Continue reading Fortress Investment Group looks to Mudd for new leadership

Fortress Investment Group looks to Mudd for new leadership originally appeared on BloggingStocks on Mon, 20 Jul 2009 09:20:00 EST. Please see our terms for use of feeds.

Tom Taulli is the author of various books, including The Complete M&A Handbook and The Edgar Online Guide to Decoding Financial Statements. He is also the founder of BizEquity, a valuation website

Fortress ditches the dividend ... and doubles down on financials originally appeared on BloggingStocks on Fri, 26 Sep 2008 09:00:00 EST. Please see our terms for use of feeds.

MAJOR PAPERS:

• Barnes & Noble Inc (NYSE: BKS) is considering a bid for rival bookseller Borders Group Inc (NYSE: BGP), the Wall Street Journal reported, a move which would allow Barnes & Noble to improve profits and reduce costs. Antitrust issues could prevent a deal.
• The Wall Street Journal also reported that Carl Icahn's effort to remove Yahoo! Inc's (NASDAQ: YHOO) board has picked up new supporters, including T. Boone Pickens, who acquired a 0.75% stake. Some Yahoo shareholders believe it is still too early to predict whether Icahn will be able to carry July 3's shareholder vote.
• A Financial Times investigation discovered that Moody's Corporation (NYSE: MCO) incorrectly awarded top ratings to billions of dollars to debt products due to an error in its computer models. Moody's said it is in the process of "conducting a thorough review" of the rating of the constant proportion debt obligations, which should have been up to four notches lower.

• According to the people briefed on the matter, the New York Times reported that the buyout of Penn National Gaming Inc (NASDAQ: PENN) by Fortress Investment Group (FIG) and Centerbridge Parters may involve revised terms. The sources said the negotiations may "delay or even imperil" the deal.

Newspaper wrap-up: Barnes & Noble may bid for Borders originally appeared on BloggingStocks on Wed, 21 May 2008 08:00:00 EST. Please see our terms for use of feeds.

It's been a year since Fortress Investment Group (NYSE: FIG) went public. At that time, the offering got a nice reception. After all, investors were hungry for hedge fund and private equity operators.

Of course, that's no longer the case. And the stock of Fortress has gone from $34 to a low of $9.50.

Well, this week, the firm announced its fiscal Q4 results. There was a net loss of $29.3 million, or $0.43 per share and pre-tax distributable earnings were down 43% to $78 million, or $0.18 per share. Revenues were also lackluster - falling 22% to $196 million. Although, with a large amount of assets under management (roughly $33.2 billion), Fortress saw a 43% spike in management fees.

With the roiling credit and equity markets, it's tough to complete deals. As a result, there hasn't been much opportunity to realize gains.

Despite all this, the Fortress conference call was upbeat. Keep in mind that the company focuses on asset-based investments, which tend to have less leverage and lower valuations. Besides, as major banks repair their balance sheets, there should be opportunities for players like Fortress to get some choice deals.

Interestingly enough, Fortress thinks that the second half of 2008 will be quite active. And, if the company can scoop up some transactions at compelling valuations, it could position itself nicely for the next couple years, when things get back to normal.

Tom Taulli is the author of various books, including The Complete M&A Handbook and The Edgar Online Guide to Decoding Financial Statements. He also operates DealProfiles.com.

Fortress Investment Group upbeat despite loss originally appeared on BloggingStocks on Tue, 25 Mar 2008 15:40:00 EST. Please see our terms for use of feeds.

There was lots of trepidation on the eve of Fortress Investment Group (NYSE: FIG)'s Q3 earnings report yesterday. After all, Blackstone (NYSE: BX) disappointed the Street.

Well, there was some relief (it also helped that there was a big rally in equities). The company, which operates private equity and hedge funds, posted a net loss of $38 million, or $0.52 per share in Q3. Although, if you strip various elements -- such as certain tax and compensation -- the firm earned $111 million, or $0.19 per share (which is known as pretax distributable earnings).

It was a relief that Fortress indicated there was little exposure to the subprime mess. If anything, the firm sees opportunities in the sector.

In fact, Fortress has some big plans. The firm is in the process of raising funds, with assets of $10 billion to $15 billion. The initiatives will range from infrastructure, commodities, emerging markets and Asian real estate.

What's more, Fortress had a nice realization on its Crown Castle investment. The original investment came in 2002, which involved an initial $120 million stake. The total proceeds since then? A cool $1.7 billion.

Yes, it's a reminder that the private equity business can be very enticing indeed.

Tom Taulli is the author of various books, including The Complete M&A Handbook and The Edgar Online Guide to Decoding Financial Statements. He also operates DealProfiles.com.

Fortress beats back the bears originally appeared on BloggingStocks on Wed, 14 Nov 2007 11:00:00 EST. Please see our terms for use of feeds.

There's been lots of buzz that the upcoming Kolberg Kravis Roberts & Co. (KKR) IPO is dead. In fact, a recent report from the Times of London indicated that the offering has been postponed.

Well, maybe not. That is, KKR has indicated that the rumor is not true.

I have to admire the optimism of KKR (hey, it's probably been a key the firm's success).

No doubt, it's been crummy for private equity. There's a credit crunch. And, of course, the stock prices of The Blackstone Group L.P. (NYSE: BX) and The Fortress Investment Group (NYSE: FIG) have been miserable. It even looks like Carlyle is going to forgo an IPO for 2007.

But, private equity is about the long-term. And, it's in bad markets where the opportunities seem to pop up (especially for those firms that are well capitalized).

What's more, a key test will be KKR's upcoming financing of the mega buyout of First Data Corporation (NYSE: FDC). If the deal can get done, there may be some hope for the KKR offering.

Also, if you want to check out other IPOs planning to hit the markets, click here.

Tom Taulli is the author of various books, including the Complete M&A Handbook and the EDGAR-Online Guide to Decoding Financial Statements.

KKR IPO postponed ... not originally appeared on BloggingStocks on Thu, 23 Aug 2007 16:29:00 EST. Please see our terms for use of feeds.

This week, private equity firm Fortress Investment Group (NYSE: FIG) reported its Q2 earnings. Well, as should be no surprise, compensation costs were higher (not cheap to hire investment gurus). In fact, there was a net loss of $55.1 million. Although, the firm thinks a better metric is "pretax distributable earnings," which came to $143 million in Q2.

What's more, revenues fell from $328.3 million to $268.1 million. No doubt, the private equity game can be volatile.

On the conference call, Fortress CEO Wesley Edens had some interesting things to say about the turmoil in the financial system.

He said that it's going to take some time to clear out the huge amounts of debt that have yet to be placed for buyouts. Much of the debt is on balance sheets of firms like JPMorgan Chase (NYSE: JPM), Lehman Brothers Holdings (NYSE: LEH), and Goldman Sachs Group (NYSE: GS).

Continue reading Fortress (FIG): Buyout meltdown a good thing?

Fortress (FIG): Buyout meltdown a good thing? originally appeared on BloggingStocks on Wed, 15 Aug 2007 15:00:00 EST. Please see our terms for use of feeds.

Private equity fund, hedge fund, and REIT manager Fortress Investment Group (NYSE: FIG) is expected to report earnings before the bell on Tuesday. Although I expect the company to report earnings that surpass expectations and raise guidance, I'd remain out of the stock in coming quarters.

For the quarter, I think the company stands to report in-line or better than expected earnings. As a Goldman Sachs research report noted, "The firm's dividend guidance of $0.225/share (75% of DEPS) offers a hint at 2Q2007 results, which ought to come in ahead of expectations.

The company should also increase its guidance for full year 2007 and 2008 as the company stands to recognize its surplus incentive income. This should increase the guidance rather significantly. In fact, this modeling revision lead Goldman to increase its 2007 estimate by 4 cents to $1.24 and its 2008 estimate by 14 cents to $1.59 per share. Clearly, if recognized, this incentive income will boost the company's bottom line.

Continue reading Fortress (FIG): Look for solid earnings but steer clear of the stock

Fortress (FIG): Look for solid earnings but steer clear of the stock originally appeared on BloggingStocks on Mon, 13 Aug 2007 11:17:00 EST. Please see our terms for use of feeds.

For now, Trump won't sell originally appeared on BloggingStocks on Mon, 02 Jul 2007 16:10:00 EST. Please see our terms for use of feeds.

Penn National gambles on private equity originally appeared on BloggingStocks on Fri, 15 Jun 2007 16:02:00 EST. Please see our terms for use of feeds.

DOW JONES & COMPANY (NYSE: DJ)

Continue reading This week's rumor round-up: Will News Corp pull its offer for Dow Jones?

This week's rumor round-up: Will News Corp pull its offer for Dow Jones? originally appeared on BloggingStocks on Fri, 15 Jun 2007 15:30:00 EST. Please see our terms for use of feeds.

Earlier this year, private equity firm Fortress Investment Group (NYSE: FIG) had an IPO. Blackstone is also preparing its own offering and even got China to invest in its firm.

More and more, private equity firms are taking money off the table. The latest? It's Ares Management. The firm sold a minority interest for $375 million this week.

Who was the buyer? Well, Ares didn't disclose that. But, according to a press release, the buyer was a "long-standing client."

And Ares has some biggie clients. Examples include the Canada Pension Plan Investment Board and California Public Employees' Retirement System (CalPERS).

Based in Los Angeles, Ares manages has about $13 billion under management and has been in operation since 1997. The firm invests in a variety of areas, such as high-yield bonds, mezzanine debt, and bank loans.

Like other private equity firms, Ares has been growing at a staggering rate over the past few years. So, why not take some money?

Tom Taulli is the author of various books, including The Complete M&A Handbook and the EDGAR-Online Guide to Decoding Financial Statements.

Private equity fund Ares cashes out originally appeared on BloggingStocks on Wed, 30 May 2007 19:50:00 EST. Please see our terms for use of feeds.

Fortress snags Florida East Coast in $2.2 billion buyout originally appeared on BloggingStocks on Tue, 08 May 2007 15:28:00 EST. Please see our terms for use of feeds.

Suppose you have a wildly successful business in an ultra hot market. Time to sell?It's probably something to consider. Well, that's certainly the state of affairs in the private equity world.

According to the Wall Street Journal, the founder of Apollo Management LP, Leon Black, is mulling these kinds of cash-out issues [subscription required]. His private equity firm is one of the largest and has done deals such as for Harrah's Entertainment Inc. (NYSE: HET), Realogy Corp. (NYSE: H), and Nalco Holding Co. (NYSE: NLC).

Based on the market multiples -- such as for Fortress Investment Group LLC (NYSE: FIG) -- it looks like he can take home about $1.5 billion selling a minority stake of 10% but still keeping control of his destiny. To me, this is having your cake and eating it too.

What's more, by selling the stake to private investors, there's no need to go through the hassles of the IPO process. In other words, Black has more time to do deals. Although, if the Apollo stock is registered - which is likely to happen - it will become publicly traded within the year.

It's an interesting structure and is typical for small companies. As for Black, he does think out of the box and the back-door IPO does make a lot of sense.

Tom Taulli is the author of various books, including the Complete M&A Handbook and the EDGAR-Online Guide to Decoding Financial Statements.

Apollo has landed ... $1.5 billion? originally appeared on BloggingStocks on Thu, 05 Apr 2007 09:56:00 EST. Please see our terms for use of feeds.

It must be something in the water, but Blackstone Group LP's workers produce nine times the profit as their counterparts at Goldman Sachs Group Inc. (NYSE:GS), according to an analysis by Bloomberg News.

Blackstone's 770 workers produced an average of $2.95 million in net income last year compared with $360,000 at Goldman Sachs which has about 31,000 workers, Bloomberg says. This raises some interesting questions about how the market will value the New York-based hedge fund company.

If investors value it like Goldman, it will trade at about 10 times earnings with a market capitalization of $23 billion while a Fortress Investment Group LLC (NYSE:FIG) multiple would value Blackstone at about $29 billion, Bloomberg News says. Goldman's market capitalization is $87 billion and Fortess Investment Group's is $37 billion.

Blackstone, though, will trade at a premium to both companies -- at least at first -- because its performance has been amazing over the past few years.

Continue reading Blackstone's workers generate nine times as much profit as Goldman's

Blackstone's workers generate nine times as much profit as Goldman's originally appeared on BloggingStocks on Fri, 23 Mar 2007 14:11:00 EST. Please see our terms for use of feeds.

Blackstone Group IPO -- the real thing? originally appeared on BloggingStocks on Fri, 16 Mar 2007 12:50:00 EST. Please see our terms for use of feeds.

CNBC's deal reporter David Faber who got the scoop on the TXU Corp. (NYSE: TXU) buyout has another big one. Apparently, the big-time private equity firm, The Blackstone Group, is planning to file for an IPO within the next couple weeks.

Funny enough, Blackstone's CEO, Stephen Schwarzman, has indicated -- on many indications -- that an IPO was not in the cards. Why deal with all the hassles? Well, I guess Schwarzman could not ignore the huge $10.4 billion IPO of Fortress Investment Group (NYSE: FIG).

Faber thinks a Blackstone offering could fetch a valuation at least twice that. It's stunning considering that it was in 1985 that Schwarzman, who owns about 40% of Blackstone, invested $200,000 to start the company. How about that for an ROI?

I think it's a good bet that other premier private equity firms are preparing for IPOs. Yes, things are going to get very interesting - very soon.

Tom Taulli is the author of various books, including the Complete M&A Handbook and the EDGAR-Online Guide to Decoding Financial Statements.

CNBC: Blackstone prepping for mega IPO originally appeared on BloggingStocks on Fri, 16 Mar 2007 10:13:00 EST. Please see our terms for use of feeds.

Investors in Rail America, (formerly NYSE:RRA), got a Valentine's Day present in the form of a buyout offer of $16.35 for each share of Rail America stock owned. Rail America is a short-line rail service provider operating 42 railroads over 7,800 miles of track, primarily in the United States, but also operating in Canada and, until recently, in Australia. Rail America was bought by several private equity funds managed by affiliates of Fortress Investment Group LLC (NYSE:FIG). Over 74% of shares held voted in favor of the acquisition. Fortress Investment Group began trading on the NYSE on 9 February 2007. Its IPO began at $18.50 per share. FIG stock closed on Friday, 2 March 2007, at $27.75.

With over $1.2 billion in assets, Rail America was an attractive buy for Fortress Investment Group. No one commodity comprises more than 16% of Rail America's shipping business. It interchanges with several Class I railroads throughout the country and has one of the strongest safety records in the rail transportation industry. Rail America is poised to grow in terms of carload volume but needed access to more funds to do so. With over $30 billion in assets under management, Fortress Investment Group can provide that access. As part of the buyout, Rail America CEO Charles Swinburn will retire. He will be replaced by John E. Giles, who brings 35 years of experience in railroads and the transportation industry to the CEO suite.

Rail America merged and delisted originally appeared on BloggingStocks on Mon, 05 Mar 2007 14:55:00 EST. Please see our terms for use of feeds.

It's not often that the principals of a firm have a big-time cash-out before an IPO.

But, this is what happened with the Fortress Investment Group (NYSE: FIG) IPO.

How much? It's about $409.2 million. The break-down (which come from the IPO filing with the SEC):

• Peter Briger - $98.1M
• Wesley Edens - $95.1M
• Robert Kauffman - $63.8M
• Randal Nardone - $59.4M
• Michael Novogratz - $92.8M

Oh, and these guys also had large distributions during 2006. They include:

• Peter Briger - $97.2M
• Wesley Edens - $109.2M
• Robert Kauffman - $66.4M
• Randal Nardone - $69.7M
• Michael Novogratz - $104.4M

Kind of makes the former CEO of Home Depot Inc. (NYSE: HD), Robert Nardelli, look like a piker. He only got $210 million for six year's of work.

Tom Taulli is the author of various books, including the Complete M&A Handbook and the EDGAR-Online Guide to Decoding Financial Statements.

On the eve of the Fortress IPO, a big payday originally appeared on BloggingStocks on Fri, 09 Feb 2007 13:24:00 EST. Please see our terms for use of feeds.

Founded in 1998, Fortress Investment Group (NYSE: FIG) has quickly become a big force in alternative investments - such as private equity and hedge funds. The firm's team has posted standout investment results.

It's a very profitable business, with net income of $192.7 million in 2005.

However, for the most part, top-notch alternative investment firms are private (only available to the wealthy and institutions). So, why go public?

After all, a public company is subject to rigorous disclosure requirements. There is also the substantial potential liability of Sarbanes-Oxley.

Well, in Fortress's SEC filing, the company does provide some reasons:

People: The alternative investment business is a intellectual capital business. That means, you need very smart investment pros.

It canbe tough to attract such talent. By having public stock, it is easier to structure improved compensation packages (ie, by offering stock options and other equity grants).

Permanence: Every three to four years, a fund must do a capital raise. This is time-consuming and is distracting.

By accessing capital from the public, Fortress now has a permanent source of funding. Interestingly enough, this is essentially what Warren Buffett has done with Berkshire Hathaway (NYSE: BRK).

Currency: Fortress can use its stock as a way to buy other funds. It's a source of leverage.

Oh, and of course, a public offering can make the main shareholders very rich. This is certainly the case at Fortress, where several of its principals are now billionaires.

Tom Taulli is the author of various books, including the Complete M&A Handbook and the EDGAR-Online Guide to Decoding Financial Statements.

Fortress: Why go public? originally appeared on BloggingStocks on Fri, 09 Feb 2007 13:16:00 EST. Please see our terms for use of feeds.