In his speech at the annual Skybridge Alternatives Conference (SALT) in Las Vegas, president of Fortress Investment Group Michael Novogratz said his company is halted for news pending, with stocks trading up 0.18% at about $5.45 per share. In a recent securities filing, the macro fund fell 4.67% in September 2015 and was down 17.49% year-to-date.
The company announced that it will close the Fortress Macro Funds and return to their investors all capital by the end of 2015. In conjunction with this announcement, the company will redeem all of Novogratz’ Fortress Operating Group Units, which will be repurchased by the company at a price of $4.50. As Novogratz stated, the transaction is subject to completion of the approvals of the board in terms of customary and definitive documentation.
“After careful consideration and analysis, we have decided to close the Fortress Macro Funds and return cash to our investors,” he said. “This was a difficult decision given my confidence in both the research positions we hold and the talent of our team. But we have had an extremely challenging two years, and I do not believe the current environment is conducive to achieving our best results. The recent past does not negate years of hard work and achievement. It has been a rare privilege to lead the Macro team and to serve as a Principal at Fortress.”
CEO Randal Nardone and Fortress co-chairmen Peter Briger and Wesley Edens also made a joint statement, “We are obviously disappointed in this outcome, and we are grateful for Mike’s many contributions to Fortress over the years. While we regret closing a fund that has been productive in the past, we also recognize the market’s reluctance to ascribe value to this strategy even in its best years.” They added, “Looking ahead, all meaningful drivers of business and earnings growth remain in place, embedded value on our balance sheet and in our funds is enormous relative to our market cap, and approximately 90% of our alternative capital will now reside in long-term or unlimited duration structures. We have an exceptional group of businesses in place today, and we have tremendous confidence in the ability of our company to grow and create value in the years ahead.”
Novogratz is also expected to leave the firm.