rffrydr
Moderator
Joined: 30 Oct 2005
Posts: 16939
Location: Sunny California
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 Posted: Thu Dec 22, 2011 9:32 am Post subject: Man Group PLC |
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Goldman via Alphaville:
| Quote: | During the calendar fourth quarter, Man Group has seen the reversal of
two key third-quarter trends. First, after rising by c.8% in 3Q, the past three
months have seen the group’s core AHL fund decline by c.6%, leaving the
fund approximately 10% below its high water mark. Second – and more
positively – the group’s GLG funds have generated broadly stable returns
in 4Q, after experiencing steep declines in the previous quarter.
BE
Although AHL’s negative 4Q investment returns are disappointing, fund
performance over the second half as a whole illustrates the increased
diversification of Man Group’s business model post the acquisition of
GLG. As we have argued previously, the non-correlated nature of returns
from Man Group’s AHL and GLG funds should lower Man Group’s cost of
equity and, therefore, raise the group’s long-term valuation multiple over
time. With Man Group currently trading on only 6.3x our 2013E EPS, we
believe that there is significant longer-term potential upside.
However, in the absence of sustained positive performance from either
AHL or GLG, and with the group’s share buyback due to end shortly, it is
hard to identify a catalyst to drive this re-rating over the short term.
BE
We reduce our 2012 performance fee forecasts to reflect volatile market
conditions and more challenging high water marks. We also lower our
near-term inflow expectations to reflect a tough fundraising environment.
Our 9M, 2012 and 2013 EPS forecasts decline materially (7%, 14% and 12%
ex-performance fees, 15%, 38% and 18% including performance fees). Our
12-month price target falls to 180p (230p) and is based on an approach that
applies separate P/Es to management fee (10x) and performance fee (8.3x)
earnings. |
File under Inversion of Values: Yield funds bought Man looking for a "slam dunk" dividend....and that's not going to happen.
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Today is the Tomorrow you worried about Yesterday! |
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