On the surface, FTSE 250-listed Man Group (LSE: EMG) isn’t too different from the other 200-year-old London financial services firms.
It’s an investment management business, so it aims to grow clients’ money – for a fee, of course.
But Man Group is really quite unique and offers a change of pace for anyone thinking about investing in the FTSE 250 stock.
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And while the name might be unfamiliar, the Man Booker prize it sponsored for many years might ring a bell.
Unique opportunity
Hedge funds are usually difficult to access for those of us outside the 1%. A £1m minimum is typical and rules out most of us.
Man Group isn’t only the largest publicly listed hedge fund on the London Stock Exchange, it’s the largest one in the world.
And as the name implies, ‘hedge’ funds can offer protection against weak stock performance.
If I buy the shares, I wouldn’t be investing in any of the group’s funds (it has 74 of them) but the overall performance of the company itself.
While a third of the group’s various funds employ typical buy-and-hold strategies, two-thirds use ‘quant’ strategies.
What it doess
Quant trading takes many forms, but if we imagine complex statistical models and lightning-fast algorithms then we’re not too far from the mark.
That’s broadly what it does and I’d have to say this might be a one-of-a-kind stock – but is it a good buy?
Well, the shares have soared in recent years, up 142% since 2020 – one of the best returns on the FTSE 250.
A meaty 5.29% dividend is set for a 4% rise. Oh, there are buybacks too.
Dividends and capital growth all sound good, and there’s an artificial intelligence play here too. Management reckons AI services could revolutionise their funds’ performance.
The group has already created a chatbot it’s calling ManGPT.
Helping quant traders find an edge in the markets is one of the more likely advances AI could help with, I feel.
Popular funds
Of course, I’d be relying on those traders – the group counts nearly 1,000 quants and technologists – to perform.
Last year, they kind of didn’t. Performance fees were down after a disappointing year for quant strategies. CEO Robyn Grew blamed the banking crisis and the November shift in the markets.
Whether she’s right or wrong, banking on smooth market conditions seems like the biggest risk here.
Despite that, the funds remained popular and assets under management went up 17% last year. The group now deals with $167bn of clients money.
In summary, the uniqueness of the stock along with an attractive growth story looks tempting. I’d buy Man Group shares today if I had any spare cash.
