Fortress Investment Group reported assets under management of $58 billion as of Sept. 30, a 6.2% increase from the end of the second quarter and a 12.6% increase from Sept. 30, 2012.
Credit and private equity funds had about $5.7 billion and $1.6 billion of uncalled capital, respectively. Uncalled capital or dry powder — capital committed to the funds but not invested and generating management fees — includes $2.3 billion that is only available for follow-on investments, management fees and other fund expenses, the company reported.
Pretax distributable earnings, which exclude some compensation costs and other items, increased 1.6% to $65 million.
Fortress’ hedge fund unit recorded a loss in the third quarter as returns slumped in strategies seeking to profit from macroeconomic events and those focused on investments in Asia. Fortress’ macro strategy, the biggest hedge fund run by the firm, lost 3% in the quarter, and its Asia macro fund declined 1.1%.
“We gave back some returns in the third quarter, which is never acceptable to a team focused on delivering strong and consistent absolute returns,” Michael Novogratz, co-chief investment officer of the macro funds, said in an earnings statement. Mr. Novogratz said his funds have had a “good start” in October.
Fortress’ liquid hedge fund unit posted a pretax loss in distributable earnings of $11 million in the quarter, compared with a gain of $8 million a year earlier. Pretax distributable earnings in the private equity unit rose to $30 million, up from $28 million a year earlier.
Fortress’ private equity business benefited from a 10% appreciation in its portfolio in the quarter.
Fortress’ distributable earnings differ from U.S. generally accepted accounting principles. Under those rules, known as GAAP, the company’s net income attributable to Class A shareholders was $42 million compared with $1 million a year earlier.