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Portfolio > Alternative Investments > Hedge Funds

Man Group to Beat 2006 Forecasts; Stock Jumps

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LONDON (–The share price of Man Group jumped nearly 3% today when the world’s biggest listed hedge fund operator reported that profit before tax for the year ending March 31 will exceed market forecasts.

That values the group at ?7.6 billion ($13.1 billion,) or double its market capitalization recorded as recently as May 2005. The analysts’ consensus for pre-tax profit is about $1.2 billion, including net management fee income of $678 million.

The pre-close trading update and quarterly funds-under-management statement also reported that the firm’s latest product launch is expected to raise around $2 billion of client money – double forecasts. The product is structured as multiple offerings of the Man IP 220 vehicle in different currencies, targeting different regions.

Funds under management grew 4.8% during the quarter, to $48 billion. Private investor funds accounted for $29 billion and institutional funds $19 billion.

Redemptions were $5.9 billion for the year, including $2 billion in the quarter to March. Private investor redemptions for the year amounted to $3 billion.

Net management fee income rose 15%, owing to the increased levels of funds under management, Man said. It added that net performance fee income would grow “strongly” and beat the market consensus due to the performance of its main managers, particularly of its flagship AHL fund.

Man said the integration of Refco, acquired in November, is “proceeding on track”. It added that organic growth would see brokerage net income rise 15%, excluding a small operating loss and exceptional costs arising from Refco’s integration.

Despite the rally of Man shares to 2467p, some analysts see further gains, with Citigroup putting on a price target of 2760p. It anticipates further upside from the full integration of Refco and a possible U.S. flotation of the brokerage business during the next 18 months.

Man Group is scheduled to report full-year results on June 1.

Contact Bob Keane with questions or comments at [email protected].


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