Man Group set for fresh client outflows

LONDON Tue Jan 17, 2012 8:00pm EST

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LONDON Jan 18 (Reuters) - Man Group, the world's biggest listed hedge fund manager, looks set to report further heavy client outflows on Wednesday, as nervous investors pull out of its poorly-performing funds.

The firm, whose share price has slumped from around 300 pence a year ago to 107 pence at Tuesday's close, is expected to report net client withdrawals of $2.3 to $2.9 billion over the three months to December, according to analysts.

Analysts have been cutting their forecasts after the shock news that Man lost $2.7 billion in outflows in the third quarter of 2011, knocking its tentative recovery off course and sending its shares tumbling 25 percent in a single day.

While fund managers have seen clients exit as Europe's debt crisis hits financial markets, Man has also been hindered by the performance of some funds in its GLG unit which it bought for $1.6 billion in 2010.

It has also seen its flagship $24.4 billion computer-driven fund AHL lose 6.4 percent in 2011. In contrast, Winton Capital, a rival to AHL that manages $28 billion, saw its main fund gain 6.3 percent last year.

Meanwhile, analysts have questioned whether Man can maintain its dividend payout, which, according to Singer Capital Markets, should be cut.

But Peter Lenardos, analyst at RBC Capital Markets, said the dividend was sustainable in the short term and said he expected figures in line with market expectations on Wednesday.

"What investors should be focusing on is balance sheet strength and if the company is instituting a further share buyback programme and a formal dividend policy," he said. "I will be interested to learn what funds they anticipate marketing early in 2012."

In November Man announced a $150-million share buyback plan in an effort to put a floor under its sagging market value.

Lenardos added: "One thing we've got to make sure is that we don't get overly excited about things (that Man Group announces) that weaken the balance sheet. Let's not take short-term measures when it's putting the company at a disadvantage in the long term. The company needs to position itself in case fund outflows continue."

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