Man Group beats forecasts

Nick Goodway12 April 2012

BRITAIN'S largest hedge fund manager Man Group confounded the stock market when it said that its profits for the year which ends on Sunday would be ahead of forecasts. The FTSE 100 group's shares, which virtually doubled last year, had fallen 20% from their January peak of 1354p.

Man admitted it may have been a victim of short-selling, when investors bet on a share price falling - one of its own normal investment tools. But today's news took them up 33p, or 3%, to 1115p.

Analysts had feared that the fall in the value of Man's key AHL fund, which accounts for 43% of the money it manages, would have meant that it missed out on the performance fees which boost its earnings.

The AHL fund's net asset value is down some 15% from last October's highs. In recent weeks the fund has reversed the downward trend and begun to earn Man bonuses again. It earned £33.5m in performance fees in the first half but analysts no longer expect it to hit their forecasts of £80m for the full year.

At the same time volatile and largely bearish equity markets have kept investors' faith in such alternative funds as Man peddles. Its investments can make money in bad times as well as good, based as they are largely on placing bets on movements in all kinds of financial instruments.

That demand has helped to push the total amount of money it manages for clients up by 57% in the past year to $10.5bn (£7.37bn). At the half year the figure stood at £6.1bn. Full-year sales were more than $4.5bn. Chief executive Stanley Fink said: 'The alternative investment market continues to exhibit strong growth. Against this backdrop, we expect to see continued high levels of demand for our products as customers recognise the advantages of including structured alternative investment products in their portfolio.'

Analysts had pencilled in profits before tax, goodwill and exceptionals of about £202m, up from £174m the year before.

Fink also said Man had recently started selling its products to private investors in the US, where he sees considerable potential for sales. He said the group had 900 intermediaries selling its products around the world and remained committed to growing this. Analysts believe Man could easily make a $1bn acquisition.

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