Fortress Investment Group Continues to Make Progress With Solid Earnings

Fortress Investment Group FIG continues to make progress with good capital formation. The lower Distributable Earnings (DE) compared to KBW''s forecast was mainly driven by higher-than-expected OpEx. Capital formation and performance trends were both positive, and most HF strategies are now above high-water marks, improving the outlook for incentive-fee generation. KBW adjusts estimates, increases target, and maintains an Outperform rating. Fortress's revenues and earnings are highly sensitive to the investment performance of the company's underlying investment products. Many of FIG's investment strategies entail leverage and there is limited transparency into many of its investment products. Given the importance of the performance fees to FIG's revenues and earnings, financial results can be volatile. FIG also has key man risk; the loss of any of the principals' services could have a negative impact on assets, revenues and earnings. KBW has an Outperform rating with a $7 PT on FIG FIG closed Friday at $5.03