Broker snap: Man Group upgraded after share price weakness

21st Mar 2011 11:42

In spite of RBS's preference lying elsewhere in the sector, it upgrades hedge fund manager Man Group to 'hold', from 'sell', following the recent share price weakness.The broker estimates that Man has around 23% of its group funds under management (FUM) exposed to Japan: 15% sourced from Japanese (retail) clients; and 8% from its GLG Partners division. The share price has fallen by around 13% over the last 13 days."The impact of this is likely to be some redemptions, although given most Japanese retail exposure is likely to be in the form of structured product with average duration over a number of years and with early exit fees, the risk is more likely to be the impact on future sales," says the broker.While the FUM exposure to Japan means the stock is likely to continue to underperform other asset managers, the broker believes the stock now represents fair value. The target price is unchanged at 244p.Schroders ('buy') and Jupiter ('buy') are the broker's sector preferences as it continues to prefer traditional asset managers, "particularly those with UK/European retail exposure, over alternative/hedge funds."