Janus Profit Drops 8.4% as Withdrawals Overtake Rally
Janus Capital Group Inc. (JNS), owner of the Janus, Perkins and Intech fund families, said third-quarter profit fell 8.4 percent as a 13th consecutive quarter of investor withdrawals offset gains from rising global stocks.
Net income decreased to $25.1 million, or 14 cents a share, from $27.4 million, or 15 cents, a year earlier, the Denver- based company said today in a statement. Analysts had expected earnings of 15 cents a share, according to the average of seven estimates in a Bloomberg survey.
Chief Executive Officer Richard M. Weil has worked to diversify the firm’s offerings away from traditional stock funds to reverse client withdrawals. He hired former Bear Stearns Cos. executive Richard R. Lindsey in September to create absolute- return products, and struck a deal in August with Tokyo-based Dai-ichi Life Insurance Co., which agreed to buy as much as 20 percent of Janus shares, invest $2 billion in the firm’s bond funds and help distribute Janus funds in Japan.
“While headwinds persist in the equity franchise, outflows decelerated,” as investors put money into bond funds quantitative strategies, Daniel Fannon, a San Francisco-based analyst with Jefferies & Co., wrote today in a note to clients.
Fixed-income assets increased to $25.6 billion, or 16 percent of total assets, up from 13 percent a year ago.
Investors withdrew $2 billion from Janus in the three months ended Sept. 30. Assets increased 3.8 percent to $158.2 billion, helped by an 6.2 percent increase in the MSCI ACWI Index of global stocks in the three months ended Sept. 30.
Revenue declined 12 percent to $209 million compared with a year earlier. The lower revenue reflects Janus’s policy of adjusting fund fees lower or higher based on performance over trailing periods of 12 to 36 months. Expenses declined 1 percent to $161.1 million.
Janus fell 2.5 percent to $8.19 at 11:31 a.m. in New York trading. The shares had risen 33 percent this year through yesterday, compared with the 18 percent gain by the Standard & Poor’s 20-company index of asset managers and custody banks.
Janus funds that beat the majority of their peers over the past year, as measured by research firm Lipper, held 41 percent of assets, up from 16 percent a year ago. Funds that beat their peers over three years held 32 percent of assets, compared with 67 percent a year ago.
“We’ve seen a substantial improvement this year” in investment performance, Weil said today in a conference call with analysts.
Net income was reduced 6 cents per share in the quarter by mark-to-market losses on investments, and 1 cent by an intangible asset impairment related to the redemption of a sub- advised account.
Janus repurchased 773,300 shares of common stock in the third quarter at an average price of $8.12 a share and a total cost of $6.3 million.
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