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Man recovers 5.5% despite clients withdrawing funds again

Hedge fund group recovers as trading update meets City expectations

Sell on the rumour, buy on the fact seems to be the mantra for followers of hedge fund group Man.

Its shares have been weak performers for a while on worries about its growth prospects, not least in the days leading to its latest trading update.

And the statement just released has shown a second successive quarter of clients withdrawing funds from the business, a total of .5bn in the three months to December. As a result the company plans further cost cuts of m on top of the m already announced, which will involve as yet unspecified job losses.

But Man’s shares have jumped 5.8p to 112.9p, the biggest riser in a falling FTSE 100, with RBC Capital Markets summing up the mood, by saying the absence of bad news would be taken positively. Espirito Santo said:

Funds under management as of end December stood at .4m in line with our estimate of m. Net outflows at .5m in the last quarter were worse than we had anticipated, we forecast .6bn and investment performance at a negative .5bn was better than anticipated.

The outlook statement contains the usual emphasis that the group is well positioned when investor demand improves. At this point we are unlikely to change our forecasts into 2012. We forecast funds under management at .7bn to end December 2012 and adjusted earnings per share at .8 cents versus a dividend expectation of 22 cents.

Meanwhile Noam Gottesman will become non- executive chairman of last year’s troubled acquitision GLG. Manny Roman will continue as sole chief executive of GLG and chief operating officer of Man. Gottesman’s share lock up arrangements agreed at the time of the GLG deal remain unchanged.

Overall the FTSE 100 has slipped back following its recent gains, as investors await the outcome of the latest round of eurozone crisis talks and bond auctions. The index is currently 23.80 points lower at 5670.15, with French and German markets also edging lower.

After Tuesday’s slump by Essar Energy after an Indian tax ruling went against the company, it has recovered some of the lost ground, up 10.3p to 137.3p. © 2012 Guardian News and Media Limited or its affiliated companies. All rights reserved. | Use of this content is subject to our Terms & Conditions | More Feeds