David Abrams (Trades, Portfolio) of Abrams Capital Management bought a new stake in Och-Ziff Capital Management Group (OZM, Financial) on May 11, picking up more than 9.2 million shares for an average of $3.95 per share.
Och-Ziff is an asset management firm with offices around the world including New York, London, Beijing and Bangalore. The stock has sunk 69% over the past year and closed at $3.83 on Friday.
The company had a challenging first quarter amid a slow global market, reporting losses of 38 cents per diluted share. Assets under management increased 9% year over year and totaled $42 billion as of May 1.
Along with declining earnings, Och-Ziff may have more trouble ahead as a lawsuit was filed earlier this month against the company on behalf of shareholders who purchased the stock before March 2014, alleging violations of securities laws. In March 2014, Och-Ziff said it began receiving subpoenas from the SEC as early as 2011 regarding concerns over an investment by a foreign wealth fund in some of its funds in 2007. The lawsuit alleges Och-Ziff violated anti-bribery laws by accepting an investment from the Libyan Investment Authority, which Och-Ziff had loaned funds to finance ventures in the Congo, in violation of the Foreign Corrupt Practices Act.
Och-Ziff still has a healthy balance sheet with a current ratio of 1.6, meaning the company is able to cover its short-term liabilities. After pulling out of the red in 2012, Och-Ziff reported profits in FY 2015 for the third year in a row.
Ruane Cunniff (Trades, Portfolio) and Mario Gabelli (Trades, Portfolio) both initiated new holdings in the company during the first quarter, though Abrams is the largest guru shareholder with 1.94% of shares outstanding.
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