Breakingviews - Man’s trading nous highlights valuation riddle

in the first half of 2022. Yet its shares fell as much as 7% on Tuesday morning.

The $4 billion group’s results aren’t blemish-free. But its absolute return funds, which include the trend-following AHL strategies, booked investment gains of $1.6 billion in the quarter ending June. Performance fees rose to $404 million in the first half. Shareholders may be worrying that, in volatile markets, investors are more likely to liquidate funds that perform well. Moreover, Man’s high-octane performance may not last.

Still, assume the group can earn 14.5 pence per share this year from management fees, in line with Panmure Gordon forecasts. On a sector-average multiple of 13 times that fee stream alone is worth 190 pence per share. Deduct that from Man’s share price, and investors appear to be valuing the remaining performance fees at less than 4 times Panmure Gordon’s full-year forecast. It’s the kind of valuation conundrum that would confound Man’s traders.

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