Hedgeye's Financials Team – led by co-Sector Head Jonathan Casteleyn – will be hosting a deep dive institutional call on adding Och-Ziff Capital Management Group to their Best Ideas List as a LONG.
The call will take place on Friday June 9, at 11 am ET.
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KEY DISCUSSION POINTS:
The Team thinks that OZM shares have almost fully discounted the worst regarding recent legal woes. With strong investment performance and decent accrued but unrecognized performance fees, OZM stock will return to being a solid dividend payor. The Team see's +25-50% upside to the equity in concert with a return to an average annual yield of 5%.
KEY DISCUSSION POINTS:
- Performance in the firm's main Multi-Strat and Credit products remain strong with positive returns of +6.1% and +3.2% year-to-date respectively. The firm's Multi-Strat product has now had 11 consecutive months of positive performance which has started to wash out the firm's constant redemptions and grow assets-under-management (AUM) again.
- The Team does not think the payment of the firm's first dividend in a year, in 1Q17, was simply a token and we estimate that OZM will return to a constant distribution payor again. They calculate that the firm has $0.52 per share in "resting" but un-distributed performance, which amounts to a total yield of over 20% at current share price.
- AUM trends in the firm's Multi-Strat have been the culprit of the sharp stock decline and with the highest realization rate of 132 basis points annually will determine if the firm's economics can greatly improve. With 2 main class of Multi-Strat shareholders (quarterly liquidity and 2 year annual liquidity), the annual shareholders will have open gates on July 1, 2017. Thus all investors impacted by the FCPA violation settlement from 2016 will have had the opportunity to redeem funds. With only a single gate left on this issue, we think the worst redemptions are behind the firm and that strong investment performance will again start to grow the important Multi-Strat product.
Ping firstname.lastname@example.org for more information. Please note if you are not a current subscriber to our Financials research there will be a fee associated with this call.
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