Our view Speculative buy
Share price 93.45p (-1.3p)
It makes me feel slightly queasy to say so, but there is an economic case for investing in Man Group's shares.
That queasiness comes from the fact that Man is in a hole. And it is by no means clear that its directors have what it takes to pull the company out of it.
Here's why: If you thought that Barclays was the poster-child for Premiership executive pay packages for League Two performance, think again.
Man's shares are bouncing around 11-year lows. Despite that, its chief executive Peter Clarke enjoyed a $7m (£4.3m) pay package during a year in which the company's shares lost nearly two-thirds of their value.
So, from a cold, hard investment perspective, there can simply be no justification for Mr Clarke receiving any bonus. His basic is $925,000, which in itself looks generous given what the people who pay it (his shareholders) have had to endure.
Man Group does have one key point in common with Barclays. Its remuneration committee is chaired by Alison Carnwath, who might well be the leading candidate for Britain's worst non-executive director if such an award were given. Presiding over two such disgraces puts her a nose in front of Scott Wheway, chair of Aviva's remco, whose committee lost the vote on its remuneration report. Arguably Ms Carnwath should have too, but Man's shareholder base is rather more forgiving than Aviva's. More fool them.
Mr Clarke oughtn't to be feeling too comfortable in his seat right now. He is probably in situ because, as one analyst suggested, there is some debate over how much a change at the top would achieve.
The recent trading statement held some positives, however. Man is on track to achieve $75m of cost savings this year. Its GLG unit (where the funds are run by human beings rather than computers) performed well enough to lift funds under management to just below $60bn, despite the fact that the company is suffering a greater number of withdrawals than it is achieving sales.
Those withdrawals have, though, eased a bit. Also, the company has invested in pepping up the aforementioned computer programme, which runs a portfolio of managed futures in the flagship AHL fund.
It is not all good. If the GLG people, who have kept performance fees flowing in, dislike the direction the group is headed they could leave. The Man shares they got when they joined are badly under water. While some might find its easier to talk about setting up on their own than actually doing it, particularly given a chillier regulatory environment, that doesn't help Man.
Moreover, the group's cash reserves plummeted by more than half to $250m for the three months ended March. "Seasonal factors," it said, but this suggests that it is spending rather too much at a time of falling earnings.
This is why any buy of Man has to be on a very speculative basis. You are betting on a turnaround from a board and management that doesn't look to be in the best position to produce one. Or, and this is a possibility, hoping that a bidder will come to the rescue, attracted by the rock-bottom price and Man's enviable distribution network.
Right now, Man shares aren't that expensive to take a punt on. For this year they sit at just 10.3 times forecast earnings, falling to 7.6 times in 2013, which is a substantial discount to rivals.
Then there is the dividend yield, which at 12.8 per cent is almost surreal for a company which doesn't seem to be flirting with bankruptcy.
The payment is not fully covered by earnings and, in my view, is unlikely to remain at this level (indeed it falls to a forecast 11 per cent in 2013). However, even in the event of a fairly steep cut, the payout would be worth having.
Despite its problems, Man has attractions for those who like a bet. But don't put the mortgage on it, and be sure to vote down Mr Clarke's pay package if the company continues to tread water.