Hedge fund firm Man Group raised hopes it had finally stemmed client outflows and unveiled plans to launch new funds aided by its $1.6 billion purchase of smaller rival GLG last week, boosting its shares.
The firm said current assets under management were $39 billion, little changed since March thanks to a recent turnaround in performance from its flagship black box AHL fund, which last year lagged rival funds.
At that level, the assets -- which form the basis of its fee income -- were still 8 percent lower than at end-December.
Man also said on Thursday it plans to use its computer-driven funds, which are backed by an army of PhDs, and Mayfair-based GLG's fund managers to create new hedge funds, taking advantage of a deal that brings together man and machine.
Man Group shares, which have underperformed the FTSE All Share <.FTAS> index by 30 percent so far this year, jumped 6.73 percent to 229.8 pence by 1113 GMT, making them the FTSE 100's best-performing stock <.PG.FTSE>
Credit Suisse analyst Rupak Ghose said the asset figures implied net outflows had slowed to around zero.
We believe it is increasingly likely that the company is past the worst with assets under management and our earnings forecasts likely to have troughed, he said in a note.
The figures raised investor hopes that Man, which has seen six straight quarters of client outflows, was finally benefiting from a wider industry upturn that has seen hedge funds win back $13.8 billion of net new flows in the first quarter of this year, according to Hedge Fund Research.
Over the year to March Man's clients withdrew $4.5 billion.
Profit for the year to end-March dropped 27 percent to $541 million, ahead of the company's March forecast of $530 million due to a pick-up in AHL's performance in March but slightly below analyst estimates of $547 million.
MAN AND MACHINE
Chief executive Peter Clarke said Man now plans to use new computer systems that AHL is developing -- which will focus on new areas other than riding on the back of market trends -- in conjunction with GLG's fund management operation, which is to be left unaffected by the deal.
AHL is already looking at (other areas than) just pure momentum, he said. It (the new funds) will be a combination of the two -- fundamental, with quantitative inputs.
He said that he had not seen any opposition to the deal from either Man or GLG's shareholders.
Clarke also pointed to an uptick in performance from AHL, the $21.1 billion computer-driven fund named after 1980s founders Michael Adam, David Harding and Martin Lueck which is viewed by many investors as key to Man's fortunes.
Man, which lost roughly half of its assets in the last two years, has been hindered by the poor returns from the flagship fund, which has fallen 3.7 percent over the past 12 months.
The fund tries to make money following big trends in global futures markets.
However, since the start of the year AHL is up around 3.5 percent, which Clarke attributes to the firm's decision to double the number of researchers over the past two years.
We're already seeing 1 percent (gain) in AHL's performance from the bond trading program. There are very encouraging early signs from the research application.
(Editing by Hans Peters)