Wes Edens' Obama Waterfall

To review: Fortress Investment Group’s (FIG) IPO, on Feb. 9, 2007, was priced at $18.50, opened at $35 and traded as high as $37 that day. But in case the last $2.06 (at Friday’s close, after the stock traded at a new all-time low of $1.80 intraday) evaporates, Wes Edens & His Merry Men know where the blame lies: at the feet of an administration that doesn’t take office for another 54 days.

If legislation were to be enacted by the US Congress to treat carried interest as ordinary income rather than as capital gain for US federal income tax purposes, such legislation would materially increase the amount of taxes that we and possibly our equityholders are required to pay, thereby reducing the value of our common units and adversely affecting our ability to recruit, retain and motivate our current and future professionals. Senator Barack Obama, the President-Elect, has publicly stated that he supports similar changes to the tax code.

Nothing to do with, say, threatened hedge fund redemptions, or over-paying for ski resorts and dodgy train tracks. Glad we got that clear.

Fortress worries about Obama’s plans…

by Michelle Leder

Footnoted Nov. 19 2008

Comments

[Kenneth J. ...:]

I don't know how much difference anyone's ski vacation makes, but I will figure on hitting the slopes again this season...

This is probably more of a testament to the fact that most asset managers are doing a miserable job and having a difficult time in the current market environment. However, according to the data from my sources, Management of the company owns about 1% of FIG's shares. This is an example of rather unfortunate timing. Their great track record of steady and strong annual earnings growth prior to going public, coming to an abrupt end right after going public, surely must be attributed to bad luck!

2008 Nov 25 04:37 PM