Oaktree Fourth-Quarter Profit Rises 65% on Investment Income

Feb 13, 2014 4:46 pm ET

(Updates with closing share price in fifth paragraph.)

Feb. 13 (Bloomberg) -- Oaktree Capital Group LLC, the world’s largest distressed-debt investor, said fourth-quarter profit rose 65 percent as it earned more fees for exceeding fund performance targets.

Net income increased to $64.9 million, or $1.69 a share, from $39.3 million, or $1.30 a share, a year earlier, Los Angeles-based Oaktree said in a statement today. Assets under management rose to $83.6 billion from $79.8 billion at the end of the third quarter as the firm attracted new money.

Oaktree is seeking investments outside of the U.S., where bargains dried up, Chairman Howard Marks said in a Bloomberg Television interview in November. The firm plans to invest as much as $500 million in soured loans and other distressed assets in China, part of a $1 billion partnership with the government- backed China Cinda Asset Management Co., and is accelerating investments in Europe as banks seek to sell assets.

“We continue to find the best opportunities in global real estate, Europe and shipping,” Marks said on a conference call today with investors and analysts. “The emerging markets are one of the few markets in the world today that are statistically cheap. We started to manage long-only emerging market equities two and a half years ago and we have consistently added value, substantial in amount.”

Oaktree rose 3.2 percent, the most in three months, to $59.72 at the close of trading in New York. The stock has gained 1.5 percent this year.

‘Active Harvesting’

Adjusted net income, a measure of profit excluding costs such as noncash equity compensation and income taxes, rose to $268.4 million, or $1.62 a share, from $220.4 million, or $1.36, a year earlier. Analysts had expected adjusted earnings of $1.17 a share, according to the average of eight estimates in a Bloomberg survey.

Oaktree had “active harvesting activity, healthy cash earnings generation, positive portfolio appreciation and strong fundraising activity” in the quarter, Credit Suisse Group AG analysts led by Christian Bolu said in a note to clients. “Looking forward, we believe emerging markets will be a major focus for Oaktree.”

--Editors: Christian Baumgaertel, Kara Wetzel, Josh Friedman