Outflows dampen Janus' earnings

Rocky Wire Report

Originally published 08:44 a.m., April 24, 2008
Updated 03:10 p.m., April 24, 2008

Investors pulled $2.1 billion from Janus Capital Group mutual funds, causing the Denver-based money manager to miss analysts’ first-quarter estimates.

Net income climbed 5.1 percent in the first quarter to $37.4 million, or 23 cents a share, from $35.6 million, or 19 cents, a year earlier, the company said today in a statement. Per-share net was expected to be 28 cents, based on the average estimate of 14 analysts surveyed by Bloomberg.

“The markets were very challenging in the quarter,” Michael Kim, an analyst with Sandler O’Neill & Partners LP in New York, said in an interview. He had estimated earnings at 27 cents a share. “Janus just got caught up in that, along with everybody else.” Chief Executive Officer Gary Black, who took over in 2006, has had mixed success rebuilding Janus, which lost money in five of the past seven years after the collapse of the Internet stock bubble led to a 50 percent drop in assets. While fund returns have improved, the company has struggled to hang onto investors.

Investors withdrew $1.5 billion from Janus’ stock and bond funds and $600 million from money-market funds in the quarter. That compares with $2.5 billion in net redemptions in the last three months of 2007.

Assets declined 9.2 percent to $187.6 billion from year-end on the fund outflows and market depreciation. They increased 6.5 percent from a year earlier. Most of the net withdrawals, $1.1 billion, came from Janus’ Intech subsidiary, which uses complex mathematical formulas to pick trades.

Black has changed manager compensation and emphasized a team approach to running funds. Several managers left, including Scott Schoelzel and David Corkins, who ran the company’s two largest funds.

Revenue rose 13 percent to $281.2 million, while expenses climbed 7.1 percent. Earnings included a $9.5 million loss on consolidated seed capital investments, compared with a $17.6 million gain in the fourth quarter.

Janus closed up $1.51, or 6.02 percent, at $26.58 on New York Stock Exchange composite trading. The stock has lost 25 percent this year, compared with the 6.3 percent decline by the Standard & Poor’s Index.

• April 24, 2008

  12:54 p.m.

  Suggest removal

  SASQUATCH writes:

  Some of the Janus managers were OK, some were even darn good. But Janus sold and promoted the "star system" in which too many of their "stars" were, in fact, no-value-added stumblebums who couldn't find their own asses in the shower. Their names were over-hyped and very familiar household names some 9 years ago. But if you examined their track records, then you would have discovered that you would have been better served in a no-load index fund that carried a tiny .15 management fee. Others didn't even rate any examination at all; they simply delivered unambiguous diaster. Mix in a little bad publicity and a little stealing and Janus will never be the same investmnent operation that it was in the 1990s; even in an environment favoring growth stocks.