LONDON (Reuters) - The chief executive of beleaguered hedge fund manager Man Group sought to defend his position, saying shareholders supported him despite further withdrawals of clients’ money and poor returns from its flagship fund.
Peter Clarke has been under growing pressure as the company’s (EMG.L) 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.”
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 had 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.
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.
Reporting by Laurence Fletcher; Editing by Erica Billingham