A more generous dividend policy and a slow-down in the net outflow of funds led to the ascent of Man, the hedge fund manager, on Thursday morning.
The group said funds under management (FUM) at the end of February clocked in at around $59.5bn, up from the end of 2011 figure of $58.4bn, on the back of good investment performance and a significant reduction in the rate of net outflows.
The FUM update was given in the group's result statement covering the first nine months of Man's financial year, which now runs to the end of December, having changed this time round from the previous year end of March 31st.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Peter Clarke, Chief Executive of Man, admitted the nine months to December 31st had been a challenging trading period for Man. Record sales early in the period contributed to gross sales for the nine months of $16.7bn, despite a wobble over the summer, with things only returning to relative normality in the final three months of 2011.
Net fee income over the nine-month period totalled $281m, which means the net fee income in the final quarter of 2011 totalled $79m. In the 12 months to March 31st, 2011, net management fee income had been $476m.
Net performance fee income actually diminished at the tail-end of last year; at the half-year stage it was $39m but at the end of 2011 it was down to $37m. The year before (a 12 month period, reflecting the change of year end) net performance fee income had been $169m.
These figures are especially significant, because the board has announced a change to its dividend policy. It will now pay out all of its adjusted management fee earnings per share each financial year in dividends to shareholders. As for the performance fees, net performance fee earnings will be added to available capital surpluses and distributed to shareholders over time, either through dividends or share repurchases, or both.
The board intends to apply this policy in 2012 to pay a total dividend for the year of 22 cents per share, unchanged from the previous year. The board is to recommend a final dividend of 7.0 cents per share (4.38p) for the nine months to December 31st, 2011, giving a total dividend for the period of 16.5 cents per share.
"After a capital buffer, Man currently has surplus regulatory capital of over $550m," revealed Clarke. The Chief Exec added that Man will revert to half-yearly dividend announcements retrospectively at the time of interim or final results for the period in question, rather than in advance as for 2012.
Management and other fees in the nine-month period totalled $1,160m, versus $1,452m in the 12 months to March 31st. Total income was $1,256m, down from the 12-month total of $1,745m for the previous year.
Adjusted profit before tax was $262m, down from the 12-month total the year before of $599m.
Diluted adjusted earnings per share (EPS) tumbled to 10.7 cents from 27.6 cents in the year ended March 31st, 2011, but were up from EPS of 8.9 cents at the half year stage.
Credit Suisse said the results were much as expected but the dividend guidance was a pleasant surprise, while the FUM figure was slightly ahead of what the Swiss broker was expecting.
"In terms of performance, there has been some good momentum across a number of the GLG funds and AHL (+2.5%) is off to a steady start," the broker noted.
Credit Suisse has left its full year earnings forecasts virtually unchanged with at $421m (profit before tax) and 18c (EPS).
"The company did not provide details of flows since the year end but indicated that lower redemptions had resulted in a significant reduction in net outflows vs. Q411 [fourth quarter 2011]. We forecast net redemptions in Jan and Feb to be around $1bn vs. $2.5bn during Q411. In terms of the outlook on flows, whilst the rebound in performance is encouraging, particularly in the GLG funds, management indicated that consistency will be key for further fund flow momentum," Credit Suisse said.
Man's Chief Executive conceded that investor sentiment remains fragile but stressed the group has taken action to reduce costs while continuing to focus on meeting the needs of its investors, "as we manage the growing demand for open-ended products as a proportion of total funds under management."
"Our financial strength, broad product range and comprehensive investor access mean that shareholders will benefit from any sustained momentum in market sentiment," Clarke said.
The shares had risen to 10.2p to 141.1p by mid-morning on the day of the results.
jh
