Man Group Rises on Fifth Quarterly Net Inflows, AHL Performance

By Lindsay Fortado

Man Group Plc (EMG), the world’s largest publicly traded hedge-fund manager, rose the most in more than three months after reporting a fifth consecutive quarter of net inflows and a 25 percent increase in assets.
Net inflows were $400 million as sales of $4.5 billion offset redemptions of $4.1 billion. Assets under management jumped to $72.3 billion in the three months through September, helped by acquisitions in the U.S., the London-based company said in a statement today. That’s in line with the estimate of Peter Lenardos, an analyst at RBC Capital Markets in London.
Man Group said the acquisitions of Pine Grove Asset Management, a New Jersey-based fund-of-hedge-funds manager, and Numeric Holdings LLC, a Boston-based quant manager, added $16.2 billion in assets. Chief Executive Officer Emmanuel Roman, 51, has been cutting costs as the AHL Diversified computer-driven fund returned to gains in 2014 after three years of losses.
“Man Group is experiencing sustained momentum in
its business, and we note that AHL recently hit another high,” Lenardos, who has a sector perform recommendation on the shares, said in a note. “With the balance sheet and cost base both in good shape, we believe that shareholders should benefit from greater scale, higher performance fees, an increasing operating profit margin, and ongoing net inflows.”
The shares rose as much as 7.6 percent, the most since February, and traded at 116.3 pence at 10:09 a.m. in London. They have increased 36 percent this year, giving the company a market value of about 2 billion pounds ($3.2 billion). The stock tumbled in 2011 and 2012, losing two-thirds of its value.

GLG ‘Flat’

The firm’s quantitative alternative strategies grew by 28 percent in the quarter, led by the purchase of the Numeric assets and net inflows of $1 billion. AHL Diversified and Alpha were up 9.1 percent and 6.1 percent, respectively, the strongest gains since 2008, according to the statement. Much of the funds’ gains came from betting on a higher dollar and bond prices and shorting agricultural commodities.
AHL Evolution, another of the firm’s quant funds, was down 1.7 percent, and Dimension was up 3.1 percent.
Man Group’s discretionary GLG funds fell 9 percent to $16.3 billion on foreign-exchange losses. The funds were hurt by redemptions of $1 billion from equity long-short strategies, outweighing sales of $400 million, while performance was “broadly flat,” the firm said. In credit and convertible strategies, redemptions and sales were equal at $500 million.
While Man is seeing “increased appetite in long-only strategies and for managed accounts,” the outlook for flows “is mixed and will depend on performance,” Roman said in the statement.
Net inflows were “significantly ahead of our forecast,” analysts at Goldman Sachs Group Inc. led by Chris Turner said in a note today. Still, “with greater upside available elsewhere, we remain neutral” on the shares, they said.