believe that this is the result of a number of factors, including the macroeconomic backdrop, (and) individual LP allocation decisions,” Mr. Och added.