Man Group Plc (EMG), the world’s biggest publicly traded hedge-fund manager, jumped the most since November 2010 in London trading as analysts recommended buying the shares on prospects for better returns and a potential bid.
The stock rose 14 percent to 107 pence at the 4:30 p.m. close, giving the company a market value of 1.9 billion pounds ($3 billion). Michael Sanderson, an analyst for Societe Generale SA (GLE), raised the shares to buy from hold today, saying performance should improve and a takeover can’t be ruled out. Barclays Plc reiterated an overweight, or buy, recommendation.
“Negative momentum is too great given the proven fundamentals for the business,” London-based Sanderson wrote in an e-mailed note today. “Upside could emerge from further cost reductions. A bid for the company, while more likely than in the past, remains in our view a low probability outcome.”
The world’s largest publicly traded hedge-fund manager was valued at 0.65 times net assets earlier this week before takeover speculation lifted Man Group’s stock from its lowest price in more than a decade, according to data compiled by Bloomberg. The London-based company also had about $1.7 billion in cash, more than any investment management firm in the industrialized world relative to its market value.
Arnaud Giblat, a London-based analyst at UBS, said in a report on April 23 that Man Group could be attractive to a bidder because of its sales and distribution relationships in Japan and the rest of Asia.
Less Short Interest
Some 4.6 percent of Man Group’s shares outstanding have been loaned out, an indication of demand from short sellers betting the stock would decline, according to Data Explorers, a London-based research firm. On April 24, that figure reached 5 percent, the highest since November 2009.
Man Group’s shares tumbled over the past 12 months as the computers that run its $21 billion flagship AHL strategy failed to spot profitable trades and Europe’s debt crisis caused clients to withdraw money.
Barclays analysts Daniel Garrod and Toni Dang said in a note today that the shares may reach 145 pence apiece. They wrote that concern about “accelerating outflows” are unwarranted as many guaranteed products have investors locked in until 2018. Any turnaround in fund performance will show the shares have been “oversold,” they added.
Laura Humble, a spokeswoman for Man Group, has declined to comment on the shares’ move or on takeover speculation.
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