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Poor Second Quarter And Investor Withdrawals Prompt Shakeup At Fortress Investment Group LLC (FIG)

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After losing money last year and during the first half of 2015, Fortress Investment Group LLC (NYSE:FIG) is undergoing leadership changes. Michael Novogratz will be the sole manager of the main macro hedge fund of the investment manager after the departure of Jeff Feig, co-manager of the fund. According to a report published in the Wall Street Journal sources have told it that the Fortress Macro Fund is down about 10% thus far this year due in part to poor currency trades. The sources also said the fund began the year with $3.2 billion in assets, including related accounts, but currently manages just $2.3 billion as investors have pulled their money out of the firm. The macro hedge fund had a dismal start to the year, with the fund reporting losses in excess of 7.9% during the first half of January alone. The portfolio maintained by Novogratz didn’t incur losses during that period. As compared with the other macro hedge funds in the market, Fortress lost 1.6% in 2014 against average gains of 5.7%. In terms of share price growth, Fortress Investment Group LLC (NYSE:FIG) has lost 10.22% year-to-date.

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At the end of the first quarter, the investment manager had a public equity portfolio valued at $7.21 billion, with 88% of its portfolio positions dedicated to the finance sector. Springleaf Holdings Inc (NYSE:LEAF) and Nationstar Mortgage Holdings Inc (NYSE:NSM) were the two primary equity holdings of Fortress Investment Group LLC (NYSE:FIG), and accounted for much of its losses during the second quarter. The results reported by the Wall Street Journal are not a surprise, and are consistent with our own data which found that Fortress Group’s 41 long positions in stocks with a $1 billion or greater market cap suffered a weighted average returns loss of 13.36% in the second quarter, ranking the firm as the 6th-worst performing fund among those we track at Insider Monkey during that period. It should be noted that our own methodology is only an estimate, and does not factor in all of a fund’s holdings or moves when calculating the returns. 

Michael Novogratz
Michael Novogratz
Fortress Investment Group

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