Och-Ziff Has First Inflows in Two Years

• May 02 2018
• Katia Porzecanski

Och-Ziff Capital Management Group LLC is finally bringing investors back into the fold after suffering eight straight quarters of outflows.

Och-Ziff Capital Management Group LLC is finally bringing investors back into the fold after suffering eight straight quarters of outflows.

The hedge fund firm, founded by billionaire Dan Och, lured $381 million in client cash in the first three months of this year, marking the first quarter of net inflows since 2015, the company said in a statement Wednesday. While Och-Ziff’s flagship multistrategy fund continued to have withdrawals, losing about $552 million, they were offset by $1 billion of inflows to the firm’s Institutional Credit Strategies, which invests in products that include collateralized loan obligations.

The firm continued to post net inflows of $11.6 million in April through May 1, according to the statement.

Redemptions for the New York-based firm have petered since reaching close to $5 billion in the first quarter of 2017. Och-Ziff has had to grapple with the fallout of settling a five-year bribery probe, changes to Och’s succession plan, executive departures and a slump in shares. Robert Shafir, a former executive at Credit Suisse Group AG who succeeded Och as chief executive officer on Feb. 5, has been leading a turnaround that’s included shrinking or shuttering non-core businesses, including the company’s European and Asia hedge funds.

Read more about Och-Ziff closing its Asia fund

“Our funds performed very well in the first quarter amidst an increasingly volatile market and we made great progress on our balance sheet strengthening,” Shafir said in the statement. “We look forward to building on this solid start throughout the rest of 2018.”

In its earnings report today, Och-Ziff reported distributable earnings of $45.3 million, or 8 cents a share, in the quarter ended March 31, compared with $35.7 million, or 7 cents, a year earlier.

Assets stood at $32.7 billion as of May 1, up about 2 percent from a year prior as strong investment gains over the last year have buffered outflows.

Last year, Och-Ziff saw $7.6 billion in client withdrawals, despite handing investors in its flagship fund a return of 10.4 percent -- the best performance since 2013. The OZ Master Fund returned 2.3 percent this year through April 30, compared to a 0.9 percent loss by the HFRX Global Hedge Fund Index, an early indicator of industry performance.

Both S&P Global Ratings and Fitch Ratings revised Och-Ziff’s credit outlook to stable from negative last month, after the firm said it would issue debt to help repay $400 million of bonds maturing next year.