* Poor fund records will mean performance fee cuts ahead
* EPS of 23 cents matches expectations
* Rising markets offset investor withdrawals
(Adds CEO comments and other conference call details, updates
By Ross Kerber
BOSTON, July 21 Janus Capital Group Inc's
JNS.N second-quarter profit met expectations even as the
asset manager reported its eighth consecutive quarter of net
The Denver-based company said investors withdrew $3.1
billion from its long-term funds during the three months ended
June 30. Coupled with $600 million in market depreciation, that
left total assets under management at $169.8 billion at the end
That is down from $173.5 billion as of March 31, but up
from $147.2 billion at June 30, 2010. Outflows from long-term
funds were $2.7 billion in the first quarter of 2011.
Chief Executive Richard Weil was contrite on an investor
conference call, saying the outflows were driven by poor
performance in flagship equity mutual funds like its $9.2
billion Janus Fund and its $3.4 billion Janus Contrarian Fund.
These in turn will reduce some revenue in coming quarters.
The company, Weil said, "will feel some pain in performance
fees going forward."
At the same time, Weil said he plans no major changes
beyond some tweaks such as new portfolio manager assignments.
"The biggest mistake you can make in this business is to
overreact to shorter-term data. We're not changing our process
in any fundamental way," Weil said.
Just 8 percent of Janus' actively managed equity fund
assets were in the top half of their categories for the year
ended June 30, Janus said.
"You have both a macro headwind and more company-specific
issue," said Sandler O'Neill analyst Michael Kim. "Both of
those factors are going to put pressure on their retail equity
Shares in Janus fell as much as 5 percent during the call
as analysts grew concerned about future performance-fee
drop-offs. They recovered, and were up 1 percent to $9.14 in
late-morning trading as investors decided there were few
surprises in the results.
LONG WAY DOWN
Weil was brought in last year and has introduced new
products to rejuvenate the company. Still, shares have fallen
32 percent for the year, the most of any large fund manager
because of concerns about the outflows. Thursday's results do
not suggest any immediate improvements are at hand, said
Citigroup analyst William Katz.
In a note to investors, he wrote that he is maintaining his
"hold" on the company and that he expects others to reduce
future earnings estimates.
There were some positives in the results. For the three
months ended June 30 Janus reported net income of $41.9
million, or 23 cents per share, compared with $30.2 million, or
17 cents a share, in the same period a year earlier.
Net income rose compared with a year ago because the higher
assets drove up investment management fees. Janus also cut
expenses, notably its spending on marketing and advertising
that fell to $8.2 million from $15.2 million in the same period
a year ago.
The results met the average expectations of analysts
surveyed by Thomson Reuters I/B/E/S.
(Editing by Matthew Lewis and Robert MacMillan)