Och-Ziff beats profit estimates but sees fund redemptions
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By Svea Herbst-Bayliss
BOSTON (Reuters) - Hedge fund company Och-Ziff Capital Management Group, on Wednesday posted a stronger-than-expected quarterly profit, sending its stock higher, but it warned that a bribery scandal will keep driving investors to withdraw money from its assets under management.
Third-quarter distributable earnings, excluding adjustments related to taxes and a bribery settlement with the U.S. government, totaled $51.9 million, or 10 cents a share, the company said. This compares with $66.1 million, or 13 cents a share, a year earlier.
Wall Street analysts had expected New York-based Och-Ziff to earn 6 cents a share. The company's stock rallied 3.2 percent to $3.22, paring its gains from a session high of $3.30.
The company said it will not issue a dividend for the quarter in order to have some breathing room after it agreed in September to pay $412 million to resolve federal probes into its role in bribing officials in several African countries.
Chief Executive Daniel Och said he expects fourth-quarter redemptions to be somewhat elevated due to the scandal, extending a recent trend. He declined to be more specific.
Investors pulled out roughly $3.4 billion during the third quarter after having asked to get $1.5 billion back in the second quarter, the company said.
On Nov. 1, the company said it had $37 billion in assets, down from $39.3 billion on Sept. 30 and $44.5 billion at the end of September 2015.
Last week the state of Rhode Island's pension fund asked for its money back..
Wall Street analysts expect revenue to keep falling, due to investor redemptions and the company's decision last month to cut the fee it charges investors for managing their money to around 1 percent.
Traditionally hedge funds charge a 2 percent management fee as well as 20 percent of the gains they earn on the investments.
Most of the outflows have come from Och-Ziff's flagship Master Fund, the company said. At the same time it is raising money to invest in the credit markets.
"We are in growth mode in credit," Och said on the conference call with analysts.
(Reporting by Svea Herbst-Bayliss Editing by W Simon)
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