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Man Group: post the call

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The CEO blamed sector rotations and the outperformance of value over growth for the weak GLG l/s results for the half, warning that this may lead to poor net flows in the following quarter. However, what really matter is the performance of the quant funds – where the majority of fees are retained for the benefit of shareholders. Here as much as 45% of funds were at peak at the end of June, with a further 38% up to 10% away. The July performance means that even more funds will be accruing performance fees – however a shift in the mix of funds means that the majority (57%) now only book (crystallise) these fees on an annual basis.

The acquisitions announced in June (Numeric $14.7bn AUM and Pine Grove $1.0bn AUM) are aimed at both increasing the presence in North America and boosting the global brand presence of existing quant and FoF offerings. At present 74% of FUM and 75% of sales are in EMEA, so inroads into the world’s largest and most important capital markets are a clear positive.

Cost savings have been delivered as promised, giving management good credibility with investors. The dividend for the first half of 4c (2.37p) compares favourably with the current share price of 114.2p, implying a yield of over 4% for the full year.

The firm story is still mostly dependent on the quant funds, but hires in the long only space reflect the CEO’s commitment to build a long-term franchise where talent and sales expertise can combine to grow FUM and build value for shareholders. After a choppy few years unwinding Stanley Fink’s unsustainable 4% fee model, the combination of Manny Roman and Jonathan Sorrell are now shaping the firm into a more sustainable asset manager who will be ‘long a lot of options’ (to use Manny’s words) and now can also expect to produce sustainable profits from a more stable asset base.


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