Citi has downgraded shares in Man Group PLC (LSE:EMG), the world's largest publicly-traded hedge fund, to 'neutral' from 'buy', warning of significant risks to earnings as key high-margin strategies underperform.
Despite a positive medium-term growth outlook, Citi flags ongoing weakness in the firm’s flagship AHL strategies, which have struggled to deliver performance fees this year.
The bank doesn’t expect these fees to return until 2027, leading to earnings estimates around 20% below consensus through 2025 to 2027.
Man Group’s shares have tumbled about 20% year to date, well behind Citi’s European financials coverage, which is up 5%.
While the stock remains attractively valued and could benefit if performance rebounds, Citi argues that the downside risks outweigh the upside in the near term, making the shares less compelling for investors today.
The shares fell 1% to 171.32p.