Continuity is a big deal in the UK. Monarchy aside, Britain has a hedge fund business with a history of 240 years. Robin Grue is the latest boss to take charge at the Man Group, which was once a rum supplier to the British Navy.
Grew is currently the chairman of the world’s largest listed hedge fund manager. He will take over as chief executive when Luke Ellis retires in September.
He has steadied the ship since he took the helm in 2016. It has also pushed heavily into AI-driven investment techniques, a natural move for a quant-based business.
Gru is therefore taking over at a crucial moment. A few years ago, techniques like natural language processing were a niche way for hedge funds to gain a competitive edge. Now that Silicon Valley giants are investing billions in AI, they are becoming more widely available.
Grew needs to make sure Mann, known for his pace-driven AHL strategies, stays relevant.
During Ellis’ tenure, assets under management grew from $81bn to $145bn. He cemented the man’s business model as a manager serving institutional investors. That means lower margins. But these clients tend to be less fickle than hedge funds’ traditional wealthy retail clients.
Man acquired rival GLG in 2010 for $1.6bn. The purpose of the deal was to diversify profits by adding discretionary hedge fund strategies. Integration was rocky. A $1bn write-down took place.
A heavy reliance on performance fees has hindered man’s valuation. This averages 20 percent revenue over ten years, according to City estimates. But the variation can be wide, ranging from 5-30 percent per year.
That helps explain Man Group’s cheap valuation compared to some UK fund managers. It trades at around eleven times forward earnings versus 17.8 times for Abrdn and 14 times for Schroders.
In theory, his concentrated offer should make him more valuable than struggling generalist Aberdeen. Gru needs to project that to shareholders — and make sure the democratization of AI and other big data technologies doesn’t turn humans into generalists, too.
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