March 29, 2011 / 10:00 AM / 7 years ago

GLG helps Man Group win back clients

LONDON (Reuters) - Man Group, the world’s biggest listed hedge fund manager, has begun winning back clients, as last year’s acquisition of rival GLG helped it break a two-year streak of losing investors.

The company, which had seen clients exit even as other hedge funds had started to get them to invest, said it expected $700 million of net inflows for the three months to March.

Analysts had been expecting flat or small net positive flows and shares in Man Group rose nearly 2 percent in opening trading on Tuesday, limiting the stock’s losses to just under 16 percent so far this year.

Man Group Chief Executive Peter Clarke described the turnaround as “a significant move”.

But the company had delayed the launch of a new fund into Japan -- which accounts for 15 percent of Man’s assets -- by a month after the earthquake and subsequent nuclear crisis there, and said sales were likely to be hit.

“Will it impact the amount we will raise? That’s a safe assumption,” he said. “But I don’t see it as a significant shock to our business.”

The company said performance of its funds had “turned sharply down with markets” immediately after the devastating earthquake and tsunami hit Japan, but has since recovered.

Man’s shares have lost 13 percent over the past month, in part on fears over the impact of Japan’s nuclear crisis on the company’s sales into the country.

“There are enough positives in this statement to cause the share to start to recover,” said Barclays Capital analyst Daniel Garrod, who rates the shares “overweight” and has a target price of 315 pence on the stock.

At 10:50 a.m. Man's shares had pared gains to trade 0.3 percent higher at 245.1 pence, outperforming a weaker FTSE 100 .FTSE, having earlier touched 250 pence.

HEDGE FUND ACQUISITION

GLG, which Man Group bought last year to boost assets and become less reliant on computer-driven funds, was the driver behind the positive sales. Without the acquisition, Man Group would still be seeing net outflows.

Man is also buying the remaining 50 percent of credit hedge fund firm Ore Hill for $18 million, a huge drop in price since it bought the first 50 percent for $235 million in 2008.

Ore Hill has seen assets tumble to $800 million from around $3 billion during the financial crisis, and halted clients from taking their money out of the business.

Last week Man announced it had sold its stake in rival Bluecrest, whose computer-driven Bluetrend fund competes with AHL, to focus on the integration of GLG. It will integrate Ore Hill into GLG.

The computer-driven fund AHL has slipped to around 10 percent below its so-called “high-water mark”, the level above which it can earn lucrative performance fees, after being hit by sharp falls in markets this month.

Since January 3 AHL, a “black box” fund named after 1980s founders Michael Adam, David Harding and Martin Lueck, is down around 6 percent.

Editing by Alexander Smith Twitter: www.twitter.com/reutersfletcher

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