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Man Group added to the ‘buy’ list as fortunes begin to turnaround

5th January 2015 Print

Helal Miah, investment research analyst at The Share Centre, explains why Man Group has been added to the ‘buy’ list.

“Futures broker Man Group was regarded as a bellwether for the hedge fund industry, but the extreme volatility caused by the financial crisis led to a number of the computer driven funds to perform very poorly. These funds have struggled to retain investor confidence in subsequent years and experienced significant fund outflows. However, we believe the long awaited turnaround in the fortunes of this business has begun and the shares have been creeping upwards on the more positive sentiment.

“Recent trading updates have shown positive signs with interim results in August reporting a 7% increase in funds under management. Furthermore, a trading update in October reported a 25% rise in third quarter funds under management to $72bn. While most of these are as a result of acquisitions, some of the key funds have demonstrated an increase in funds under management on the back of better investment performance.

“We recommend Man Group as a ‘buy’ for investors willing to accept a medium level of risk and seeking capital growth. The shares are still a long way off from the time when hedge funds were sought after investments and the recovery in investor sentiment may be slow. The shares trade at roughly 17 times forward earnings, slightly above other big asset managers, however we believe the earnings should recover well soon.”