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October 26, 2012 12:03 am
Crispin Odey, the prominent London hedge fund manager that specialises in taking stakes in undervalued companies, has built a 5 per cent stake in the Man Group, one of his biggest peers.
Shares in Man, the world’s second-largest hedge fund manager by assets behind Bridgewater, are down 40 per cent this year.
Odey Asset Management’s £75m holding, revealed on Thursday in a regulatory filing, catapults Odey into second place on Man’s share register, behind US asset manager BlackRock which owns just over 9 per cent.
Odey, which has been building its stake in Man for some time, did not return a call for comment.
The disclosure will nevertheless reinvigorate debate about Man’s need to address shareholder concerns, according to analysts.
“They are not publicly activist, but there will be private discussions,” one person close to Odey said.
Man shares touched all-time lows over the summer, down 91 per cent from their peak in 2007. The group, once considered a poster child for London’s pre-crisis financial boom, fell out of the FTSE 100 in June.
Poor performance for AHL, the group’s flagship fund, has taken a heavy toll on profitability and the takeover of rival GLG Partners two years ago has yet to make a significant monetary contribution.
Shares in Man last week dropped 10 per cent in a single day after the company unveiled further outflows of $2bn in its third-quarter interim management statement.
Although Man has moved to address concern among its investors, problems have persisted for the group, which manages assets of $60bn, because of continuing market difficulties.
Hedge funds worldwide have struggled to make money because of sharp “risk on, risk off” reversals in sentiment triggered by political events in the eurozone and the US.
Computer-driven AHL, in particular, has been caught out. The fund is flat for the year and still 14 per cent off its high-water mark – a point of peak value beyond which it can charge lucrative performance fees.
According to Peter Clarke, chief executive, the tough environment is unlikely to abate in the coming months.
“The flow environment continues to be challenging, and this was reflected in lower sales,” he said last week.
Executives stress that Man is now well-positioned to benefit when markets stabilise. New products will help to diversify income streams, they say, and inroads are beginning to be made into new institutional client bases.
Shares in Man on Thursday rose 3p to close at 80.05p.
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