Tuesday tips round-up: Man Group, BAE, Greggs
Change at the top of Man Group comes not a moment too soon for investors. Fund managers always suffer more when the market falls, as it did solidly for two years after Mr Peter Clarke became chief executive in March 2007, but the whole point of Man’s computerised flagship, AHL, was that it was supposed to make money from movements either way. With rivals doing better, it had become hard for Mr Clarke to pin Man’s woes on the macro environment.
As chief operating officer, the new CEO - Mr. Manny Roman - has moved quickly to cut costs, improve efficiency and bring in new product lines, including a new Quant fund, all of which should serve to de-emphasise AHL’s importance. But none of this has, as yet, served to stem the outlow of funds from investors, writes The Times’s Ian King.
BAE Systems was, understandably, making much of the Ministry of Defence’s decision to award it the £1.2bn contract to build the nuclear attack submarine HMS Audacious. But in reality there was never any prospect that the contract would not materialise. More positively, the company is renegotiating a fighter-jet contract with Saudi Arabia. RBC believes that confirmation of a successful renegotiation could prompt another round of share repurchases worth perhaps £500m and possibly a re-rating for the shares. Nevertheless, neither will there be much growth in sales this year. Thus, while the shares sell on less than nine times this year’s earnings this does not look like the time to buy, writes the Times’s Tempus column.
Shares of Greggs fell almost 3% as the exit of Ken McMeikan – announced on Monday - is not good news. As well, Greggs is facing a challenging time. Yesterday the company said that there had been no significant change since its last trading update, in which it said that like-for-like sales had fallen by 2.6% in the 14-week period to October 6. This can be read in a positive manner. Although there has been no improvement, there was no news that would result in analysts having to take their red pens to current year earnings forecasts. Downside should be limited by the shares’ 4.5% prospective yield in 2013, rising to 4.75% in 2014. This means investors with the shares should continue to hold. Questor would not recommend a purchase until we have some clarity on Mr McMeikan’s successor. Until then, the rating is therefore avoid.
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