This is a long-time holding for Greenhaven Road, and our thesis remains the same. Fortress is an asset manager focused on private equity and credit funds. The quality of the business is very high with “sticky” assets in the permanent capital vehicles as well as the private equity vehicles. We believe the market is ignoring the balance sheet, which has $3 in cash and investments and roughly $1 in net incentive fees. With a stock in the $4s, we are getting the asset management business almost for free, while it has consistently generated earnings north of $.50 per share.
There is a long presentation on our website that I did for The Manual of Ideas Best Ideas conference (www.greenhavenroad.com).
This is one of the most asymmetric investments in our universe, and management appears to agree. They issued a tender offer for $100M worth of shares over the course of the quarter.
Scott Miller is an instructor at Wide-Moat Investing Summit 2016.
This post has been excerpted from the Greenhaven Road Capital Q1 2016 Letter.
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