Where MF Global Went, Will Man Follow?


Man Group is suffering a lack of investor confidence that may not be unrelated to the aftermath of the somewhat disastrous first listed year of its MF Global subsidiary.


Man Group is a good business at its core but the problem right now is we thought the same of MF Global last year and that company has had a disastrous first year on the stock market. Basic risk controls at MF Global were found significantly wanting. Statements at the trials of former Refco executives brought worrying implications for the brokerage and all manner of disasters befell it which suggested that MF Global seemed to be dangerously close to losing track of reality.

In the midst of a massive outflow of money from those clearing companies who did not have rock solid balance sheets, MF Global stock has slumped and ultimately Kevin Davis was replaced as CEO.

Of course this can’t be the same at Man Group, can it? The company has sound management, a great track record and an incredible history of returns through its core AHL machinery and related hedge fund management entities.

Unfortunately, this market is in the midst of a phase where nobody wants to believe anything that is not absolutely conrete. There is an acute reticence to take the slightest thing on trust after all manner of “safe and secure” utterances have ultimately been proven inaccurate with other major financial entities this year.

Man Group’s management have an uphill struggle to make the market believe their case and the MF Global stock melt-down is doubtless an added problem for the parent group’s reputation as a brilliant hedge fund manager of the utmost probity.

In this, the most critical and nervous market for generations, a perfect reputation of the whiter than white variety is required and Man Group will find itself struggling to ensure its business is back on track in a world where hedge funds have, at least temporarily, lost their lustre for some clients. Any shock news will be punished and in that respect Man Group will be working hard to make up for lost ground.


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