UPDATE 3-Man Group CEO hits back at critics

Tue May 1, 2012 10:25am EDT

Related Topics

* CEO Clarke says no need for a takeover

* Funds under management $59 bln vs $59.5 bln at end-Feb

* Net outflow of $1 bln in three months to March

* Small shareholders question Clarke's reappointment, pay at AGM

* Shares down 6.2 pct, underperform FTSE 100

By Laurence Fletcher

LONDON, May 1 (Reuters) - The chief executive of beleaguered hedge fund manager Man Group said he had the support of shareholders despite further withdrawals of clients' money and poor returns from its flagship fund.

Peter Clarke has been under growing pressure as the company's share price has fallen by almost 60 percent since September, sparking market talk of a takeover or a change of management.

Clarke on Tuesday dismissed the need for a bid from a rival, despite recent speculation by analysts at UBS that the company was a "likely take-out candidate," and said he had shareholders' support.

"We do not feel we need a big brother in order to achieve our strategic objectives," said Clarke, who took over as CEO from industry 'godfather' Stanley Fink in 2007.

"I do not feel our shareholders do anything other than support existing management, as witnessed by the proxy votes."

Man shares were down 6.2 percent at 97.1 pence at 1353 GMT, underperforming the FTSE 100 blue-chip index, which was up 0.4 percent.

In November, Reuters reported one top 15 shareholder saying the fund manager was "ripe for a management reshuffle". Last Friday the Financial Times reported that top 10 institutional investors had given Clarke a "window" in which to lift the share price.

Clarke's comments come as Man said client withdrawals slowed to a net $1 billion in the three months to March 31. Analysts at Numis had expected a $1.5 billion net outflow. In comparison, the firm saw $2.5 billion of net outflows in the final three months of 2011.

Total assets under management fell to $59 billion from $59.5 billion at the end of February.

"WRONG DIRECTION"

Clarke and the board nevertheless came in for criticism from small shareholders at Tuesday's annual general meeting, held opposite London's Westminster Abbey.

One shareholder described Man's share buybacks - conducted at an average price of around 134 pence compared with the current share price below 100 pence - as "a terrible use of the company's cash".

He also questioned Clarke's pay package, which comprised $2.9 million - including a $1 million cash bonus - plus just over $4 million in long-term incentive plans, in the light of declining funds under management and net income.

"All six of (the key performance indicators) are trending horribly in the wrong direction," he said. "Sir, does it really seem like a ($)7 million sort of year to you?"

Another investor, questioning Clarke's reappointment, drew applause from some shareholders.

In response, chairman Jon Aisbitt said that ahead of the AGM nearly 99 percent of the proxy votes cast were for Clarke's re-election.

"We think our very experienced senior management team are the best people to address those challenges and we solidly support them," Aisbitt said. He added that 85 percent of institutional shareholders had voted in favour of the remuneration report.

AHL

Man's outflows were largely at its $21 billion 'black box' hedge fund AHL, named after 1980s founders Michael Adam, David Harding and Martin Lueck, which is down 2.2 percent so far in 2012 after falling 6.4 percent last year.

In contrast, the hedge fund industry as a whole is seeing modest inflows, helped by buoyant markets. Data from GlobeOp shows investors' demands to pull money out of hedge funds fell in April.

Funds at Man's manager-driven GLG unit - which it bought for $1.6 billion in 2010 - made gains this year. Its European Long-Short hedge fund, run by star manager Pierre Lagrange, was up 8 percent in the first three months of the year.

"We do not see enough here to trigger re-rating or share price recovery," said analysts at Citi in a note. "AHL performance and rebalancing continues to be the key issue."

Man has been weighed down by the sluggish performance of AHL, which tries to make money following trends in futures markets and which suffered last year as its programmes focusing on short-term market movements were hit by volatility.

Last year, around 70 percent of group revenue was generated by AHL funds or funds that allocate to AHL.

Man said on Tuesday that at the end of March, AHL was on average 14 percent away from its so-called high-water mark, above which it can earn lucrative performance fees. Citi analysts estimate that after losses in April it is now around 17 percent away from that mark.

Outflows from AHL were largely from Nomura Global Trend - an open-ended version of AHL - which Man launched in Japan only last year, raising $2 billion by last May.

"Sales will remain subdued until we see positive performance enduring there," Clarke said on a call to journalists.

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