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Incoming PIMCO chief, Man Group's Manny Roman, to try his hand as serial turnaround artist


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Incoming PIMCO chief, Man Group's Manny Roman, to try his hand as serial turnaround artist

MannyRoman, who turned around the world's largest listed hedge fund, will now turnhis attention to PacificInvestment Management Co. LLC, the California-based asset managerthat has struggled since the departure of founder Bill Gross in 2014.

TheMan Group Plc CEO, a52-year-old Parisian, will takeon the top job at PIMCO in November. He is described astough-talking, with a track record of solidifying his power base by appointingallies to key positions. He is also a ruthless slasher of jobs where he feelsthere is bloat, and demonstrated both these traits following Man Group'stakeover of GLGPartners.

"I'ma fan. He's a very good operational guy," said a fund-of-funds head ofinvestment who asked not to be named. "However, it's his way or thehighway a lot of the time."

Roman,who is described as an intimidating adversary, holds an MBA from the Universityof Chicago and worked his way up the Goldman Sachs Group Inc. ladder between 1987 and 2005.

Hewent on to serve as its co-head of European equities, worldwide equityderivatives, and worldwide global securities, before joining GLG Partners asits joint CEO.

GLGwas then acquired by Man Group in 2010, and Roman duly became its CEO as well,from 2013.

Whenhe arrived at the London-based hedge fund, it was suffering from clientoutflows and losses from its computer-powered flagship fund AHL, as well as ataint from having invested roughly $360 million with convicted fraudster Bernard Madoff, according to a Nasdaqreport.

Inturning around the firm's fortunes, Roman began with belt-tightening,delivering a $270 million cost-saving program ahead of schedule. But he alsooversaw a spree of judicious acquisitions which increased its operations — andbase of institutional investors — in the U.S. market.

Partly,this was funded by $550 million released by a regulatory switch that lessenedthe amount of capital Man Group needed to hold.

Heused this money to invest in a carefully diversified portfolio of U.S. assetmanagers — judging large U.S. public pension funds to be more expert inalternative investments than European managers.

The ways of Man

Thesepurchases includedConnecticut leveraged loan manager Silvermine Capital Management LLC, New York and NewJersey-based hedge fund manager Pine Grove Asset Management and a $1.2 billionfund portfolio fromMerrill Lynch AlternativeInvestments LLC. Buying investment manager NewSmith in February2015, with offices in Tokyo, expanded Man's footprint into Japan.

Romanhas also, in recent years, spurred a shift at Man Group toward institutionalclients, and given the firm a bent toward quantitative investment — representedbest by his June 2014 purchase of Boston-based quantitative equity managerNumeric Holdings, which has $14.7 billion of funds under management across fourmain categories of quantitative equity strategies, in long-only and alternatives.

Asfor AHL, its four main vehicles returned between 3.9% and 7.6% in tumultuousmarkets in the first quarter of this year, the Financial Times reported, which kept overall funds under management fairly steady at $78.6billion. Inflows into its quant funds balanced outflows from more traditionalhedge funds.

Romanwill not want for challenges at Newport Beach, Ca.-based PIMCO, which has facedproblems since the acrimonious departure of Bill Gross. Its Total Return Fund,once the largest bond fund internationally, has seen 38 consecutive months ofoutflows.

PIMCOChief Investment Officer David Ivascyn, in a statement, praised Roman's"deep understanding of global markets" as well as his "uniqueskills in investment management."

Romanwill leave Man Group at the end of August and move to Newport Beach,California, to lead the AllianzGroup-owned asset manager from Nov. 1. He has family in New Yorkand two children at university in the U.S. He had also been a fierce critic ofBrexit, which he went on the record to oppose in February. TheU.K. voted to exit the European Union in June.

Forits part, Man Group will undergo a handover period where Roman will work withhis successor Luke Ellis and Jonathan Sorrell, who remains CFO and president.

Hewill leave the hedge fund with a cash-rich and restructured balance sheet, whenit reports its first-half results on July 26.

Theenviable remaining question for Man Group is whether to continue its hunt foracquisitions or commence a share buyback program, say Peter Lenardos and PortiaPatel of RBC Europe Ltd. in a July 20 research note. They said a"small" buyback program would give the shares "some much neededsupport."