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Edited Transcript of OZM earnings conference call or presentation 7-Mar-19 1:30pm GMT

Q4 2018 Och-Ziff Capital Management Group LLC Earnings Call

NEW YORK Mar 13, 2019 (Thomson StreetEvents) -- Edited Transcript of Och-Ziff Capital Management Group LLC earnings conference call or presentation Thursday, March 7, 2019 at 1:30:00pm GMT

TEXT version of Transcript

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Corporate Participants

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* Adam Willkomm

Och-Ziff Capital Management Group LLC - Head of Business Development and Shareholder Services & MD

* Robert Scott Shafir

Och-Ziff Capital Management Group LLC - CEO, Executive MD & Director

* Thomas M. Sipp

Och-Ziff Capital Management Group LLC - CFO & Executive MD

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Conference Call Participants

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* Gerald Edward O'Hara

Jefferies LLC, Research Division - Equity Analyst

* Patrick Davitt

Autonomous Research LLP - Partner, United States Asset Managers

* William R. Katz

Citigroup Inc, Research Division - MD

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Presentation

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Operator [1]

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Good morning, everyone, and welcome to Oz Management's Fourth Quarter and Full Year 2018 Earnings Call. (Operator Instructions) As a reminder, this conference call is being recorded.

I would now like to introduce your host for today's conference, Adam Willkomm, Head of Business Development and Shareholder Services at Oz Management.

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Adam Willkomm, Och-Ziff Capital Management Group LLC - Head of Business Development and Shareholder Services & MD [2]

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Thanks, Sharon. Good morning, everyone, and welcome to our call. Joining me are Robert Shafir, our Chief Executive Officer; and Tom Sipp, our Chief Financial Officer.

Today's call may include forward-looking statements, many of which are inherently uncertain and outside of our control. Before we get started, I need to remind you that Oz Management's actual results may differ, possibly materially, from those indicated in these forward-looking statements. Please refer to our most recent SEC filings for a description of the risk factors that could affect our financial results, our business and other matters related to these statements. The company does not undertake any obligation to publicly update any forward-looking statements.

During today's call, we will be referring to economic income, distributable earnings and other financial measures that are not prepared in accordance with U.S. GAAP. Information about and reconciliations of these non-GAAP measures to the most directly comparable GAAP measures are available in our earnings release, which is posted on our website. No statements made during this call should be construed as an offer to purchase shares of the company or an interest in any of our funds or any other entity.

Earlier this morning, we reported a fourth quarter 2018 GAAP net loss of $1 million or $0.05 per basic and diluted Class A share. The full year GAAP net loss was $24 million or $1.26 per basic and diluted Class A share. As always, you can find a full review of our GAAP results in our earnings release, which is available on our website.

On an economic income basis, we reported a fourth quarter 2018 distributable earnings of $17 million or $0.31 per adjusted Class A share. For the full year 2018, distributable earnings were $64 million or $1.17 per adjusted Class A share. Excluding a $32 million settlement expense incurred during the current year period, full year 2018 distributable earnings were $91 million or $1.67 per adjusted Class A share. We declared a $0.23 dividend for the fourth quarter. If you have any questions about the information provided in our press release or on our call this morning, please feel free to follow up with me.

With that, let me turn the call over to Rob.

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Robert Scott Shafir, Och-Ziff Capital Management Group LLC - CEO, Executive MD & Director [3]

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Thanks, Adam. Good morning, everyone. Before we discuss our fourth quarter performance, I want to highlight the transformative and strategic steps we have taken to restructure the firm and set us up for the future.

First, we have taken steps to further align our senior management with clients and shareholders with long-term employment agreements and a significant transfer of equity from former Oz partners resting over multiple years. Second, we are taking material actions to facilitate and accelerate the strengthening of our balance sheet over time. Lastly, we implemented certain governance changes that complete the firm's generational transfer.

Overall, the reaction from our clients, shareholders and employees has been resoundingly positive, and we believe these actions position us to serve our clients and grow our assets under management.

The fourth quarter of 2018 was difficult with global markets experiencing significant declines and increased volatility. The Oz Master Fund seeks to protect capital on the downside, but provide upside capture during strong markets. We are pleased to see both sides of that equation in action, protecting the downside last year and capturing the upside so far in 2019 with a year-to-date net return of approximately 7%. Oz Master Fund was down 1.9% net for the full year 2018 and was down 5.7% for the fourth quarter.

On a relative basis, we outperformed the MSCI World Index, which was down approximately 7% for the year and 13% for the fourth quarter. While credit markets were comparatively more resilient than equity markets for most of 2018, both struggled during the fourth quarter, finishing in negative territory for the year.

This was the most significant market turbulence experienced in a long time, brought on by the U.S.-China trade war, winding down of quantitative easing and the outlook for Europe and China economic growth.

Convertible and derivative arbitrage led multi-strategy performance in 2018 as we generated gains across all geographies. Structured credit was also a strong performer, with performance coming predominantly from events driven and trust oriented investments. While global equities lost money overall in 2018, the U.S. was a bright spot, generating a mid-single-digit return -- positive return on capital for the year. The performance came from a combination of positive single-name alpha, single-name shorts and a highly effective hedge overlay program. This hedge overlay program was particularly affected in the higher volatility months of February, October and December.

Oz Co., our global opportunistic credit fund, was up 6.5% net for the full year 2018 after a loss of negative 2.1% net for the fourth quarter and has returned positive 11.9% annualized net since inception. Both corporate and structured credit drove our strong performance in 2018.

When compared to a broad range of markets, Oz Co.'s 6.5% net return stands out relative to high yield and HFRI Distressed Indexes, which were all down 2% to 3% for the year. We believe this differentiated result and opportunistic credit is a testament to our investment approach as we pursue process and event-driven opportunities or ultimately, the core drivers of return come from [AOC] credit outcomes that have shown little correlation with the direction of the broader risk assets.

Our real estate franchise continues to deploy capital and generate strong returns with a 23% annualized net return in our current opportunistic fund. We look to continue to grow this business by expanding our product offering in both new and existing strategies.

Our CLO franchise continues to perform. In the fourth quarter, we closed a new European CLO, adding $460 million in new assets under management. We had a strong year in 2018, closing $1.5 billion in U.S. CLOs, $1.4 billion in European CLOs and refinancing $3.8 billion. This leaves us with total AUM in the business of $13 billion. We currently have 3 new CLOs in our pipeline and would expect to see 2 of these deals price over the next few months.

Turning to flows. In the fourth quarter, our total net inflows were $469 million, driven by $460 million of a new CLO asset and $350 million of inflows into opportunistic credit, offset by $342 million of outflows in multi-strat.

Our March 1 assets under management were $32.3 billion. The $200 million reduction in AUM versus year-end was a result of $1 billion in outflows, offset by our strong year-to-date performance. We want to remind you that there were affiliate redemptions of $579 million related to our strategic actions, including in our year-to-date outflows, and we expect another $382 million of affiliate outflows this year, with just over $300 million occurring on April 1. We expect us to have a minimal impact on profitability.

Looking forward, we believe the strategic actions I mentioned earlier position the firm to grow AUM. In multi-strategy, while we continue to experience a normalized level of quarterly outflows excluding affiliates, we are actively working to generate inflows.

Several significant intermediaries have recently approved reopening the distribution channel for the Master Fund. We will be adding resources in our investor relations function to grow the capabilities of our team covering clients globally.

In opportunistic credit, I believe we have the combination of a unique strategy and strong returns. We are proactively working to expand our credit platform, including in connection with specific opportunities we see in various credit subsectors. To that end, in December, we raised a $300 million private equity style vehicle, focusing on opportunistic investing in aviation.

In Institutional Credit Strategies, we continue to be optimistic about our ability to issue CLOs, and we anticipate more opportunities coming in aviation management, including through our strategic alliance with GECAS.

In real estate, our third opportunistic fund is roughly 70% deployed, and we expect further increases in AUM.

Now let me turn the call over to Tom to go through the financials.

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Thomas M. Sipp, Och-Ziff Capital Management Group LLC - CFO & Executive MD [4]

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Thanks, Rob, and good morning, everyone. Before I move into our quarterly and full year results, I'd like to go into detail on the strategic actions Rob mentioned.

Specifically, I'll cover 3 of the main components; equity realignment, accelerated balance sheet strengthening and C-Corp conversion. The equity realignment institutes a revised compensation structure and creates long-term incentives for current partners without dilution to shareholders. Former partners have reallocated 35% of the Class A units to current partners, certain of whom have agreed to reduce their current compensation by up to 20%. This realignment reduces compensation expense, materially improves alignment of current partners with shareholders and clients and highlights their long-term commitment to the firm.

The balance sheet strengthening consists of a series of initiatives that we project will accelerate the repayment of our liabilities. We instituted a distribution holiday where all partners, both current and former, will forego distributions on their units until the company achieves cumulative earnings of $600 million. The cash that would have been otherwise distributed will be used to pay down debt, deferred securities and for public shareholder distributions.

Additionally, we amended our tax receivable agreement, bringing up $55 million debt along with $45 million of cash on hand immediately reduced our debt by $100 million at closing.

Our prior $400 million of preferred securities were restructured into $200 million of debt and $200 million of preferred. Both instruments included incentives for accelerated repayment that could reduce principal on the combined instruments by $60 million. We believe the combination of all these actions will materially strengthen our balance sheet over time.

Lastly, Oz announced that our tax classification will change from a partnership to a corporation on April 1. We believe using -- we believe being a corporation will simplify our tax structure and broaden the universe of eligible shareholders.

Now moving into earnings. As Adam mentioned at the beginning of the call, we reported fourth quarter 2018 distributable earnings of $17 million and full year distributable earnings of $91 million, excluding the settlement expense occurred in the current year period.

Revenues were $166 million for the fourth quarter and $483 million for the full year, down 42% from 2017.

Management fees were $64 million in the fourth quarter and $264 million for full year 2018, 12% lower than 2017. The year-over-year decrease in management fees were driven primarily by lower multi-strategy assets, partially offset by increased assets in Institutional Credit Strategies.

Incentive income was $98 million in the fourth quarter and $203 million for the full year, 62% lower than full year 2017, driven by lower fund performance. Please note that given multi -- given Master Fund's performance in 2018, we will have a loss carry forward in 2019. Our performance thus far into 2019 has us in a gained position, but this remains dependent on full year performance.

As of 2018, our accrued but unrecognized incentive was $263 million, down 26% as compared to $358 million in the prior quarter. The decrease was primarily due to $66 million being recognized in the fourth quarter and $29 million of negative performance, driven by write-downs on our legacy energy portfolio.

As a reminder, with the exception of the balance associated with our real estate funds, most of the remaining balance has no associated compensation expense as this was paid in earlier periods. We expect to realize majority of this accrued but unrecognized incentive by the end of 2020.

Other revenues were $4 million in the fourth quarter and $16 million for the full year 2018, up $10 million versus 2017 due to higher interest income on our investments in CLOs and cash equivalents.

Now turning to our operating expenses. For the fourth quarter of 2018, total expenses were $136 million. Our full year total expenses were $397 million. Excluding the $32 million settlement expense and $16 million in expenses related to the strategic actions we have discussed, full year expenses were $350 million, 29% lower than 2017.

In the fourth quarter, compensation and benefits were $92 million and for the full year 2018 were $219 million, down 38% from 2017. Salaries and benefits were $21 million for the fourth quarter and $90 million for full year 2018, down 7% from 2017 due to lower headcount. We expect full year 2019 salaries and benefits to be between $80 million and $85 million.

Bonus expense was $71 million for the fourth quarter and $129 million for the full year 2018, 49% lower compared to 2017 due to lower incentive income. We expect full year minimum annual bonus accrual for 2019 will be between $85 million and $90 million.

Fourth quarter general and administrative expenses were $39 million. Excluding the $16 million of expenses related to our strategic actions, fourth quarter G&A was $23 million. For the full year 2018, G&A expenses were $154 million. Excluding the expenses related to the previously mentioned settlement expense and strategic actions, full year 2018 G&A was $107 million, 11% lower than 2017. We expect these expenses to be between $85 million and $95 million in 2019. Please note, this excludes approximately $10 million in additional strategic action expenses, the majority of which we expect to be recognized in the first quarter.

Our interest expense was $5 million for the quarter and $24 million in 2018, slightly higher than 2017. While we reduced our overall debt in 2018, the small increase was primarily due to higher interest from our CLO risk-retention financing, partially offset by the reduction in our overall debt in 2018. We expect full year 2019 interest expense to be between $10 million and $15 million as we continue to pay down the term loan and have sold off most of our U.S. CLO risk-retention investments and repaid the related borrowings.

Our guidance for the full year 2019 tax receivable agreement and other payables as a corporation is 18% to 22%. As a reminder, tax estimates are subject to many variables that won't be finalized into the fourth quarter of the year and therefore, could vary materially from the estimates provided.

Now an update on the balance sheet. At year-end, total cash and cash equivalents were $495 million. Subsequent to year-end, we used $120 million of cash to pay down the current term loan, resulting in an outstanding term loan balance of $80 million. The plan to strengthen our balance sheet will cause the majority of our earnings after public shareholder dividends to pay down our existing term loan, followed by the new preferred and debt created as part of the strategic actions we discussed earlier.

With that, let me turn it back over to Rob.

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Robert Scott Shafir, Och-Ziff Capital Management Group LLC - CEO, Executive MD & Director [5]

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Thanks, Tom. I'm pleased with our start to 2019, and we are working hard to build on that momentum. Our strategic actions leave us well positioned to execute on our priorities going forward by performing for our clients, growing our assets and driving efficiencies throughout our business. We look forward to updating you on our progress over the course of 2019.

With that, we will open the line to questions.

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Questions and Answers

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Operator [1]

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(Operator Instructions) Your first question comes from Bill Katz with Citigroup.

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William R. Katz, Citigroup Inc, Research Division - MD [2]

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Just a few to get started. So on the pickup on the balance sheet, I was just sort of wondering if you could sort of walk me through how you think about the waterfall of cash as the year progresses versus the debt reduction? And specifically, when you breakdown the cash and cash equivalents versus the investment securities, what's the updated thought process on the minimum? And then sort of the -- against the waterfall, how you think about the use of cash and balance sheet liquidity and earnings to offset the debt?

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Thomas M. Sipp, Och-Ziff Capital Management Group LLC - CFO & Executive MD [3]

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Bill, I'll take that. It's Tom. The -- so we will continue to pay down the term loan. Our current balance is $80 million. We started at $200 million before we closed the recap transaction. We will first pay out a public company dividend. That total payout ratio will be 20% to 30% of total distributable earnings. After we payout that dividend, we will then sweep our distributable earnings and first pay down the term loan. And we will do a quarterly sweep. And then once the term loan is fully paid, we will then sweep and pay down the new preferred securities. The -- so if you look on a pro forma basis, once we ended the year at $495 million of cash on a pro forma basis as of today, when you just pay down the $100 million of term loan and the additional $20 million that we just are paying today, our free -- total cash is $395 million, our committed cash is about $190 million and our free cash is $200 million. And our remaining balance is the $80 million. So as we have earnings less public company dividends, we will continue to pay down that $80 million term loan. And then from there, we will roll and start paying down the preferred securities.

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William R. Katz, Citigroup Inc, Research Division - MD [4]

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Okay. Just one follow-up to that before I get to my next question. So the $20 million you paid, I guess, expectingly today, is that the quarterly sweep or would we expect more at the end of the quarter? And then is it sort of a ratable reduction as we get through rest of the year? How you think about that?

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Thomas M. Sipp, Och-Ziff Capital Management Group LLC - CFO & Executive MD [5]

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I would not think of it ratably. It will all be dependent on our earnings and when we recognize incentives. So it will -- I would not expect it to ratable. It would be more year-end weighted. The $20 million is associated with closing our Q4 and recognizing -- it's all associated with Q4's earnings and cash flow. So it is not associated with Q1.

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William R. Katz, Citigroup Inc, Research Division - MD [6]

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Okay. I may have one question.

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Thomas M. Sipp, Och-Ziff Capital Management Group LLC - CFO & Executive MD [7]

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We have (inaudible) earnings in -- yes, go ahead.

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William R. Katz, Citigroup Inc, Research Division - MD [8]

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I'm sorry to interrupt you. Okay. That's very helpful. And then, Rob, maybe to yourself. You had mentioned the word resounding response by both those internal and external. I was wondering if you can maybe quantify that a little bit more externally. And so how that might be shaping the conversations around net new asset opportunity for the rest of this year and into '20?

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Robert Scott Shafir, Och-Ziff Capital Management Group LLC - CEO, Executive MD & Director [9]

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Sure, Bill. Look, I think as we have engaged our clients as well as our own employees and our shareholders, I think everybody has been very pleased by the results of this thing. I think if you look at it, what we've really tried to do is create a more longer-term aligned incentive program for our managing partners of the firm, which certainly is something that I think people have received very well, stability in asset management firm's long-term alignment, all those things, I think, are indications of a very healthy firm. Secondly, as Tom has gone through, we are sacrificing not only in terms of payouts in order to achieve those equity awards, but also both the active partners and former partners, to that matter, will be sacrificing distributions in order to pay down our debt and preferred securities. So we are giving back to the firm. And I think that's a very healthy thing in terms of really taking care of liabilities in our balance sheet. So you've got better aligned senior management on a long-term basis. You've got a much healthier approach to your balance sheet. In terms of all the governance things and the alignment there, with the generational transfer, all of that stuff is clarified, cleaned up. And I think we all feel very good about that going forward. So a lot of the questions that I had received in client meetings over the course of the year that were specific to our firm really get addressed here, and I think in a resoundingly positive way. So the good news is that we go back to business as usual, which is about performance, products, value propositions and how we grow our assets. We talked about the fact that we focused our firm down to our core verticals of multi-strat credit and real estate. We believe, as I said in the call, that in multi-strat, protecting downside and giving upside capture, we believe is a very sensible place to have money. We've had a long track record there. And as I said, we are starting to open channels that have been close for a long time here with some of our distribution partners, in addition to which, some of the consultants, some of the major consultants I should say, are beginning to upgrade us. I also think that certainly in credit and real estate, given what is outstanding performance, I'm optimistic about our long-term results. Now just to caution everyone, as you know, the sales cycle in the institutional asset management world is not a short one, it's a long one. So I think this kind of puts us back in the game, where it's really just about our performance and value propositions, and not about anything specific to the firm. It'll take some time. And I would expect to see that progress more back-half related and hopefully building strong pipeline in 2020. But I do think it's directionally positive.

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William R. Katz, Citigroup Inc, Research Division - MD [10]

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Okay. And if I could just ask maybe one more. Just as -- thank you for the expense guidance. It's very helpful. So as you think about -- and I appreciate the discussion on the minimum variable payout. As you think about at the end of the year, is there a way to think about the ratio of variable compensation to revenue, just given the moving parts around the reorganization and how some of the ownership versus comp structures have changed?

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Thomas M. Sipp, Och-Ziff Capital Management Group LLC - CFO & Executive MD [11]

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No. It's fairly difficult to model, Bill, because it all depends on when we pay compensation versus recognized incentive. And as I described with the (inaudible), for some of the incentive, we recognize -- we pay the compensation based on mark-to-market, but we don't recognize the incentive for several years. So it is -- it really is not kind of a stable comp-to-revenue ratio.

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Operator [12]

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Your next question comes from Gerry O'Hara with Jefferies.

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Gerald Edward O'Hara, Jefferies LLC, Research Division - Equity Analyst [13]

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Rob, maybe just picking up on some of the commentary around real estate and how you, obviously, continue to be active in the deployment side, strong returns, but also mentioned you're looking to kind of expand some of the product offering there into new and existing strategies. Maybe if you could discuss maybe what -- provide a little bit of color around what some of those strategies might be? Or how you're kind of thinking about that segment going forward?

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Robert Scott Shafir, Och-Ziff Capital Management Group LLC - CEO, Executive MD & Director [14]

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Yes. I guess, I'd say the following. One of the major things we did strategically last year was pare back the portfolio of offerings we have. We eliminated what we thought were smaller products that were not sort of our core offerings or places where we really believe that we have sort of edge as a firm. And that are the 3 verticals that I've mentioned, real estate, as you say, being one. You're correct in saying that we've had very strong performance in real estate. And I think we are optimistic about our ability to raise assets there going forward. And what we've done over the course of the last year is we have raised money not beyond the traditional private equity side of real estate is in terms of the form of real estate credit. Now why real estate credit? Because it's a sensible adjacency of the business -- of not only our real estate vertical business, but also our credit business. So where we see logical adjacencies to our core businesses that can take advantage of the capabilities we have, we will be expanding. Real estate credit would be an example of that expansion. What we're not going to do though is sort of have the style creep that we're going to do things that are just really not core to our mission. We're not going to be a quantitative equity shop tomorrow or going to areas that are not either within the main stream of what we do or logical adjacencies. So to answer your question, I think real estate credit will be a place, as an example, that we will look to continue to expand in real estate.

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Gerald Edward O'Hara, Jefferies LLC, Research Division - Equity Analyst [15]

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Great. And then, just one follow-up on, I guess, the -- some of the prior comments around expanding or, I guess, reengaging with distribution partners and major consultants. Beyond performance, are there some other kind of metrics that we can sort of watch or sort of monitor throughout the year to sort of see how that might be progressing? Or is that just sort of something that's going to be internal and we're going to have to wait and hear about?

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Robert Scott Shafir, Och-Ziff Capital Management Group LLC - CEO, Executive MD & Director [16]

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The truth is -- look, obviously, performance is the core part of our value proposition. Our mission is to manage assets on behalf of our clients on a risk-adjusted basis in a positive and competitive way. So to that extent, we are an asset management firm. We are very focused on performance, which is why we have really shrunk down to the core verticals, where we actually believe we can deliver alpha and exceptional performance. So I think that's going to be the key part of it. Obviously, beyond that, I mentioned we are going to be reengaging and opening some channels that have been previously closed to us on the intermediary side. And as I also mentioned, the consultants are now seeing it. They've seen the performance, and they've also seen a lot of the things that concern them about the firm being addressed in this recap. And we are getting upgraded now. And as you know, those upgrades begin to stimulate conversations beyond what we've -- the scope of what we've been able to do in the last couple of years. So I'd say as we -- beyond performance and the actual flow picture itself, I'll probably be looking at things like what's happening on the consultant side in terms of upgrades. I'd probably see what is happening in terms of channels being open that had previously been closed. And I would make the long-term leap of faith that, that will lead to higher assets over time.

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Operator [17]

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(Operator Instructions) We have a question from Patrick Davitt with Autonomous Research.

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Patrick Davitt, Autonomous Research LLP - Partner, United States Asset Managers [18]

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I suspect this is an extension of that last comment. Last quarter, you mentioned a private bank coming onboard. I imagine that's kind of in the line of other intermediaries you're reengaging with. Are you starting to see sales through that particular client? And is there a pipeline of other pools of assets like that coming in as well aside from the consultants?

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Robert Scott Shafir, Och-Ziff Capital Management Group LLC - CEO, Executive MD & Director [19]

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The answer is, it is a private bank. But I would say to you, there's actually a couple of private banks that are just greenlighted. The process of being greenlighted and sort of reengaging with the bank, refamiliarizing yourself with distribution forces within those banks, is a long-term process. So I call it early days. So I wouldn't say that you've seen anything of significance as of yet. But as I mentioned on the call, my expectation is that you'll start to see things towards the back half of the year. I think beyond just the intermediaries or the consultants, as I said earlier, the sales process in asset management is a long-waited process. It's -- I wish it were shorter, but the truth is I think you'll start to see momentum if we can continue to deliver on our value propositions. And you'd like to sort of see that manifest itself in flows in the second half of the year. I do not want to overpromise and underdeliver here. So I think conservatism should apply in terms of how we think about that towards the back half of 2019. And as and more importantly, which you really hope to see is your pipeline really beginning to build that you can really start to move the needle more materially going into 2020. But it's a process and it takes time.

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Patrick Davitt, Autonomous Research LLP - Partner, United States Asset Managers [20]

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Yes. Sure. And then, this morning [call of the FXD] quoted, talking about ramping up oversight of the CLO world. I know it's early days, but do you have any preliminary thoughts or views on what they're looking at? And to what extend it could impact the growth prospects for that side of your business?

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Robert Scott Shafir, Och-Ziff Capital Management Group LLC - CEO, Executive MD & Director [21]

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I actually didn't see the comment, so I couldn't comment on them without looking at them, sorry.

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Patrick Davitt, Autonomous Research LLP - Partner, United States Asset Managers [22]

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Fair. And last one, the energy-related write-down you talked about in the net accrued carrier, is that recoverable or should we look at it as permanent?

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Thomas M. Sipp, Och-Ziff Capital Management Group LLC - CFO & Executive MD [23]

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It's just our current view of fair value on the positions. So sure, rates could go up, but that's -- we mark the fair value.

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Operator [24]

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(Operator Instructions) And I'm not showing any further questions. I will turn the call over to Mr. Willkomm.

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Adam Willkomm, Och-Ziff Capital Management Group LLC - Head of Business Development and Shareholder Services & MD [25]

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Thanks, Sharon. Thanks, everyone, for joining us today and for your interest in Oz management. If you have any questions, please don't hesitate to contact me at (212) 719-7381. Media inquiries should be directed to Jonathan Gasthalter at (212) 257-4170. Thanks very much.

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Operator [26]

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This concludes today's conference call. You may now disconnect.