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.
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.
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Rupert Hargreaves has no position in any shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.