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How Did Randal Nardone’s Fortress Investment Group Grow?

So, the Fortress Investment Group became the first hedge fund to go public, but what was the secret to its success? How did it grow? Which asset classes were winning investments for the Fortress?

Building Fortress Brick by Brick

By 2016, the Fortress Investment Group was worth $70.2 billion. How did it continue to grow while others investments declined in value?

First of all, Fortress is located in New York City. While other real estate investments turned sour after 2008, high-end property did not. Therefore, Fortresswas able to leverage its New York City property assets to increase its profits.

Housing has become a “financial leveraged asset market.” Most financial value is based on physical assets. Banks have been able to build up pyramids of mortgages through mortgage backed securities. Fortress Investment Group has a subsidiary called New Residential Investment, which purchased mortgage servicing rights.

Fortress Investment Group Managers Michael Novogratz and Pete Briger were both Goldman Sachs partners. Therefore, they were able to take their debt security expertise and use it to build Fortress up brick by brick.

Successfully moving its subsidiaries from private to public also delivered healthy profits for Randal Nardone and others. Examples of these companies, included Aircastle, Brookdale Senior Living and Rail America. Randal Nardone still retains an executive position at Brookdale Senior Living.

Housing Market Timing

The Fortress was able to purchase cheap assets that were part of industries that might have seen better days, like railways. It also invested in booming markets, like senior living, which would only continue to grow due to the graying of America. Choosing the right investment was the secret to success.

Fortress Investment Group Co-Founder Randal Nardone had a solid background in both the legal and financial fields. He had also worked for UBS, which helped him hone his skills. He surrounded himself with financial professionals, who offered specific skills in specific fields.

Institutions were hoping to see a return to profitability after the 2008 Sub-Prime Credit Crisis. With Fortress going public, there were high hopes of a solid recovery. Fortress was part of the good news of “America becoming great again.”

On February 14, 2017, SoftBank spent $3.3 billion in cash for the Fortress Investment Group. Fortress had created a number of billionaires, including Mr. Nardone. Fast growth led to fast cash for the principal investors of the Fortress Investment Group.

Learn More: www.crunchbase.com/person/randal-nardone