Man Group Shares Drop as First-Half Profits Slip
Man Group (MNGPY) shares slipped in morning trading and were recently trading 2.45% down in London on disappointing earnings.
Man Group, the world's largest publicly listed hedge fund, saw adjusted profits before tax of $98 million in the first-half of 2016. This was a significant drop from the $280 million reported in the first half of 2015. This was due primarily to lower gross performance fee revenue.
Earnings fell to 4.9 cents per share, compared with 13.9 cents in the first half of 2015.
Funds under management sit at $76.4 billion. Man saw inflows of $1 billion in the first half and outflows of $2.6 billion.
The hedge fund has $470 million surplus cash above regulatory requirements. The company is on the hunt for possible acquisitions, saying that it is looking to grow the business to add long-term shareholder value.
Outgoing CEO Manny Roman said the first half of the year was challenging for the investment management industry.
Roman said the long-only strategies suffered in the first quarter and the company's discretionary strategies suffered after the U.K.'s vote to leave the European Union.
Man Group is well-positioned to manage any regulatory changes that may occur due to the Brexit vote, Roman said, adding the company is committed to keeping the headquarters in the U.K.
Roman added, "The outlook, particularly cross border post-Brexit, remains uncertain and accordingly the risk appetite of our clients has the potential to impact flows, albeit we have seen no meaningful change so far."
Last week it was announced that Roman would be leaving Man Group August to take the helm of Pimco. Luke Ellis, the current co-president, will become CEO in September.
Liberum analysts in a note sent today said, "Our current forecasts look stretched at this point and we suspect the pressure to consensus forecasts will be to the downside, for both core and Total EPS."
Under Liberum's existing forecast of 8.4 cents, the stock is trading at a core PE of 17x. "This looks like it will come under pressure given the challenging conditions," the said.
Analysts at Liberum said that the statement pointed to a possible share buyback rather than a special dividend to boost shareholder return, if no acquisitions are made.