Man Group rises on share buy back announcement

published 3 November 2011

Man Group, the FTSE 100 hedge fund manager, has risen strongly in early trading after revealing a $150m share buy back programme .

The firm also revealed adjusted pre tax profits of $195m for the six months to the end of September down 14% on the same period of 2010.

The figure comes at a very difficult period for Man during which investors' appetite for risk has reduced amidst the carnage in the Eurozone. The firm acknowledges redemptions, that is people taking their money out of the fund, have been a problem.

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Funds Under Management (FUM) at Man dropped from $71bn at the end of June to $64.5bn by the end of September. This was partly due to a $2.7bn outflow of funds from anxious investors but investment performance was also a drag, losing $1.7bn while currency effects also reduced the FUM figure by a further $2.1bn.

The financials are not great either, with adjusted earnings per share at 8 cents, down significantly on the 10.2 cents at the same point in 2010

There is, then, no disguising the fact that Man is in trouble. Its share price has fallen 50% so far this year, 30% in the last three months.

To keep shareholders from getting too angry Man says it is maintaining dividend at 16.5 cents per share in addition to the share buy back, financed with some of the company's $1bn surplus of regulatory capital.

Commenting on the results, Man's chief executive Peter Clarke highlighted the slightly better performance since the end of September:

"The last six months began with record sales, but ended with a spike in redemptions as extreme volatility severely tested investor risk appetite in the late summer. Since period end we saw reduced redemptions in October, and we ended the month with around $63.5 billion under management."