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Man Group looks cheap

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A broker looks at a graph on his computer screen in London, Britain January 3, 2018. REUTERS/Simon Dawson

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LONDON, July 28 (Reuters Breakingviews) - UK fund manager Man Group (EMG.L) is having a good year. The London-based company said on Thursday that its assets under management rose to a record $135 billion in June and reported pre-tax profit of $280 million in the six-month period, surpassing the total for all of 2020 of $179 million. Rebounding markets and winning bets, which boost performance fees, have helped. But Man is also surfing longer-term trends: as interest rates collapse, pension funds and other investors are pouring money into hedge funds and absolute return funds as alternatives to bonds.

Shares rose 2% after the results, but that still undervalues the company. Man is trading at just over 10 times this year’s earnings, according to Refinitiv estimates, a discount to the sector average of around 14. Shareholders struggle to value performance fees, which made up over 40% of Man’s core revenues in the first half of the year. Man is putting its money where its mouth is: the company announced another $100 million share buyback. If its winning streak continues, that will be a good trade. (By Neil Unmack)

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Editing by Swaha Pattanaik and Oliver Taslic

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