Och-Ziff Loss Narrows; Revenue, Fee Income Plummet

Och-Ziff Capital Management said yesterday that it posted a loss in the fourth quarter, but a much smaller one than a year earlier.

The New York hedge fund firm said its quarterly loss was $112.2 million, down from $774.6 million in the fourth quarter of 2007. While the firm’s revenue posted an equally stark decline, dropping for than 80% to $146.3 million—due mostly to the precipitous drop in incentive income to $6.7 million, just over 1% of last year’s total—Och-Ziff also managed to cut expenses, with compensation and benefits expenses falling 60%.

Plus, as one analyst pointed out during a conference call with the firm, its unusual high-water mark policy differs from other hedge funds, to its favor. While many hedge funds will be struggling to recoup last year’s losses for years, Och-Ziff’s high-water marks are only for one year, meaning that the firm will begin collection performance fees again next year even if the firm’s funds don’t reach their previous hights.