Man Sees Inflows in Second Half as Redemptions Slow (Update1)
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By Kevin Crowley and Tom Cahill
July 9 (Bloomberg) — Man Group Plc expects clients to add more funds in the second half than they withdraw after redemptions by institutional investors slowed in the three months through June, Chief Executive Officer Peter Clarke said.
Pension plans, endowments and money managers pulled $1.8 billion on July 1, half the amount withdrawn three months earlier, London-based Man Group said today. Assets under management at the biggest publicly traded hedge-fund manager declined 7.5 percent to $43.3 billion in the second quarter, after investors pulled a net $1.4 billion.
“We know there’s a lot of money on the sidelines and will have to redeploy,” Clarke told shareholders at the company’s annual investor meeting in London today. “It’s the larger managers who are picking up assets as investors get more fussy and choosy about their managers.”
Hedge funds are rebounding after the industry recorded its worst year in almost two decades in 2008. Man’s assets under management have dropped by almost half since they hit a record $79.5 billion a year ago, forcing Clarke to cut about 15 percent of full-time employees to help reduce costs.
“This could be a signal that we’re seeing a trough in assets, the worst is past them and we’ll start to see some improvement,” said Gurjit Kambo, an analyst at Numis Securities Ltd. in London, who has a ‘buy” recommendation on the shares. “They’re seeing quite a big slowdown in redemptions.”
Man closed up 1 percent at 241.5 pence in London, after climbing as much as 4.5 percent earlier.
Man’s assets have dropped as the firm reduced the amount it borrows and invests in Man Global Strategies, which allocated capital to about 80 single hedge fund managers. The company also wrote down to zero its $360 million investment in two funds linked to Bernard Madoff.
Man had been in “dialogue” with its institutional investors and attorneys about the Madoff loss, and how to recover assets lost in the $65 billion-fraud, Clarke told investors today.
Hedge funds are mostly private pools of capital whose managers participate substantially in the profit from speculation on whether the price of assets will rise or fall.
Man AHL Diversified Futures Ltd., which uses computer programs to identify trades in more than 150 futures markets around the world, fell 10 percent this year through July 6 after rising 25 percent in 2008, according to data compiled by Bloomberg. AHL drives about $25 billion of the company’s funds.
Clarke said Man Group’s ability to honor investor redemptions last year will help it lure investors back without the firm being forced to cut fees.
“People who have performed and didn’t gate can withstand fee pressures,” Clarke told investors today. “There are fewer firms around that can tick all the boxes for liquidity, transparency and governance, which is to our advantage.”
To contact the reporter on this story: Tom Cahill in London at firstname.lastname@example.orgKevin Crowley at Kcrowley1@bloomberg.net
Last Updated: July 9, 2009 12:16 EDT