Janus escapes Bear meltdown

By James Paton, Rocky Mountain News (Contact)

Tuesday, March 18, 2008

Janus dodged a bullet, unloading a large stake of Bear Stearns in January - before the stock plunged - at prices ranging between $70 and $90 a share.

The Denver-based mutual fund company owned nearly 2.8 million shares of Bear Stearns worth about $244 million at the end of last year, making it one of the top 10 institutional shareholders, according to a document filed with securities regulators.

At the time, Bear Stearns traded at $87.89 a share.

Now the troubled Wall Street investment bank, whose shares have fallen fast amid a credit crisis, is selling itself to JPMorgan Chase for just $2 a share.

If Janus had held on to the Bear Stearns position, it would have lost around $238 million.

But the company, which manages more than $200 billion in assets, did not own a single share of the stock as of Jan. 31, spokeswoman Shelley Peterson said Monday. The Janus Twenty and Janus Forty Funds, which became the responsibility of Ron Sachs at the end of last year when veteran Scott Schoelzel retired, had most of those Bear Stearns shares. The stock was only 1 percent of the Twenty Fund.

After getting clobbered in late 2000, 2001 and 2002, Janus has made a comeback, delivering relatively strong returns in recent years.

Observers are watching carefully to see if the company's investment managers can sustain that type of performance amid stock market turmoil and in the wake of a string of departures.

In 2007, Janus lost money on Bear Stearns. Schoelzel, in his final letter to fund holders, acknowledged that Bear Stearns, Lehman Brothers and Merrill Lynch were his three worst-performing investments in an otherwise stellar year.

Bear Stearns was trading close to $150 a share a year ago.

But it could have been much worse.

Janus would not talk about the decision to sell Bear Stearns.

"We don't typically comment on individual stocks," Peterson said.

Other Bear Stearns investors are facing huge losses and wishing they had punched the sell button, though it's unclear if some major shareholders sold stock earlier this year because holdings are reported with a significant lag.

Barrow, Hanley, Mewhinney & Strauss owned almost 10 percent of Bear Stearns at the end of 2007, British billionaire Joseph Lewis had more than 9 percent and Legg Mason had nearly 5 percent, according to Securities and Exchange Commission documents.

patonj@RockyMountainNews.com or 303-954-2544