Warthog4
04 May 2016
Decline and Fall Ths sun is shining today and at some time it will sink slowly in the west emulating the SP of this wretched company who have now demonstrated beyond reasonable doubt that they are not the experts they claim to be as evidenced by their total inability to read the markets. How they can trumpet their services in the way they do beggars belief as does the way they are taking handsome salaries whilst we SI's get shafted.James Man must be turning in his grave
Warthog4
03 May 2016
Re: Poor shareprice Agree completely Clarence. Manny and His Manny Men have lost the plot IMO.SP now descending rapidly and fast approaching the 52 week low(2.5% today alone Vs only 0.6% for the 250), AHL staggering badly etc etc.and generally speaking seesaw performance which beggars belief."Experts"-give me a break!Wish I'd never got involved with this poxy company who seem to be relaxed about it all with the attitude that "the competition is suffering as well so everything's OK".I believe it was you who said "what will it take to get this share moving" Apart from a jab with a large stick in some management posteriors I really don't know!
Clarence Beaks
03 May 2016
Poor shareprice Very tired of EMG having been in it years ago to see it's share price still abysmal. time to depart I think.GLAH, too dull for me.
alphatrooper
29 Apr 2016
Re: performance slipping I note the Manage Futures sector is down for March -2.83% in the Credit Suisse Hedge Fund Index:[link] Reading the FRM March summary: they are citing strategies being long in bonds which sold off and short in oil which had a rally being the culprits [link] factsheet of AHL diversified also indicates this as well: [link] only repeating myself now but the reversal of the momentum trade is the biggest threat to these strategies - trend established, the program follows the trend, an event in the market shocks and reverses the prices, the trend doesn't pick it up. For example, take a look at month to date return on AHL Div... its down -6%!Crikey-moses-man! Negative performance at AHL is a game changer for this stock as we all know. Represents less than a quarter of AuM, but at least 35% of mgt fee, >90% of per fees... maybe as much as 40 to 50% of total revenue. This really is what puts me off but also fascinates me about this stock... next month AHL could rally up and we start looking at wonderful perf fees... they need to get to a model where the sp is valued on majority of mgt fees and perf fees looked at as a bonus. right now its too dependent on perf fees... and those fees are so variable on almost a day to day basis. think about it like this.... would you borrow your mortgage against your normal wages or would you include bonuses and things like that in it? if your bonus swung up and down a lot, then probably not!!! unless you bank at Northern Rock..... sorry is it still too soon?? 
)Peace out folksAT
Warthog4
29 Apr 2016
Re: performance slipping Correction. Low 150's now past. Now in the high 140's and come this time next week prob. low 140's.Pessimistic? I don't think so-as posted elsewhere the "Flagship"AHL which used to be a nice little earner is beginning to stagger badly after a promising Q1.
Warthog4
28 Apr 2016
Re: performance slipping Good post AT. Yep-I'm afraid Management has lost the plot. After the euphoria of the results SP now languishing in the low 150's as opposed to the 150-170 range of a while ago but despite that broker consensus ( for what its worth) is much more bullish than 3 months ago with over 50% going for buy/strong buy.Q's posed to the company elicit the rather pathetic response that " our competitors are suffering too" which appears to point to a mindset of "as long as we produce much the same result as the competition, everything in the garden is beautiful.Pathetic
alphatrooper
28 Apr 2016
performance slipping Performance at AHL really coming down now. Group composite is: -2.12%AHL: Diversified, -0.5; Alpha, 0.5; Evo, 4.5, Dimension, 0.3 - composite AHL, 0.9%GLG Alt: Eur L/S, -2.9; Eur Alpha, -0.2; UK Alpha, -1.6; Gbl Conv, -1.4 - composite -1.48%GLG LO: Gbl Eq -4.9; Japan, -12.3; Strat Bnd, 2.3; Undervalued, -4.4 - composite -9.17%FRM: diversified, -3.7%Numeric: Gbl Core, -0.2; Emerging, 4.9; US, 0.4 - composite 0.57%That covers c. 48.8bn in AuM against total of 78.6bn.... so 62%. that is a fair indication. It is also noteworthy that AHL is starting to struggle. Especially on the Diversified strategy... that's the big one with the most fees, or at least used to be. GLG Alt and FRM are the two next large fee generators and they are both negative as well. In GLG Alt already saw outflows in Q1... FRM was flat. Keeping an eye on it... but a negative performance in AHL does not bode well for either management or performance fees, particularly when some of the other businesses are suffering too!Peace outAT
Warthog4
19 Apr 2016
Re: Amateur stock note Yep- there was a decent lift last week but boy was it needed. Now we're back to the usual dismal trading pattern-out of the starting gate to a nice improvement only to gradually run out of steam and collpase to a loss on the day.This happens day in, day out and supports the theory that it is probably the most manipulated share on the market.
alphatrooper
18 Apr 2016
Re: Amateur stock note Hmmm boy did I get this wrong!.... ok but to be fair, I got it wrong for the reasons I pointed out that I might get it wrong! that makes it ok right?!?!? right so what actually happened here? The overall point of a lower revenue mix is really the point of this trading update. We got right the decent AHL performance and lower GLG causing a performance drag on AuM. But the flows to AHL and Numeric... as well as the pretty decent performance at Numeric create a quite a different AuM mix for revenue - for an overall mix the total AuM in the "higher" charging strategies AHL, GLG Alt, FRM and Gtd are 1.6% higher than the lower mix for the Q on Q move. Taking the AuM reported here and backing out Management fees on the same rates used: this gives 726 vs 707 estimate, a difference of 25 on AHL alone. Interestingly, AHL is nearly 3% higher in total AuM... I really had not appreciated this point, but acknowledged the flows point... will need to try to find a way to translate good/bad performance into a flows estimate. A nice exercise is to reverse out the current SP through earnings to a required revenue for plausibility: Using 160 sp and LT PE of 12.2 and XR of 1.41 gives a $x EPS of 18c. @1700 shares that is profit of 314. Use same tax, interest and costs for simplicity. Revenue then is 952. As per above decomposing the Management fee AHL: 271, GLG alt: 152, FRM: 83, Numeric: 65, GLG LO: 101, Gtd: 54 - total 726That leaves 226 needed from Performance fees.... which is only 40 more than previous forecast. And to be fair, they did over 300 last year. I also note the SP is coming down a little bit today so that means actually need for higher perf fees not as demanding in order to justify the current SP. In conclusion, the revenue mix is not as bad as first thought and if remains, then the current valuation does look a little more justified.... and not to be too defensive about this, I did say it was trading inside fair value range!! even if some of my major points were wrong 
I am going to put a bit of effort into my model to improve it: I have now found the Numeric performance for the Global, US and Emerging strategies, you need to look up the products in the Luxembourg or Ireland sites as a professional investor, so I'll add their performance to the model. I may try to model the flows - something like generally trending performance for the strategy translates into a net in/outflow of XYZ%.... or maybe run a number of scenarios from loads of outflows to loads of inflows and then apply a weight based on how well their performance is going... I don't know yet. But I maintain my stance on this one that is at or near FV and there is not yet a upside catalyst for a breakout or revaluation upwards.... short of a total risk on play in the markets for equities being bought across the board. Congrats to the holders, hope you all got a decent lift from the run up last week. More to come from me!Peace out AT
Clarence Beaks
15 Apr 2016
From This is Money [link] Nice to see a tick up for a change.Also from Digital Look : "Man Group advanced after Shore Capital argued that the company's shares were significantly undervalued, following its first quarter update."
Warthog4
15 Apr 2016
Re: Amateur stock note Well, almost static performance overall but Flagship AHL moving well to offset poor performance by GLG, Man's first acquisition of its buy in AUM strategy of a few years ago.I suppose taking into account the global markets grasshopper performance in the last few months the overall outcome better than expected and initial market reaction seems to be favourable.As mentioned by you maybe the next quarter's results will give a clearer picture of where Man is going."Challenging" is becoming Manny's Trademark Comment
alphatrooper
14 Apr 2016
Re: Amateur stock note thank you warthog very kind words indeed!cta, that's a really good few points made there, far more precise on costs and the tax point I will admit, I didn't capture that at all. If I follow it through to an SP it looks pretty grim: Revenue 707+173 = 880Costs: 643EBIT: 237Interest: 10Tax (at 15% and less interest): 34Net Profit: 193Shares: 1700EPS $c: 11cXR: 1.41EPS £p: 8pLTPE: 12.2 = 98p SP-/+ 10% on multiple = 88p to 1.08At current SP on forward EPS... multiple of 18.88!Not sure Fair Value would be that low... but the general direction of lower revenue and higher costs seems very likely here. The unknowns are the flows and the true investment performance figure... as even if the short term eps is under strain, new flows and some good performance on key products will generate future revenue and justify a higher multiple. The jack-up in the fixed cost base due to acquisition is a great point by you both.... hadn't really fully appreciated that. So they need products really to perform now in order to get over that, or quite frankly.... and I believe this is your overall point cta.... there is a structural game-changer shift in their overall margin profile from the higher costs base not being covered by the revenue... in which case, whether it is a 98p share price or not is not the point, the real point is short to medium damage to earnings ability.... sounds like this is where you are going? If so, I buy that as a possible outcome, but perhaps too early to conclude on that... maybe tomorrow will shed some light, but more likely mid year to get a proper view.thanks for adding your analysis, that was pretty cool. Peace outAT
Warthog4
14 Apr 2016
Re: Amateur stock note Some masterly pieces of research which do not make for comfortable reading. For myself I do feel the market MAY discount the better figures from AHL 'cos those from the GLG acquisition are not looking at all rosy and AHL is notorious for being a mercurial entitiy anyway.Regrettably tomorrow may not produce anything to make this share look any better as management seems to have lost its way after the orgy of buying in new AUM of a couple of years ago. As highlighted in the analysis the staff costs of said acquisitions are still impacting significantly.Just hope I am very wrong!!Bol to all
cta100
13 Apr 2016
Re: Amateur stock note One last point.Have used a tax rate of 10% (which is the rate for 2015). However, this rate is lower than the normalised rate due to the release of tax provisions in the period that are now used up.Tax rate going forward for 2016 will be 14%-17% (see slide 40).
cta100
13 Apr 2016
Re: Amateur stock note Some good points - agree with high level premise #2 being the driver here for results day. The SP movement will depend on how the market weighs up the good AHL performance fees vs the big drop off in GLG AUM from the Japanese fund.Can't provide any additional colour on the subs/reds for the quarter - and as say these can't be modelled reliably. The fee modelling looks robust. On the mgt side which can be calculated reliably I get $707m compared to $704m - so the same number effectively. On the performance side accept just have to make more assumptions as isn't the visibility on the exact decomposition of this calc. I get $173m compared to $212m. The difference is on AHL and suspect comes primarily from modelling the distance from HWM (see slide 35). But is within range of reasonableness for sure.On the cost side though are under budgeting for sure. Cost bloat is a valid concern for this company at the moment (was a prior chain on this a month or so back with more detail if interested). Get the pragmatic approach that have taken for $600m as a short hand but this fails to capture all the costs associated with recent acquisitions (which is Man's current strategy of keeping AUM up by buying it). These can be estimated pretty reliably: see following breakdown.Per slide 37. Fixed comp for 2016 will be circa $185m (higher than prior year $177m due to full year inclusion of increased head count from acquisitions). This is headcount not AUM based so can't be flexed downwards. On the mgt variable comp side. Can scale this down by the decrease in mgt fee ratio (so $759m to $707/$704m) = -9% reduction. The pragmatic approach captures that sure. But what it then misses is the ramp up in the unwind of the deferred compensation scheme (which is effectively part of the cost of acquiring these businesses). Per slide 37 again: $53m was amortised for this in 2015 but that number goes up to $62m for 2016. On the perf variable side. AHL typically charges 20% performance fee. Of that 20%, 7% is then paid on to staff as a bonus. So this can be reliably estimated as 1/3 of the performance fee. If are estimating $212m of performance fee then performace staff costs will be $74.Cost breakdown summarised:Fixed comp: $185 (per guidance and higher due to recent acquisitions)Variable mgt comp: $171m (prior year of $174m - 9% for AUM & margin change, but +£9m for increased unwind of deferred costs from acquisitions)Variable performance comp: $74m (7%/20% of your modelled performance fee of $212m)Cash costs: $160m (per slide 38 - same as prior year - this is rent and such like)Depreciation: $20m (per slide 38)Asset servicing: $33m (this can be calculated as 5bps of total AUM excluding FRM)So total costs (ex finance charge) = 185 + 171 + 74 + 160 + 20 + 33 = $643m.The only real floating number in their is the variable performance comp being 1/3 of whatever model peformance fee as.So in short. Largely agree with your calc but are $43m short on costs due to not capturing the ramp in acquisition costs.
