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MAN Group (EMG)
Resurgent Man Group teed up for further rally
By David Brenchley | Thu, 20th April 2017 - 13:01
It was a case of target hit for Man Group (EMG) as the hedge fund manager's stellar first-quarter numbers triggered a 7% rally Thursday. We reported six months ago how UBS analyst Michael Werner had slapped a 150p target price on the stock, then trading around the £1.20 mark.
Well, after a cracking trading statement for the quarter ended 31 March 2017, the investment management firm just smashed through that level.
Werner had pencilled in total funds under management (FUM) of $84.2 billion and net inflows of $1 billion. The latter came in at $3 billion, primarily driven, the company said, by strong flows into the lower margin, discretionary long-only GLG fund, and FRM fund of fund alternatives.
It hasn't happened just yet, but considering the beat to Werner's targets, we'll be watching closely for any revision to his target price. In the meantime, plenty of others are queuing up to give a bullish assessment of Man's prospects.
According to the charts, 150p is a big level for Man and could prove stiff resistance. However, both JP Morgan and Goldman Sachs see 170p as achievable, and Credit Suisse goes for an ambitious 195p. That would give Man upside of almost a third from here, and almost double the price of 102p hit a day after the EU referendum.
Credit Suisse had been even more cautious than UBS, pencilling in net inflows of just $400 million. And analyst Tom Mills reckons there's plenty of scope for EMG to complete its share price recovery, claiming the update is encouraging "because the broad-based nature of the inflows demonstrates the success of Man's increasing diversification".
Man Group is up a huge 28% year-to-date compared to just 1% for the FTSE All-Share and, trading on just 10 times Mills' 2018 estimates, the stock remains "attractively valued". There's that 5% dividend yield, too.
It's been a tough couple of years for Man since April 2015 when the shares were riding high at over £2 on the back of a strong year for fund sales, as investors piled record amounts of cash into collectives.
A lot of water has gone under the bridge since then, with eurozone and emerging market worries, the Brexit vote and the election of Donald Trump to the White House, providing headwinds.
In the first half of 2016, taking in the week immediately following the UK's referendum on EU membership, Man's FUM slipped 3% to $76.4 billion (£59.5 billion). However, as confidence returned to stockmarkets and investors put their money back to work, that figure improved to over $4 billion of net inflows in the third quarter of 2016.
In Q1 2017, Man reported an increase in FUM of 10%, to $88.7 billion. This represents their best result in more than five years and was a "strong beat" against expectations.
Elsewhere, foreign exchange movements added $800 million in the quarter and its January acquisition of real estate equity and debt strategies manager Aalto added $1.8 billion FUM.
Boss Luke Ellis noted "continuing near-term interest from clients", but cautioned: "It is important to recognise that this is only one quarter and flows are likely to vary on a quarterly basis given the institutional nature of our business."
This article is for information and discussion purposes only and does not form a recommendation to invest or otherwise. The value of an investment may fall. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.
|Bid / Ask||212.9 / 213.1|
|Day Range||211 / 214.8|
|52Week Range||123.46 / 215.50|
|Last Update: 18:43:48 (22/01/18)|