He may have just reduced his price target on hedge fund manager RAB Capital by 41% but Credit Suisse analyst Daniel Davies still believes there is 48% upside in the shares. Davies has pulled his price target back from 120p to 71p after slashing his current-year earnings forecasts, but that still represents considerable upside from today’s 48p.

Last month, RAB reported that assets under management (AUM) had fallen around £900 million since 31 December. About half of this was due to fund outflows while the other half stemmed from faltering performance. Of the £450 million relating to outflows, Davies surmises that this was the result of £480 million in redemptions offset by about £30 million of new sales.

That £480 million in redemptions represents an annual rate of redemptions of about 20%, which the analyst believes is in line with other hedge fund managers. With no company-specific problems, Davies is of the opinion that the 50% share price correction seen in RAB over the past few months is overdone.

by Simon Keane