Citigroup upgrades Man Group after Numeric buy

20th Jun 2014 13:27

Citigroup has upgraded Man Group after the hedge fund manager bought US quantitative investment specialist Numeric for up to $494m.Citi has changed its recommendation on Man to 'neutral' from 'sell' with a target price of 102p, up from 88p, which it said reflected a 22% rise in expected 2015 earnings per share from the acquisition.The broker said it liked Numeric, which would allow Man to increase funds under management by more than a quarter.It could also become a significant channel for future fund flow growth, Man said.Citi said concerns about Man included recent poor GLG flagship fund performance, over-reliance on GLG for fund flows, a high cost-to-income ratio and the prospect of the stronger dollar wiping out cost savings in 2015.It said it continued to believe Man's organic earnings recovery will not start to show up in its results until 2016, but added: "Numeric usefully plugs the gap until then."Shares in Man, which is led by Chief Executive Manny Roman, fell 0.5p or 0.5% to 104.6p by 14:07 in London. PW