Man Group have had a tough couple of months. Having been an established member of the FTSE 100, a dismal April and May performance on its public listings, with the two months combined reducing the company’s value by about 50%, has left them in dire need of a change in direction.
Indeed, from a high of over 600p in 2007, the firm is now worth something in the 70p per share region. Man has been hit by structural deficiencies as much as internal problems – markets across the world have crashed and hedge funds have not been immune to this treatment. However, much of the blame can also be attributed to the firm’s AHL fund. Once popular, AHL represents over two-thirds of Man’s business interests, and is reported to be finding it tough to attract fresh investors. Man are discovering just how important momentum and reputation is in the hedge fund business.
Despite Man’s attempts to diversify its business approach, in particular through its purchase of GLG, the firm has continued to struggle and was though to be in need of a fresh approach.
In attempt to arrest this slide, the fund has decided to replace Kevin Hayes and has appointed Johnathan Sorrell as their new finance director in his place. Sorrell’s recent involvement in the Financial Risk Management deal was a key part in his promotion in the firm, CEO Peter Clarke said. It is thought that Sorrell will look into cutting costs as a primary objective. In this respect, he may be in line with shareholder preferences; just last week, his father, Sir Martin Sorrell, director of WPP, faced a shareholder rebellion over his intentions to boost his pay packet by 30% to £1.3 million.
Given the furor developing over the very future of the hedge fund industry, J. Sorrell has an intriguing job on his hands to try to turn the firm around in the face of shareholder resentment, macroeconomic headwinds and lacklustre performance figures.