Broker snap: Man reaches inflexion point

5th Nov 2009 12:25

Better than expected interim figures from Man Group could see some upgrades to those full-year earnings estimates at the bottom end of the range, Singer Capital Markets reckons.Singer's own estimates are towards the top end of the range, and it remains a buyer of the shares.'The statement reiterates the significant improvement in private investor and institutional redemption rates with sales in the first half of $5.7bn. Investment performance has been good across the majority of hedge fund styles with the exception of managed futures (AHL) which has reported a 5% fall since the end of September,' Singer notes.Singer reckons the maintained interim dividend 'not only signals the strong capital position but the stability of the business at this point and strong market position going forward, strong momentum within the business and expected subsequent asset growth.'The shares trade on a relatively high price/earnings ratio of 17, but Singer believes the earnings side of the equation is set to rise 'as a consequence not only of headline asset growth but operational gearing from a largely fixed cost base.'Barclays Wealth goes so far as to suggest that Man may have 'reached an inflexion point' with adverse sentiment towards the industry on the wane. 'The group's finances are robust, and recent trends suggest an improvement in hedge fund performance (specifically results from the US). We continue to find the group attractive relative to the sector,' Barclays Wealth analyst Roderick Wallace states.