LONDON -- The shares of Man Group (LSE:EMG) has surged 12.2% to 119 pence as of 10:15 a.m. EDT after the hedge fund firm revealed it will repurchase all of its debt securities with surplus cash.

Man announced that after a change in the company's regulatory status, a whole $470 million of surplus cash would be freed up to redeem the debt, saving the group $78 million a year in interest charges. However, this news masked some disappointing results in Man's underlying business.

Man reported $3.7 billion in client withdrawals -- the worst quarterly fund outflows since the financial crisis began. This offset fund inflows of $2.8 billion, bringing total funds under management to $55 billion.

Chief executive Manny Roman said:

Investment performance is the lifeblood of our business and in time we expect good performance to translate into flows. However, we remain cautious in our outlook as we will need a more sustained period of performance, particularly from AHL, before we see an improvement in net flows. ... We continue to make good progress against our key business priorities and the recently announced improvement in our capital position, together with our announcement today of the intended buyback of our debt securities, has delivered value for shareholders.

With a market cap of 2 billion pounds, Man Group's shares trade at 19 times expected earnings and offer a prospective dividend yield of 4.3%. Of course, whether that valuation, today's results, and the future prospects for the hedge fund industry all combine to make shares of Man Group a buy remains your decision.

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