Bloomberg News

Man Group Gains Sixth Day on ‘Key Pick’ by Oriel: London Mover

February 12, 2013

Man Group Plc, the biggest publicly traded hedge fund manager, rose for a sixth day to the highest in more than nine months as Oriel Securities called the stock a “key pick” as it initiated coverage with a buy recommendation.

The shares gained as much as 2.5 percent, the highest intraday price since May 1, and were up 2.3 percent at 103.1 pence at 2:03 p.m. The stock is the best performer in the Stoxx 600 Financial Services index over the past five days, advancing 13 percent compared with the index’s gain of 1.8 percent.

“Rising equity prices have naturally supported asset managers in the early part of 2013,” and Man Group is among those that may give “further outperformance,” Sarah Ing, an analyst at Oriel, said in a note initiating her coverage of U.K. financial stocks for the London-based brokerage.

Man Group has surged almost 40 percent, adding more than 500 million pounds ($780 million) to its market value, since saying Dec. 10 that Manny Roman would replace Peter Clarke as chief executive officer on Feb. 28. Roman joined Man Group in 2010 when it bought GLG Partners Inc. for $1.6 billion.

Ing named Man Group a top pick “as a less consensual view.” Of the 22 analysts who report recommendations to Bloomberg, five rate the shares buy, while 12 favor holding the shares and five advise selling.

The analyst’s other key picks are Aberdeen Asset Management Plc, Scotland’s largest money manager, as well as F&C Asset Management Plc, Tullett Prebon Plc and ICAP Plc, the world’s largest interdealer broker.

Strategy Change

UBS AG added Man Group to its list of most preferred stocks on Feb. 6, saying the company could announce a change in strategy, including a review of distribution capabilities, when it releases full-year results on Feb. 28. Day by Day, a Paris- based securities firm, raised its recommendation on the stock a week ago to buy from hold.

Man Group is rebounding after declining to a 13-year low in July as some of its products, including its AHL computer- algorithm-driven flagship fund, lagged behind historical returns and clients pulled money.

Clarke started to cut almost $200 million in costs last year to boost returns to investors. A management shakeup in June included the appointment of Jonathan Sorrell, a former Goldman Sachs Group Inc. executive, as finance director.

AHL, Man Group’s biggest fund and most significant profit generator, relies on computer programs to spot profitable trades in futures markets. AHL’s assets under management were $16.3 billion on Sept. 30, down from $19.5 billion as of March 31. Overall, Man Group had $60 billion of assets under management at the end of the third quarter.

AHL is about 9 percent below its high-water mark, Arnaud Giblat, an analyst at UBS, said six days ago. That compares with 14 percent below at the end of the third quarter. The high mark is the level at which the fund can charge performance fees to existing investors.

To contact the reporter on this story: Peter Woodifield in Edinburgh at pwoodifield@bloomberg.net.

To contact the editor responsible for this story: Douglas Lytle at dlytle@bloomberg.net


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