SOURCE: The Bedford Report

The Bedford Report

August 11, 2011 08:16 ET

American Capital and Fortress Investment Search for Gains

The Bedford Report Provides Equity Research on American Capital and Fortress Investment Group

NEW YORK, NY--(Marketwire - Aug 11, 2011) - Private equity firms had a successful first half of 2011 as asset prices appreciated. On the downside, as The Wall Street Journal reported this week, these companies may face headwinds in the second half of the year as prices of stocks have fallen, "making it harder to monetize gains by selling portfolio companies." The Bedford Report examines the outlook for companies in the Asset Management Industry and provides investment research on American Capital Ltd. (NASDAQ: ACAS) and Fortress Investment Group LLC (NYSE: FIG). Access to the full company reports can be found at:

The state of the global economy is making it harder for asset managers to boost profits. Regarding the most recent quarter, Michael Novogratz, one of Fortress Investment Group's principals, explains that there was "a breakdown in both consumer confidence and corporate confidence" because of Europe's inability to solve its debt problems and "the political gridlock that we saw in D.C. and the perceived inability to really deal with the fiscal issues."

In the company's fiscal second quarter, Fortress Investment said that Assets under management rose to $43.8 billion at June 30 from $43.1 billion as of March 31 and $41.7 billion a year earlier.

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Fortress Investment also reinstated its dividend. The company's directors approved a quarterly dividend of 5 cents a share in the fourth quarter. Its last payout, in the second quarter of 2008, was 22.5 cents per share. For the second quarter FIG's pretax distributable earnings were $46 million, or 9 cents per share, down from $73 million, or 14 cents a share, a year earlier.

American Capital Ltd. is one of the very few asset managers that does not pay a dividend, although the company said it strengthened its balance sheet in the recent quarter, paying down $100 million of securitization debt, and improving its asset coverage ratio to 376%.

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