UPDATE: Goldman Sachs Downgrades Fortress Investment Group LLC to Neutral, Lowers PT Following Outperformance in 2013

In a report published Thursday, Goldman Sachs analyst Marc Irizarry downgraded the rating on Fortress Investment Group LLC FIG from Buy to Neutral, and lowered the price target from $9.50 to $8.50. In the report, Goldman Sachs noted, “We downgrade FIG to Neutral from Buy on the stock's outperformance (+75% YTD vs. Asset Managers +42% on average), while softer 4Q to-date performance of hedge fund and key public PE investments could also be near-term headwinds. Outperformance of FIG shares has been driven by strong performance of publicly traded portfolio companies such as NSM and LEAF and solid credit/liquid hedge fund performance (DBSO +13.5% YTD as of 9/30, Macro Fund +9.8% YTD as of 10/31). PE funds continue to make progress vs. high water marks and move closer to cash carry, with Fund III ($2.8 bn NAV) within 2% of its hurdle and Fund IV ($4.4 bn NAV) within 20% of its hurdle as of 3Q (down from 34% and 35% a year ago). That said, outperformance has narrowed the valuation gap of FIG vs. other alternatives, and we see more imminent catalysts and upside elsewhere. We lower our 2013/2014/2015 estimates -1%/-2%/-1% on more modest hedge fund performance and PE incentive fee expectations.” Fortress Investment Group LLC closed on Wednesday at $7.54.