Man Group, the worlds largest listed hedge fund firm, reported an 11 percent fall in assets and said it would cut jobs, but the shares rose as the figures beat market expectations of larger outflows.
Man said estimated funds under management are $47.7 billion, down 11 percent from end-December, as private investors and institutional clients pulled out a net $3.2 billion in the face of falling markets. It also said it would cut 15 percent of permanent staff, which equates to 270 out of its 1,800 workforce, mainly in London and Switzerland to save $60 million a year.
"Man has had a bad year but is in very strong shape," Evolution analyst Jason Streets said in a note, adding the company was stronger than the share price suggested.
"When a stock is trading on 3x EV/EBITDA and a 15 percent yield you expect to find a company in distress," Streets said, who rates the shares at "Buy".
At 1251 GMT Mans shares, which have underperformed the FTSE All Share by 43 percent over the past year, were up 8.7 percent 225.5 pence. Markets had expected hefty redemptions after Mans RMF fund of funds unit revealed a $360 million exposure to Bernard Madoff, but the figures were not as bad as expected.
Analysts also highlighted the final dividend, which is held at 24.8 cents, and cash of $2.2 billion. The firm said it expects pretax profit for the year to end-March to be $1.2 billion, from $2.1 billion a year ago.
Net performance fee income for the year is estimated at $340 million, down from $936 million a year before.
Clarke said in a statement that institutional investors were "holding back from increasing their investment exposure as markets declined sharply, especially in the second half". He added: "Many investors, particularly institutions, have sought liquidity regardless of performance and reduced their exposure to all asset classes."
Man said it will integrate its business units outside of AHL, its flagship managed futures strategy, under the Man brand with a greater focus on transparency and risk management and double the number of managed accounts - personalised accounts for investors which are widely viewed as being more transparent - to between 140 and 150 in the next year.
"Transparency, governance and risk management are now at the top of investors agendas," Clarke said in a statement. "Investors are looking at a number of things, and maybe Madoff contributed to a focus on certain areas," he told Reuters in an interview.
He also said Man Group had not yet begun legal action, which Reuters revealed in January, over its Madoff-related losses but said "well take action against anyone weve got the prospect of getting money back from". Fund of funds unit RMFs Four Seasons product, which had exposure to Madoff, fell 13.1 percent in performance terms between April 1 2008 and February 28 2009, it said. Man also said it had written down the value of its 50 percent holding in credit specialist Ore Hill, which it bought into a year ago, by around $200 million.
However, Clarke said the group would continue to look at investing in smaller hedge fund firms. "Where we see specific opportunities, where we want to scale up, we will take an investment in a manager."