Published by Global Banking and Finance Review
Posted on February 27, 2025
By Nell Mackenzie
LONDON (Reuters) - Man Group's shares rose as much as 5.7% on Thursday after the hedge fund reported that its assets under management grew by around 1% to $168.6 billion in 2024 as markets whipsawed.
The shares jumped as the company announced a $100 million buyback, twice the amount that analysts had expected, according to a note by JPMorgan.
Man Group's profit and revenue figures beat expectations while its asset growth was slightly below the anticipated level, said the note.
"The market has fretted about Man’s investment performance but the delivery of better-than-expected performance fees suggests that the market cannot quite measure all it believes it can," said a note from Rae Maile at Panmure Liberum.
Man Group's shares were up 3.7% by 0920 GMT.
Against the backdrop of increased market volatility and a rapid rise in long-term rates to start the year, hedge funds levered up in 2024 to boost trading to new heights and trade on U.S. elections and volatility spikes.
London-listed Man Group, which houses many different kinds of trading strategies under one roof, saw strong investment performance from its long-only strategies, which contributed an additional $10.9 billion to the firm-wide AUM, the firm said.
Other strategies, particularly trend following strategies such as its AHL Alpha and AHL Evolution produced mixed returns of a positive 3.2% and negative 6.1%, respectively.
"We were able to capture some quality trends in commodities including agriculturals and in the Mag 7 stocks," CEO Robyn Grew told Reuters, referring to the largest U.S. tech stocks.
She confirmed that the hedge fund had a positive investment performance in cocoa, a large profit maker for trend funds last year as prices surged on supply constraints.
Clear opportunity to catch market trends in sovereign bonds, however, were not there, she added.
"We walked into 2024 with expectations of a number of rate cuts which decreased to two and then were shortly back up to seven in October. This saw markets whipsaw," said Grew, explaining this hampered trend following strategies generally.
Trend following hedge funds buy into rising markets and sell falling ones, but they rely on prices to travel in one direction and not change.
Trend funds tracked by Societe Generale returned roughly 3% in 2024.
Hedge funds overall averaged just over a 10% return for the year, according to PivotalPath, versus 5.7% in the same period in 2023.
Multi-strategy hedge funds with many different trading strategies all housed in the same company were the strongest cohort of hedge funds returning 13.6% in 2024, after being the 5th best performing master strategy in 2023.
Man's multi-strategy fund 1783 returned 14.5%.
'NO SECRET'
Core performance fees rose 72% to $310 million, an increase of money that clients pay to Man Group when its investments deliver positive returns.
Firm revenues were hit by a $3.8 billion negative currency impact from the strong dollar and $2.1 billion in costs from the wind-down of the hedge fund's U.S. real estate business and capital returned from its packaged loan business.
The firm recorded net outflows of $3.3 billion for 2024, driven by the $7.0 billion single client redemption in the third quarter of 2024, the company said in a statement.
Asked if Man Group planned further acquisitions, with a European credit manager or direct lending firm, Grew said: "We have made no secret of our desire to grow credit, whether that is organically or inorganically," but added, the price had to be right.
(Reporting by Nell Mackenzie; Editing by Dhara Ranasinghe and Susan Fenton)
