The world’s largest publicly traded hedge fund manager Man Group (LSE: EMG) today reported a slump in pre-tax profit for the first half of the year to $55m, from $163m as posted for the same period last year.
Man has been suffering from the same issues that have affected the wider hedge fund industry, specifically a weak investment performance and high fees. Net revenues for the period declined to $389m from $624m as reported last year and performance fees fell to $42m, down from $231m a year before. At the end of June, funds under management stood at $76.4bn, down from $78.7bn at the end of December. Man secured $1bn in net inflows during the half, compared to outflows of $2.6bn for the comparable period a year earlier but a negative investment return eroded net inflows.
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Based on these weak numbers, management has declared an interim dividend of 4.5 US cents per share, compared to last year’s interim payout of 5.4 cents a share. City analysts expect Man’s EPS to fall by 37% for 2016 and today’s half-year results confirm this trend. Based on current forecasts, shares in Man trade at a forward P/E of 13.2 and support a dividend yield of 5.4%.
Croda (LSE: CRDA) announced today that its pre-tax profit for the first half grew 7% year-on-year while revenue for the period rose to £608.7m. That was up from £564.5m in the year-ago period as the company benefited from sterling’s weakness.
And based on the first half’s trading performance, management believes Croda is on track to hit its full-year targets. City analysts expect Croda to report 10% EPS growth for the full-year 2016. Based on this projection, shares in the company are currently trading at a forward P/E of 22.5.
Drax (LSE: DRX) warned today that the firm’s earnings for 2016 are now likely to be at the lower end of projections as gross profit in the first half fell to £182.2m from £234.2m in the year-ago period. A 2.4% increase in costs was blamed for the decline in profitability. Earnings before interest, tax, depreciation and amortisation dropped to £70.3m from £119.9m. However, unrealised gains then pushed up operating profit to £181.7m from £67.1m a year earlier.
This is yet another disappointing result from Drax, but it seems that the City never had high hopes for the company this year. City analysts are projecting a 61% fall in earnings per share to 4.3p for the year ending 31 December 2016. These figures imply the company’s shares are trading at a forward P/E of 84.3 — a premium valuation for a company that has a history of continual disappointment.
Slow and steady
Shares in Segro (LSE: SGRO) are rising today after the company reported a 9.4% increase in gross rental income and 2.6% increase in its net asset value to 475p per share for the six months to the end of June.
However, pre-tax profit dropped to £200.7m for the period, from £330m for the same period a year earlier, primarily on the back of a lower valuation surplus on its investment properties. Alongside these results, the company announced a 4% increase in its interim dividend to 5.2p per share. The shares currently support a dividend yield of 3.7% and trade at a forward P/E of 22.6.