Wednesday 18 January 2012

MAN enough?

Sometime ago, back in the pre-2008 crisis, I used to trade the giant FTSE100 Man Group quite a bit (its EMG.L).

Since then, things have been going very badly for the group. Its main fund has done quite badly the last couple of years, notching up 6.3% down last year (I dream of returns like this, 50% down last year...). It made a huge and expensive acquisition of GLG partners which was only ever going to be a good deal for the GLG guys selling to them. Clients have been pulling money out in droves, which also makes it hard to make money on the funds (forcing liquidation of good positions etc). Also MAN only makes good money when it hits its high performance targets, so underperforming funds really affect its profits

So all in all its a bad story, no wonder the shares have fallen from 300p to 112p. Now today there is a new statement out saying that there is a need for a further round of cost reduction. However, the divi of 16.5 cents is still be paid. This is quite some divi at 10% for a FTSE 100. Furthermore, analysts think it is probably just about sustainable, even with all this bad news backed in.

Now, I doubt 10% is sustainable, but that is because 6-8% is more likely and that is probably going to happen when the shareprice recovers from these depressed level. EMG could easily get back to 150p odd this year which would mean a decent profit even without the divi. With little downside, protection of a big dividend and a shareprice at bargain levels this one is back on the watchlist.


Steven_L said...

Man was my pick of the FTSE100 back in March 2009. It shot from 198p to 274p, then plunged back down to 225p where it hit my stoploss. I haven't traded it since.

Back then I thought money would flow back into their AHL thingy and it would carry on outperforming other hedge funds. But it didn't, it seems to have had a torrid time in these volitile markets.

I've had a nice little run on banks and insurance the last two and half weeks. I keep thinking about opening some more positions (or just doing some profit taking) and I could see myself getting on this, but only in a small way, maybe £3 a point or so.

roym said...

10% divi? i thought my Nat Grid at 8% was pretty good.

BTW, is your RSS feed working ok? Google reader hasnt registered any of your posts this year as new.

Budgie said...

I have dipped a toe in the water with Range Resources (RRL - CU, your tip some time ago) and Red Rock (RRR). RRL moved up immediately to 13p and has now dropped back to 11p, still above my buying price. RRR still around the 2.7p mark.

On the bright side, GKP is doing really well at about 275 and I think has more to go. Most others are just wallowing, waiting for the realisation to dawn that the euro is not going to disappear.