There is a certain inevitability about Emmanuel Roman’s accession to be CEO of Man Group, the world’s largest listed hedge fund manager. It may have come sooner than some expected, but the timing may suit Roman nicely, if markets behave.
Pressure on Peter Clarke, the incumbent, has grown in recent months as concern mounted about the moribund share price. The stock has fallen more than 70 per cent over the past two years. To be fair, that is hardly all the fault of Mr. Clarke. Man’s chief money-spinner, a computer-driven fund called AHL that aims to spot market trends, struggled to function at full tilt in choppy markets distorted by political chaos and central bank intervention.
Mr. Roman has been the heir apparent since Man’s 2010 purchase of GLG, the hedge fund business that he co-ran. He was chiefly responsible for integrating the two businesses after the acquisition. The challenges won’t disappear when he takes over in February. The business is still heavily dependent on AHL. And there are other gaps too, particularly in the United States.
Still, Mr. Roman accedes at what may prove an auspicious time. Moreover he has form when it comes to timing. After joining GLG from Goldman Sachs in 2005, the group nimbly executed a New York listing in 2007, just before the sub-prime credit crisis. Man later bought GLG for less than half the listing price. But GLG’s sale to Man was also nifty, fetching a juicy price of over six times assets under management, compared with average sector multiples of perhaps four times, according to UBS.
It would be foolish to expect a dramatic, immediate, turnaround at Man. Shares are trading at about 12 times 2013 consensus earnings, in line with peers. There are some encouraging signs, however. AHL’s performance has stabilized recently, and it is ahead of the average trend-following fund so far this year. While computer-driven funds have had a tough time, investor demand for the asset class remains. An easing of the euro zone crisis and U.S. fiscal wrangle next year would make trends easier to spot.
A period of market normality might even encourage potential acquirers. Man has been rumoured as a takeover target for years, though suitors have been turned off by AHL’s wanderings. The business would certainly sit neatly within a large U.S. diversified asset manager.
For now it’s a long shot, but helped by his impeccable sense of timing, the Roman empire could yet expand even further.