Market Report: Man slumps after bond market losses
Thursday 06 June 2013
The fortunes of Man Group took another turn for the worst yesterday after its flagship AHL Fund suffered a loss that wiped out all of its 2013 gains. The hedge fund, which has been trying to plug billions of pounds-worth of client redemptions, said the value of AHL fell 8.5 per cent in May and 6.1 per cent last week due to losses in the bond markets.
This troubled investors who abandoned the group in their droves, dragging down Man's share price by almost 17 per cent to 97.05p. The results were particularly galling for the company because AHL had flirted with its so-called high water mark at the start of May, meaning it was close to earning lucrative performance fees.
"Man Group remains highly dependent on AHL, which has had a pullback from its recent peak, leading to a significant cut to earnings, but also reducing the probability of flows turning," Arnaud Giblat, an analyst at UBS, said.
Negative sentiment from Man's results seemed to spread across the fund management sector with Aberdeen Asset Management falling 26.4p to 437.5p. The setback proved just how much work Man's chief executive, Manny Roman, and his board of directors, including Jonathan Sorrell, still have to do to save the former stock market darling from a terminal decline.
Mr Sorrell was not the only member of his family with investors on the mind with his father, Sir Martin, gearing up to face shareholders at WPP's annual meeting next week. Shares in the blue-chip advertising group, which were trading ex-dividend, fell 19p to £11.01 as the wider FTSE 100 dipped 139.27 points to 6419.31. Traders blamed events across the pond for the 2.12 per cent fall.
William Nicholls, a dealer at Capital Spreads, said: "Unfortunately for the bulls, investors are speculating that the temporary increase in money supply provided by the Fed has been the main driver behind improving returns on equity, and that once the tap has been turned off, returns will reduce.
"This just goes to show how much markets are influenced by speculation, fear and greed rather than actual risks and returns. The bulls will be hoping that other investors see that, in the long term, equity markets can only improve."
The building materials group Wolseley was one of the day's few winners, rising 15p to £31.60 following upgrades from brokers at Numis and HSBC.
Further down the scale RPC, which makes plastic containers, jars and bottles for brands such as Nescafé and Heinz, climbed 8.1p to 407.7p despite its profits falling 5 per cent on the back of high polymer prices as well as the weak euro.
Elsewhere, it was another £165m in the bank for the entrepreneur Simon Nixon and more luxury cars to stock up the garage – that's soooo Moneysupermarket.
The comparison site's founder set out plans to sell up to 80 million shares worth £165m in his first major stake sale since Moneysupermarket floated in 2007. At the time, the 45-year-old sold £105m-worth of shares.
The deal represents about 15 per cent of Moneysupermarket, taking Mr Nixon's stake to 35 per cent. But even before the sale, which prompted a 10.7p fall to 197p in the shares, Mr Nixon was reckoned to have a personal fortune of £733m. Mr Nixon – a university dropout who worked as a mortgage broker before setting up the website – stepped down as chief executive of the site in 2008. He is thought to be in the process of relocating from Chester to Jersey for tax reasons.
Synergy Health, the supplier of sterilisation systems to hospitals and medical device makers, saw its profits jump 16 per cent to £50.3m in the last year on sales also up 16 per cent to £361m. The company reported particularly strong growth in demand for its systems from US hospitals, and said that it expected another year of good growth ahead. Shares in the group climbed 37p to £11.08.
The suit specialist Moss Bros also rose 1.225p to 56.75p despite customers leaving hiring their suits for summer weddings until the 11th hour. The retailer saw hire sales fall 6.2 per cent in the 18 weeks to 1 June.
And finally, Investec considered the likelihood of Britvic's £1.5m tie-up with AG Barr, which is now at the mercy of the Competition Commission. Shares in both companies fell more than 2 per cent each as analysts asked: "To be, or not to be?"
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