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Fortress takes hits

Fortress’s first-quarter earnings sparked some concern among market participants but chief executive and chairman Wesley Edens says the worst is now over.

"The risk of a systemic financial crisis has now diminished. We’re now in a credit crisis rather than a liquidity crisis," he said on a phone call in May.

Fortress reported a loss of $69 million in the first quarter. Earnings for the period were $58 million compared with $220 million for the first quarter in 2007. "Our business is not a business that can be measured quarterly," insists Edens, but adds that one month into the second quarter, "we’re off to a good start",

Since the beginning of the year, Fortress has launched several new funds. Its commodities fund had $800 million in assets under management at the end of March. At the beginning of April, it also launched two mortgage opportunities funds, targeting the residential mortgage sector. Both now have more than $300 million in assets.

The firm has one private equity fund looking at other credit assets, which Edens says has $1 billion still to invest. Fortress is organizing a second private equity fund to take advantage of further opportunities. "We are on track with our capital-raising initiatives, having raised $11 billion this year already," says Edens. The target is to raise between $15 billion and $20 billion over 2008.

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