Most followers of Man Group will readily concede the shares are cheap and that they trade at almost the liquidation value of the Company. The key questions are –
(a) Will the dividend be cut? The shares are trading on an unheard of for a recent FTSE 100 stock of just under 15% – if they maintain this rate then you have your capital paid back in just over 6 years!
(b) Can the lacklustre performance of AHL be turned around and so begin generating performance fees for Man again (testimony indeed to just how difficult trend following systems are finding this elongated bear market where trends turn quickly and the returns before the retracement are not sufficient to generate positive net results).
As technicians, we find the chart below interesting – the last time the stock turned up above through its 7 & 19 day EMA it ran up over 40% (and similrly on the downside). The RSI is beginning to rise back towards the 50 level and the stock is flatlining against the broader market in terms of relative performance, showing a marked reluctance to let the 70 level give way.
In short, we think thata bottom is now being carved out in the stock and that any sniff of bid rumours again will see a sharp rally in the price. At this level &72p), SBM makes Man Group a Trading Buy.