| LONDON, July 24
LONDON, July 24 A recent uptick in the
performance of its flagship AHL fund may not be enough of a cure
for hedge fund manager Man Group after a sharp fall in
assets, analysts said.
The firm, whose shares have lost more than three quarters of
their value since the start of last year as clients withdraw
funds, is set to report interim results for the six months to
the end of June on Tuesday.
Last month Man signalled a fightback when it replaced
finance director Kevin Hayes with Jonathan Sorrell, son of WPP
chief Martin Sorrell, a move that has raised hopes of
further cost cuts.
Man's $19.5 billion "black box", computer-driven, fund AHL,
meanwhile, has profited from short bets on oil and metals and
long positions in U.S. Treasuries and UK gilts, gaining 4.5
percent between May 21 and July 16, a 1.1 percent rise for the
"A move in AHL is helpful, but it does need to do a bit more
before any analysts start to revise their forecasts up," Singer
analyst Steve Keeling, who rates the shares a buy, told Reuters.
"Man Group is a relatively binary play. If AHL was
performing better then the share price wouldn't be 60 pence or
so. What's in their control is the cost base. I'd like to see
the company tackling the cost base with a bit more vigour."
Analysts at Citi have called on Sorrell to bring forward $25
million of cost cuts from next year to this year, part of the
$75 million extra cuts announced in January.
Despite widespread criticism of its 2010 acquisition of GLG
for $1.6 billion, Man in May bought fund firm FRM to try to
reduce dependence on AHL, in a deal that has been much better
Analysts nevertheless remain divided on a stock that has
proved volatile and hard for the market to value.
While assets trickle into the $2 trillion hedge fund
industry, Man has seen a client exodus for the past three
quarters, while assets have also fallen as it cuts borrowings in
its guaranteed products division on the back of poor
Singer expects Man to report $1.6 billion of net outflows
during the three months to end-June, slicing assets to $52.2
billion from $59 billion at end-March, while RBC Capital Markets
expects assets to fall to $53.4 billion after $1.5 billion of
"In our opinion, Man is currently trading at a level only
slightly above its liquidation level, which we believe is 60
pence," said RBC analyst Peter Lenardos, who rates the shares
"sector perform" with above average risk, in a recent note.
Man shares closed 0.4 percent lower at 69.15 pence on
Monday. Last month the firm was demoted from the FTSE 100.