The Man Group ranks itself as the leading alternative investment management business. It has a long history, and in recent times has concentrated on financial services, investing in hedge funds and similar types of financial instrument. Its services are available to institutional and private investors around the world.
Man Group is headquartered in London, and listed on the London Stock Exchange. It also has offices in the US, Channel Islands, Asia, Europe, and Australia. The original company was founded in 1783, and among other things supplied rum to the Royal Navy. It dealt in commodities such as rum, sugar, and coffee. As the commodities markets developed through the centuries, Man was a major market participant.
In the late 20th century, interest in financial instruments such as these increased. Futures contracts on commodities were originally invented to protect and hedge existing market participants, but the opportunity for profit pulled in many speculators trying to make a return on price movements. Man partnered with a money management firm called Mint, based in New Jersey, in 1983.
This led to a continuing interest in financial services, and by the year 2000 Man had become exclusively a financial services company, abandoning its commodity trading links. Its brokerage business became MF Global. This led to its current position as a non-traditional fund management company, principally investing in hedge funds. Despite taking part in a number of acquisitions, including the New York hedge fund GLG in 2010, the financial markets have not been kind to Man Group in recent years, and the share value has been on a decline from its high of over 700 in 2007 to its current level of below 80.
Of course, it is important not to confuse Man Group’s profitability for its clients and investors with its share price or company value. It is possible for clients to be making significant amounts while the perceived value of the company continues to fall. Man Group is an interesting share to spread bet on, and should respond well to technical analysis.
Man Group Rolling Daily
Man Group has been in a general decline in recent months, and the current spread betting quotation for a rolling daily bet is 77.87 – 78.08. Here is a chart of the price progression.
If you think that the price will continue to go down, you may wish to place a short bet, selling at the price of 77.87 for a stake of £25 per point. As the underlying value of the share is so little, your bet size can be accordingly greater.
Assume first that the price continues to fall, and you decide to close your spread bet and take your profits when it gets down to 68.15 – 68.36. Your short bet opened at 77.87, and closed at the buying price of 68.36. That means you made a total of 9.51 points on the drop. With a stake of £25 per point, you would have won £237.75.
On the other hand, the price may not go in the direction you anticipate, and you may be forced to close your losing bet to keep your losses down. Perhaps the price went up to 86.93 – 87.14, so you closed your spread bet at 87.14. 87.14 minus 77.87 is 9.27 points, so this would amount to a loss of £231.75.
It can be hard keeping track of all the prices, particularly if you have several spread bets open the same time. Many spread traders use stop loss orders to automatically close a losing trade, whether or not they are at their computers. You might have chosen to place a stop loss order on this spread trade when you took it out, and possibly this would result in you exiting the losing trade for a smaller loss. Perhaps it took you out of your bet when the price was 83.62 – 83.83. Your loss this time is 83.83 less 77.87, which is 5.96 points. For your chosen stake of £25 per point this would have cost you £149.
Man Group Futures Style Bet
The investment company Man Group has gone through a general decline in value, but perhaps you see signs in your analysis that the price will go up in a few weeks or months. You could take out a futures based spread bet for the far quarter which is quoted at 78.16 – 79.21, staking perhaps £21 per point.
In due course, you might find that the price rises to 95.63 – 96.54, and you decide that you have made your target profit and that there are signs that the up-trend is slowing. You close your spread bet at 95.63. The opening price was 79.21, which means you have made 95.63 minus 79.21 points gain, which is 16.42 points. Multiplying by your wager of £21 you find you have won £344.82.
Although this is a futures style bet expiring in more than six months time, there is nothing to stop you closing the trade at any time before then, and if the share price falls you may want to cut your losses by ending the trade, rather than wait to see if it turns around. Perhaps the price could drop to 65.96 – 66.17, and you would decide to call it a day. Your spread bet was opened at 79.21, and it closed at 65.96 for a loss. Taking 65.96 away from 79.21 you have 13.25 points, and for your size of stake that amounts to a loss of £278.25.
Another way that many spread traders decide to limit their losses is by placing a stoploss order when they take out the original bet. This means that a losing trade is closed for them by their spread betting company, and automatically keeps down the amount lost. Perhaps in this case the stoploss order closed the bet at 69.23 – 69.44. Now the loss is 79.21 less 69.23, or 9.98 points. Your loss has been limited to £209.58.