Sculptor Capital Plunges Most Since May 2020 After Posting Outflows
Sculptor Capital Plunges Most Since May 2020 After Posting Outflows
(Bloomberg) -- Sculptor Capital Management Inc. tumbled the most in almost two years on Thursday, after reporting that clients pulled $55 million from its flagship hedge fund in the fourth quarter.
Shares of the firm fell 13% to close at $13.86, the biggest drop since Feb. 24, 2021, as Chief Executive Officer Jimmy Levin’s turnaround efforts continued unevenly. That extended the stock’s decline this year to 35%.
The multistrategy funds, with $11.1 billion of assets at year-end, gained 5% in 2021, Sculptor said in a statement after the close of U.S. markets on Wednesday. Despite the fourth-quarter outflows, the vehicle and associated portfolios still managed to pull in $100 million for the 12-month period, the first year in seven of positive net inflows.
Levin remained upbeat during a conference call with analysts Thursday, calling 2021 “an inflection point” for the business. “After years and years of hard work against what at times felt like some pretty tough odds, we’re now in a place where we have actual, tangible results,” he said.
Sculptor, formerly known as Och-Ziff, struggled to bounce back from redemptions totaling $30 billion since 2014, when the firm disclosed it was the target of a bribery probe into its business in Africa. It has since resolved the legal issues, paying hundreds of millions of dollars in fines and penalties as part of a deferred-prosecution agreement with the U.S.
The results follow the departure earlier this month of board member J. Morgan Rutman, who alleged that Levin’s compensation is excessive and could reach $200 million a year. The firm countered that the figure is exaggerated.
Rutman decried governance failures at Dan Och’s former company and said he was frozen out of the compensation process because he opposed Levin’s pay package. Rutman was handpicked to serve on the board by Och, who remains Sculptor’s largest shareholder.
Levin didn’t directly address the matter on Thursday’s conference call.
The new compensation framework approved by the board in December “creates further alignment for our management team with our clients and our public shareholders,” Chief Financial Officer Dava Ritchea said. “The performance-based equity grants are only granted if shareholders experience significant returns. Over the long term perspective, we think this is the right way to do it.”
Total compensation and benefits expenses for the year were $411 million, little changed from 2020, even as incentive income -- what the firm collects in performance fees -- plunged almost 50% to $312 million. The firm attributed that to a mismatch between when incentive income is recognized and bonuses are paid.
Sculptor’s Institutional Credit Strategies, which manages collateralized loan obligations, continued to be the biggest draw for clients in the fourth quarter, with inflows of $1.42 billion. That unit managed about $16.1 billion of the firm’s $38.1 billion of total assets at year-end.
Other highlights:
- Adjusted distributable loss was 94 cents a share, missing analysts’ estimates
- Opportunistic Credit Funds had outflows of $310 million, with assets totaling $6.35 billion
- The Sculptor Master Fund fell 2.6% in January, according to the statement
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