The Five Dumbest Things on Wall Street

Fortress or Fort Knox?

Pity Adam Levinson.

The poor soul, a new dad and star trader for publicly traded hedge fund Fortress Investment Group(FIG Quote), recently told The Wall Street Journal that he's awake all night, every night. Not because of the kid, he says, but because the phone won't stop ringing with calls from work.

"On a good day, it's a couple of calls overnight," he told the Journal. "On a bad one, it's seven."

Man, being chained to the office like that would drive a lot of guys to look for new employment on Sixfigurejobs.com. Fortunately for Levinson, six figures seem quaint in light of Fortress' incentive for him to stay where he is: a $300 million bonus.

You read that right. That's nine figures, if you're not so good with math.

Fortress plied Levinson with a grant of 31 million shares to keep him from bolting to a rival or hanging up his own shingle, the Journal says. Lavish pay packages are certainly common among the hedge fund and private equity worlds, as there is a lot of money at stake, and the competition for top talent is fierce.

The problem for Fortress is that it is no longer giving away its own money since the firm went public last year. Thus, pesky investors and journalists have more access to information and are able to uncover such things as Levinson's pay package and subject the firm to scrutiny from bitter, less-handsomely compensated folks like the Journal's Peter Lattman, who wrote the piece, and we here at The Five Dumbest Lab. (To be fair to Lattman, we've never met him and can't attest he shares our bitterness.)

But while we acknowledge a touch of envy in our mocking Levinson's windfall, our scorn is justified when it is juxtaposed with the firm's recent financial results. Fortress posted a net loss of $55.6 million, or 67 cents a share in the second quarter -- its third straight quarterly loss. Moreover, shareholders have seen the firm's stock plummet nearly 70% since it went public in February 2007 at $35 a share.

Plus, as Citigroup analyst Prashant Bhatia pointed out in a note on Aug. 7, the 31 million shares granted to Levinson dilutes existing shareholders' holdings by increasing the number of shares outstanding by 7%.

"We can't rule out additional dilutive share grants to other senior employees down the road," he wrote.

Well, that's nice -- for the next hot property Fortress wants to keep from skipping town.

-- by Michael Gannon

Dumb-o-meter score: 85. It's reassuring that Levinson isn't getting any sleep. Investors in Fortress aren't either.