Fortress Investment Group LLC

This hedge fund group filed its "red herring" with the SEC yesterday and is apparently the first US listed IPO of a hedge fund company. The offering is $750 Million of equity interests. The company will trade on the NYSE under the symbol FIG.

After the smoke is cleared the company will still be 90% controlled by its 5 principals: Peter Briger, Wesley Edens, Robert Kauffman, Randal Nardone and Michael Novogratz.

An equity holder does not become an investor in the various funds run by Fortress but rather in Fortress itself.

According to the red herring pre-tax distributable earnings of Fortress have grown from $54.8 million for 2003 to $240.1 million for 2005. Distributable earnings is a measure of the income earned during each period which the company will use in the determination of any periodic dividends to its equity holders.

It is unclear what percentage of distibutable earnings Fortress will pay to equity holders.

However, no matter what the percentage share, the payout to equity holders will suffer if the funds managed by Fortress don't perform well going forward. Given performance volatilities in the industry this one doesn't look like a widows and orphans stock.