This content is from: Portfolio

The Morning Brief: Och-Ziff’s Multistrat Funds Surge Amid More Outflows

The firm’s funds have performed solidly this year, but investors keep pulling money out.

  • By Stephen Taub

Och-Ziff Capital Management suffered another $1.5 billion of outflows in July. As a result, the multistrategy specialist had $32 billion in total assets under management as of August 1, down from $33.2 billion the previous month, according to the firm’s second-quarter earnings report. But the news wasn’t all bad, with the firm reporting strong gains in its multistrategy funds.

In the 12-month period ending June 30, assets declined by 21 percent. During that period, the firm suffered $11.6 billion in net capital outflows, mostly from the multistrategy funds. Total assets in the multistrategy funds were $16.1 billion as of June 30, down 38 percent, or $10 billion, year-over-year. The main reason: Net capital outflows amounted to $12.6 billion, primarily from the OZ Master Fund, the company’s largest multistrategy fund. Meanwhile, in June Och-Ziff held a final close on the Och-Ziff Real Estate Credit Fund I, its first real estate credit fund. It had total commitments of $736.2 million.

Moving forward, however, the investment picture is clearly brightening. Och-Ziff is among the top-performing multistrategy firms so far this year. For example, the firm’s OZ Master Fund gained 1.25 percent in July, boosting its gains for the year to 8.80 percent. Its OZ Asia Master Fund rose 2.75 percent last month and is now up 17.92 percent for the year, while the OZ Europe Master Fund rose 0.67 percent in July and is up 4.87 percent for the year.

___

Bridgewater Associates suffered slight losses in July in its main Pure Alpha strategy. As a result, Pure Alpha II, also known as Pure Alpha 18 percent, is now down 1.61 percent for the year through July, while Pure Alpha I, also known as Pure Alpha 12 percent, is down 2.79 percent. All Weather, the hedge fund firm’s risk parity strategy, gained about 1.7 percent in July and is now up about 6 percent for the year.

___

Dan Loeb’s Third Point Offshore Fund gained 0.90 percent in July, boosting its gains for the year to 11.7 percent. This is more or less in line with the Standard & Poor’s 500 stock index. The fund reaped all of its gains from long positions in stocks, credit and “other” strategies. Its equity long positions returned 0.80 percent, while the short positions lost 0.30 percent. Heading into August, its equity net exposure stood at 69.1 percent, up from 63.1 percent the previous month.

___

Shares of hedge fund favorite Apple surged 4.7 percent, to close at $157.14, after the iPhone maker reported better-than-expected results for the fiscal third quarter. In response, several investment banks raised their price targets on the stock. For example, Credit Suisse lifted its target from $170 to $175 and repeated its outperform rating. “With the iPhone showing sustained growth, and Services again showing robust growth, we still look forward to an iPhone 8 super cycle,” it stated in a note to clients. UBS raised its target from $170 to $180. “Apple’s…guidance was surprisingly strong, implying shipment of some new models,” it stated in a note to clients. “Also striking was the breadth of execution.”

Related Content