Man Group Slumps Most Since 2013 After Citi Says Sell Stockby
"Performance-fee generation looks challenged," analyst Haley Tam said in a note on Friday, cutting the firm’s pretax profit forecast by 35 percent to $235 million. Citigroup also reduced the price target to 120 pence from 182 pence.
The shares dropped as much as 9.3 percent in London, making Man Group Friday’s worst performer in the STOXX Europe 600 index. That was the stock’s biggest decline since June 2013. The shares traded at 129.5 pence as of 12:05 p.m.
Citigroup highlighted performance losses at Man Group’s computer-driven AHL unit this year. It said an acquisition would be "the best solution to the fundamentally subdued" assets and earnings-growth outlook, but the chance of one this year is unlikely. The hedge fund has $480 million of surplus capital.
The GLG unit, which uses fundamental analysis, will make very little contribution to performance fees, Tam wrote. “There has been significant investment in acquiring investment talent and FUM at GLG,” according to the note. “This has so far apparently been unsuccessful in repairing performance or flow momentum.”
Man Group’s 2015 profit fell 17 percent as performance-fees and margins dropped. Last month it reported net inflows of $500 million in the first quarter as its computer-driven funds attracted investors. A spokeswoman for the company declined to comment on the Citigroup report.