Fortress Investment Group announced $54 million in profits for the three months ending December 31, down from $61 million in the same period last year. The firm posted its highest-ever 4Q distributable earnings at $0.30 a share. In line with the buybacks announced by PE giants KKR, Apollo and The Carlyle Group, Fortress announced a tender offer for $100 million in stock to close a week from today. This comes on top of the recent $256 million buyback of a 13% stake held by Mike Novogratz, Fortress's former global macro hedge fund manager. The Fortress Macro Fund was shuttered amid underperformance to focus efforts on the core PE and credit investment strategies. Firm-wide fee-generating AUM declined 5% to $70.5 billion during the quarter.
In spite of Fortress's generous dividend to public investors, shares have declined about 40% in the last year, in line with underwhelming returns of other publicly traded investment houses. This skittishness may be a reflection of opaque accounting and liquidity concerns stemming from the recent market rout in high yield debt markets. Wes Edens, head of the firm’s PE arm, echoed observations made in our recent PitchBook reports that “liquidity in capital markets is very, very ineffective right now,” and that “underlying liquidity in the asset businesses we traffic in is overall very poor.”