Man Group stock price target downgraded on performance fee concerns
Man Group’s share price target has been downgraded by City broker Peel Hunt over concerns that the investment manager could see performance fee returns plummet in 2025.
In a trading update last month, Britain’s largest hedge fund revealed that its assets had dropped by $5.6bn (£4.2bn) in the first two weeks of April thanks to ongoing market volatility.
Analysts were taken aback that asset managers with a focus on alternative assets that typically avoid correlation with market crashes,suffered so greatly from the tariff turmoil.
“Whipsawing markets are the worst possible environment for trend-following strategies,” explained Peel Hunt analysts Stephen Payne and Stuart Duncan.
As a result, the broker slashed forecasts for the group’s performance fees this year by 59 per cent, given most of Man Group’s funds that are eligible for performance fees are currently underwater.
The performance issues have been largely limited to four of Man Group’s strategies: AHL Alpha, AHL Dimension, AHL Evolution, and AHL Diversified, all of which have seen significant falls over the last three months and the last year.
These performance fee concerns caused a 34 per cent downgrade of total pre-tax profit forecasts for the year, which Peel Hunt now expects to come in at £274m.
Meanwhile, 2026’s pre-tax profit forecast was downgraded by 17 per cent, while 2027 was downgraded by only nine per cent.
Man Group’s price target was therefore slashed from 229p to 197p, compared to its current price of 165p.
Since the group’s shares have crashed more than 20 per cent over the last month, the stock’s rating was actually upgraded from an Add to a Buy by the analysts.
“Shares have modestly de-rated to a price to earnings ratio of only eight times,” noted the analysts.
“Looking at market cap as a proportion of assets under management, Man Group now trades on 1.4 per cent, having historically been at in excess of two per cent.”