The Share Centre has added hedge fund giant Man Group to its ‘buy’ list as better investment performance has resulted in increases in funds under management.
The stockbroker believes earnings at the group, which has endured a turbulent period over recent years, should recover well soon boosted by investor sentiment. The past 12 months alone has seen the FTSE 250 constituent’s stock jump by 91%.
Man Group was regarded as a bellwether for the hedge fund industry but the extreme volatility caused by the financial crisis led to a number of its funds to perform very poorly.
Looking ahead, Helal Miah, investment research analyst at The Share Centre, said: “We believe the long awaited turnaround in the fortunes of this business has begun and the shares have been creeping upwards on the more positive sentiment. Recent trading updates have shown positive signs with interim results in August reporting a 7% increase in funds under management.”
Furthermore, Miah highlighted that a trading update in October reported a 25% rise in third quarter funds under management to $72bn.
“While most of these are as a result of acquisitions, some of the key funds have demonstrated an increase in funds under management on the back of better investment performance,” he added.
“The shares are still a long way off from the time when hedge funds were sought after investments and the recovery in investor sentiment may be slow. The shares trade at roughly 17 times forward earnings, slightly above other big asset managers, however we believe the earnings should recover well soon.”
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