ii view: Man Group beats forecasts

Hedge fund manager Man Group saw quantitative strategies push performance fee growth.

Half-year results

• Funds under management (FUM) up 5% to $114.4 billion
• Net revenues up 7.8% to $524 million
• Adjusted profit up 3% to $157 million
• Interim dividend down 26% to 4.7 cents per share

Chief executive Luke Ellis said:

"Absolute performance was strong in the first half of 2019, particularly in our quant alternative strategies, which drove a $5.9 billion increase in FUM and growth in profits. Relative performance and flows were more mixed with outperformance and inflows into our quant alternative strategies and underperformance and outflows from our valuation biased strategies, with clients continuing to reduce their equity exposure coming into the third quarter.”

ii round-up:

Tracing its history back to James Man in 1783, today Man Group Ltd (LSE:EMG) is an investment manager with a stock market value of over £2 billion. 

The group has assets under management in excess of $100 billion, with institutional investors contributing around 80% of the group’s funds. 

Its client’s funds are managed across five core strategies including quantitative, numeric and discretionary. 

The company reported solid progress in these half-year results. Profits exceeded analyst forecasts with strength in performance fees leading the way. Strong performance of some of its quantitative strategies and gains in some of its early stage funds help contribute. 

The share price rose by over 3% in early UK stock market trading.

ii view:

An ultra-low interest rate environment pushing investors away from cash and into other assets looks to provide a supportive backdrop for all asset managers. Man’s differing styles of management have helped set it apart from other asset managers. 

From an investment prospective, a forward dividend yield of over 4% and covered nearly twice by earnings generates attraction. But a forward price earnings ratio in line with the ten-year average offers little guidance. 

Positives: 

• Managing costs and diversifying product offering
• A total of $851 million has been returned to shareholders over the last 5 years

Negatives:

• Net management fee revenue fell by 4.7% to $382 million
• The dividend payment is linked to adjusted management fee EPS which can fluctuate

The average rating of stock market analysts:

Weak buy