Janus Profit Falls 13% After 14th Quarter of Withdrawals
Janus Capital Group Inc. (JNS), owner of the Janus, Intech and Perkins funds, reported a 13 percent decline in profit as clients pulled out money for the 14th consecutive quarter.
Net income in the three months ended Dec. 31 fell to $31.2 million, or 17 cents a share, from $35.7 million, or 19 cents, a year earlier, the Denver-based company said today in a statement. Profit beat the 14-cent average estimate of eight analysts surveyed by Bloomberg.
“Mutual fund performance fees remained quite negative, though that was offset somewhat by a big upstep in performance fees at Intech,” Michael Kim, an analyst with Sandler O’Neill & Partners LP in New York, said in an interview. Intech uses mathematical models to choose securities.
Chief Executive Officer Richard M. Weil has worked to reduce Janus’s dependence on equities, strengthening his fixed- income team and planning the introduction of multi-asset products known as absolute-return funds, as investors have shunned stocks for bonds. Poor long-term fund performance led to continued withdrawals and lower fees, even as Janus’s fixed- income investments reached $26.4 billion, or about 17 percent of total assets.
Janus fell 1.8 percent to close at $9.65 in New York. The shares are up 13 percent this year, compared with the 9.4 percent gain by the Standard & Poor’s 20-company index of asset managers and custody banks.
Assets increased 5.8 percent from a year earlier to $156.8 billion as global stocks rose 13 percent in 2012, based on the MSCI AC World Index. Clients withdrew a net $3.6 billion in the quarter, excluding money market funds. Only fixed-income products attracted money, with about $700 million in net deposits.
While assets rose, Janus earned less in investment-related fees because of performance measures that reduce fees when funds fail to meet their benchmarks over trailing periods of 12 to 36 months. Negative performance fees cost Janus $13.6 million in the quarter and $75.4 million in 2012. Fees from mutual funds were reduced $21.9 million in the quarter because of underperformance.
“We expect this level of negative performance fees to continue for the next several quarters,” Chief Financial Officer Bruce Koepfgen said during a conference call with analysts, referring to mutual fund fees.
Revenue rose 0.5 percent to $216.6 million. Expenses climbed 9.4 percent to $158.6 million, driven by an 11 percent jump in compensation and incentive pay. Pay dropped 7.1 percent compared with the third-quarter of 2012 after the company lowered pay to senior executives.
Janus repurchased 293,100 shares of common stock during the fourth quarter at a total cost of $2.6 million.
Weil struck a deal in August with Tokyo-based insurer Dai- ichi Life Insurance Co. (8750) that has helped support the firm’s shares. Japan’s second-largest life insurer agreed to purchase 15 percent to 20 percent of Janus shares within a year, invest $2 billion in the funds and help distribute them in Japan.
Dai-ichi held 19.9 percent as of Dec. 4, according to a regulatory filing. The company, which had options priced at $10.25 a share, bought the entire holding at lower prices on the open market.
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