This FTSE 250 dividend-growth stock isn't the first stock I'd buy after today's news

Today's figures from FTSE 250 hedge fund firm Man Group (LSE: EMG) have sent the share price up by nearly 8% at the time of writing.

The group reported net inflows of $4.8bn to its funds during the first quarter, taking assets under management to $112.7bn.

This figure would have been higher if it hadn't been for a "negative investment movement" of $1.8bn. What this means is that Man's trading strategies generated a loss for investors during the first three months of the year.

Of course, three months is a short period, during which the wider market has also fallen. The FTSE 250 fell by more than 5% during the quarter, whereas I estimate that Man's investment loss equates to a fall of less than 1.5% in the value of its assets under management. So the group's investments appear to have beaten the market so far this year.

The right time to buy?

The group reported surplus capital of $460m at the end of last year and has repurchased $100m of its own shares since October. A further $100m share buyback was announced today, and chief executive Luke Ellis says that the company will "continue to review further potential acquisition opportunities".

The group's hunt for acquisitions highlights one of the problems for investors -- profits from this hedge fund group can be inconsistent. To some extent, they depend heavily on stock market movements.

Analysts expect the group's adjusted earnings to fall from $0.20 to $0.18 per share this year. This leaves the shares trading on 14.9 times forecast earnings with a prospective yield of 4.5%. Although I think this is a well-run business, I believe there are better choices elsewhere for investors.

One stock I prefer

One company I'd choose ahead of Man is specialist small-cap fund manager Miton Group (LSE: MGR).

To some extent, the same comments apply to Miton as to Man. The group's funds will generally do better in rising markets.

But Miton only has £3.8bn of assets under management, compared to $112.7bn at Man. I believe that this 'small' size means that the chance of a market-beating performance is greater.

The firm's performance metrics seem to support this view -- 87% of its funds have been in the top 50% of performers in their sector since their current managers took charge.

Another attraction is that two of the company's senior fund managers, Martin Turner and Gervais Williams, own more than 12% of Miton's stock between them. So it's probably fair to assume that they encourage a culture of sustainable, long-term investing.

I'd buy again

I've owned Miton stock before and regret having sold the shares. But the group's valuation remains reasonably modest and I'd consider buying again.

The board has allowed almost £20m of net cash to build up on the balance sheet, so about one quarter of the current share price is backed by surplus cash. This should provide support for the dividend if profit growth does slow at any time.

At present there's no sign of this. Analysts expect earnings to rise by around 10% to 3.8p per share this year. That leaves the stock on 11.2 times forecast earnings with a well-covered dividend yield of 4%. I believe this is a quality business and rate the shares as a buy.

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Roland Head has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

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