Analysts repeat 'buy' recommendation on Man Group shares
The shares of London-listed Man Group were hit by uncertain financial markets and fears of poor returns at its flagship funds in the six months to September 30.
Assets under management rose to USD 39 billion in the six months to 29 September from USD 38.5 billion, the London-based company said in a statement, noting that asset growth was at its slowest level since 2000.
Man Group said customers redeemed about USD 2.1 billion in the six months. Net management fee income will be 30 percent higher and performance fee income will be about half of that earned in the same period of last year, the company stated. Earnings per share will be about 25 percent higher.
Despite these projections, shares of Man Group fell to their lowest level since May 21, 2003, and on Wednesday this week were down 70 pence, or 5.6 percent, to 1,175 pence. The shares have dropped 20 percent this year compared with a 65 percent gain in 2003, pushing down the company's market value to GBP 3.6 billion.
The shares were also hit this week by fears of declining performance by Man's flagship funds. Bloomberg reported that of the 11 largest funds run by Man, ten showed declines in asset value in the year to date with one fund, the AHL Currency Fund, falling by 28%.
However, by close of play on Thursday the shares were making a comeback. On Thursday Man Group Plc advanced 32 pence, or 2.8 percent, to 1,187 pence, the biggest gain in the FTSE 100, boosted by analysts' recommendations.
Merrill Lynch & Co. analyst Philip Middleton repeated his "buy'' recommendation on Man Group in a research note, saying the stock is "deeply undervalued.'' Lehman Brothers Inc. analysts reiterated its "overweight'' advice, saying Wednesday's decline in the shares was "inappropriate.''
Man remained upbeat in tone. Chief Executive Stanley Fink, 47, said in a statement: "Man Group sees high levels of product demand continuing and is well placed to grow assets strongly.''
Fink, who took over as CEO of Man Group in 2000, appears to be making a steady recovery from brain surgery and fronted this week's presentation to investors and analysts. Fink fell ill during a recent safari in Botswana with his family and had to have a benign cyst removed from his brain.
Harvey McGrath, Man Group's chairman, said Fink's faculties returned immediately but it has taken longer for him to build up stamina after such surgery; he returned to work part-time last week.
Man Group was founded in 1783 by James Man as a sugar broker that won an exclusive contract to provide sailors in the Royal Navy with rum. The company then grew into one of the world's largest sugar and cocoa traders. Man Group got into hedge funds and futures broking through its commodities trading business. Hedge funds now account for about 85 percent of the company's earnings.
The company said it will post first-half earnings on 4 November.
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