Janus Rises Most in Nine Months as Revenue Beats Estimatesby
Results were helped by acquisition of Kapstream Capital
Profit falls 51% after firm retires $344 million in debt
Janus Capital Group Inc., the money manager that hired bond legend Bill Gross a year ago, rose the most in nine months after the firm reported third-quarter sales that beat analyst forecasts.
Revenue in the three months ended Sept. 30 rose 16 percent to $273.8 million, the Denver-based money manager said Thursday, helped by better performance fees and acquisitions. Analysts had expected sales of $268.4 million. Janus’s shares rose as much as 7.6 percent, the most since Jan. 22.
Chief Executive Officer Richard M. Weil, 52, put Janus in the spotlight by hiring Gross and diversifying into new products and regions as he seeks to distinguish the company from other active fund managers. Earnings were helped by the acquisition of Kapstream Capital, which contributed $7.1 billion in fixed-income assets.
“There were a number of positive factors,” said Macrae Sykes, an analyst with Gabelli & Co, including “the acquisition of Kapstream.”
The firm’s assets under management fell to $185 billion as of Sept. 30 from $192.5 billion at the end of June as the market plunge erased $11 billion and clients pulled $3.3 billion from long-term investments.
Third-quarter net income dropped 51 percent to $19.2 million, or 10 cents a share, from $39.5 million, or 22 cents, a year earlier. The results include a one-time 12-cent-per-share loss for retiring $344.5 million in debt due in June 2017.
Janus issued $300 million in senior notes in July to repurchase the outstanding debt, a move that spurred Standard & Poor’s to raise its credit rating. Adjusted for the debt expense, earnings per share were 22 cents, compared with the average estimate of 23 cents in a Bloomberg survey of 12 analysts.
Janus shares rose 6.5 percent to $15.20 in New York trading, paring losses for the year to 5.8 percent. The 19-member Standard and Poor’s index of asset managers and custody banks has lost 9.5 percent this year.
The $1.38 billion Janus Global Unconstrained Bond Fund, which Gross took over in October 2014, lost 1.3 percent this year through Oct. 20, trailing two-thirds of its peers, according to data compiled by Bloomberg.
Gross, 71, started overseeing the unconstrained fund after leaving Pacific Investment Management Co., where he built one of the industry’s best long-term records while running the Pimco Total Return Fund.
"Gross has had a gigantic brand effect on the whole firm," Weil said today during the conference call, spurring investors "to stop and recognize the name Janus."
Gross sued Pimco this month, contending executives formed a “cabal” to force him out in an alleged plot to divvy up his share of the firm’s bonus pool. Pimco said the suit is “without merit.”
“This is a personal matter for Bill prior to his employment at Janus,” Erin Passan, a spokeswoman for the firm, said in an Oct. 17 telephone interview. “Bill and the team at Janus remain focused on investing client assets.”