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Shares of the world’s largest listed hedge fund company, Man Group, rose almost 5 per cent after it reported rising profits, despite disappointing performance across some core strategies for a second consecutive year.
The London-listed company said on Thursday that profits before tax were $398mn, a 43 per cent increase compared with the previous year, with analysts noting that adjusted profits and fee income were above consensus.
Man Group, which has a market capitalisation of £2.61bn, also said it intended to purchase $100mn in shares as it reported a dividend of 17.2 cents for the full year, slightly above the previous year.
“We think this is a strong set of results and a great platform as we enter 2025,” said chief executive Robyn Grew.
But assets under management rose only $1.1bn to $168.6bn, partly due to a large $7bn client redemption in the third quarter of last year, and a strengthening of the US dollar that affected the company’s non-US dollar-denominated assets.
The performance of the data-dependent quantitative hedge fund strategies that Man Group is best known for was muted for a second consecutive year. These strategies generally try to ride trends in markets and can suffer if there are rapid market reversals in periods of high volatility.
Analysts pointed to weaker flows in the “alternatives” part of the business, which includes hedge fund strategies and infrastructure investing.
“[We] would expect to see a negative reaction for the stock given the weaker flow trends in alternatives,” said analysts at Citigroup. “Cheap valuation and poor performance into numbers may partly mitigate this.”
When asked if the company would make changes to improve the performance of some of its quantitative strategies, the chief financial officer, Antoine Forterre, said that “we don’t have knee-jerk reactions” and that there was a “process of continuous improvement and R&D and innovation”.
Shares rose more than 4 per cent in morning trading in London to 218.9p. The group’s share price is slightly up from the start of the year, but down about 9 per cent compared with a year ago.
One particularly bright spot for the company was the performance of its 1783 hedge fund, which charges higher fees but trades across multiple strategies. The fund returned 14.5 per cent, comparable with the 15 per cent returns of Millennium and Citadel, some of the world’s best-known hedge funds.
