March 11, 2010 / 3:56 PM / in 8 years

UPDATE 1-Sprott profit falls with performance fees

* Q4 EPS C$0.09 vs C$0.14

* Assets under management up 9 pct in year

* Shares up C$0.09 to C$4.35

CALGARY, Alberta, March 11 (Reuters) - Sprott Inc’s (SII.TO) fourth-quarter profit sank 35 percent as the fund management firm’s performance fees dropped and returns from its hedge funds were squeezed in the market rally, it said on Thursday.

Sprott earned a net C$13.3 million ($12.9 million), or 9 Canadian cents a share, down from year-earlier C$20.4 million, or 14 Canadian cents a share.

Revenue fell 38 percent to C$35.7 million from C$57.7 million in the fourth quarter of 2008.

The company said its accrued performance fees fell by nearly C$32 million to C$10.6 million in the quarter.

“As the markets rallied in 2009, the majority of our long funds outperformed their benchmarks, some by a wide margin, while most of our hedge funds were constrained by their short positions during the year, limiting them to modest returns,” Sprott said in a statement.

Its assets under management totaled C$4.8 billion at the end of 2009, a 9 percent increase from the year before as net redemptions were more than offset by an increase in value as markets rebounded sharply last year.

Shares of Sprott were up 9 Canadian cents at C$4.35 on the Toronto Stock Exchange. That represents a drop of about 3 percent from its price of a year ago.

$1=$1.03 Canadian Reporting by Jeffrey Jones

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