The hedge fund manager beats first half expectations.
Hedge funds have waxed and waned in popularity over the past decade, with some pretty decent profits interspersed with the occasional calamitous collapse.
Those interested in such things will surely have been buoyed by first half results from Man Group (LSE: EMG), released Thursday.
Man, the world's largest publicly-quoted hedge fund manager, reported pre-tax profits (before exceptionals) of $227m (£140m) for the six months to September 30, sending its shares soaring more than 8% in early trading.
That £140m, though it was down on the $292m (£180m) the firm made in the first half of 2009, was significantly ahead of forecasts.
A dividend of 9.5 cents per share was announced, which is a little more than half of last year's interim dividend of 19.2 cents. A total dividend for the full year of at least 22 cents per share is expected.
Strategy rebound
Man put these better-than-expected figures down to a strong performance from its flagship computer-driven AHL fund, which accounts for around half of its managed funds.
AHL gained 6.6% over the period, helping to push total funds under management to $40.5bn. That's $1bn more than forecast and $2bn up on June's figure.
Hedge funds like this only attract investors when they're winning, and Man's previously lacklustre performance has seen investors withdrawing their cash for eight quarters in a row, resulting in a net $1.6bn outflow for the six months.
The company will presumably be hoping that these first half figures will signal the start of a turnaround, and that it will start to see a net inflow of cash. There was no mention of whether this has started to happen in the second half yet, although there was some indication that institutional investors have started to return.
Diversification
Man acquired GLG Partners, a fellow hedge fund manager, for $1.6bn earlier in the year, though contributions from GLG were not included in these interim figures.
The acquisition, as well as boosting Man's total managed funds to around the $67bn level, will help the company diversify its strategy and ensure it is not entirely dependent on the fortunes of its main AHL offering.
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