The largest publicly traded hedge fund manager in the world, Man Group, saw net outflows of $1 billion in Q1 and reported a net drop in cash that made analysts wonder if it is spending too much.
Bloomberg reported Tuesday that the company reported sales of $3.1 billion, countered by client outflows of $4.1 billion from its investment funds. It also said its net cash had fallen by 58% to $250 million in the same quarter as expenses such as employee bonuses devoured more funds than analysts had anticipated.
In an analyst call, Finance Director Kevin Hayes said that staff bonuses, taxes and loans to some of Man Group’s funds accounted for the lower cash reserve. Analysts have lowered estimates for fee revenue for the company after its largest hedge fund, the $19.5 billion AHL computerized trading system, fell about 2.1% so far this year after losing 6% in 2011.
RBC Capital Markets analyst Peter Lenardos said in the report, “The surprise to me was how low the net cash position was. Man will pay an uncovered dividend this year, so the balance sheet could get weaker.”