Man Group Considers Purchase of Boston Quant Manager Numeric

May 29, 2014 12:23 pm ET

(Updates with closing share price in fifth paragraph.)

May 29 (Bloomberg) -- Man Group Plc, the world’s largest publicly traded hedge-fund manager, is in talks to buy Numeric Holdings LLC in a deal that would diversify its computer-driven investments after the company’s biggest fund posted losses over the past three years.

The discussions are “ongoing” and may not lead to a transaction, London-based Man Group said in a statement today. Boston-based Numeric, which trades equities based on signals from mathematical models, manages $13.9 billion, according to its website.

Man Group’s stock price has slumped 66 percent since the end of 2010 after its $11.3 billion AHL Diversified fund lost clients money during that period, prompting analysts to urge the company to make acquisitions. Buying Numeric would add funds that are less reliant on following trends in asset prices and give Man Group a bigger presence in the U.S.

“This transaction would further diversify Man away from AHL and is consistent with Man’s strategy to acquire a U.S.- based asset manager,” Peter Lenardos, an analyst at RBC Capital Markets in London, said in a note to clients today.

Man Group rose 4.8 pence, or 5 percent, to 99.55 pence in London trading, valuing the company at 1.76 billion pounds ($2.9 billion). It was the stock’s biggest gain in three months.

Performance Declines

Lang Wheeler founded Numeric in 1989 after working for State Street Corp. TA Associates Inc., a Boston-based private- equity firm, acquired a minority stake in Numeric through a $240 million recapitalization in 2004. Its investment funds are primarily “long-only,” meaning they don’t bet on falling stock prices and charge investors lower fees than hedge funds.

A Man Group spokesman, Rosanna Konarzewski, declined to comment beyond the company’s statement. Calls to Numeric and TA made outside of usual business hours in Boston today weren’t returned.

AHL fell 2.81 percent last year, 2.14 percent in 2012 and 5.5 percent in 2011, as actions by central banks and politicians broke up the trends in bonds, commodities and currencies that its computer models try to follow to make money. AHL has performed better in 2014, gaining 4.4 percent through May 27, according to data compiled by Bloomberg.

Man Group, which manages $55 billion, bought hedge-fund firm GLG Partners in 2010 and added FRM Holdings Ltd., which invests in hedge funds on behalf of clients, in 2012. Chief Executive Officer Emmanuel Roman said last year that Man Group would continue to consider making acquisitions, while being disciplined on the prices it would pay.