Gross eats his own cooking at Janus, putting more than $700M in his fund

Overall, firm brings in assets across its funds as they land on more broker platforms

Jan 22, 2015 @ 11:49 am

By Bloomberg News

Bill Gross invested more than $700 million of his own money in his unconstrained bond fund, Janus Capital Group Inc.'s Chief Executive Officer Dick Weil said Thursday in a conference call with investors and analysts.

Mr. Gross is “proud to eat his own cooking,” Mr. Weil said on a call discussing fourth-quarter earnings. Mr. Gross will also manage a new exchange-traded product for the firm, which the firm is planning in coming months, Mr. Weil said.

Janus shares rose as much as 9.9%, the most since the firm announced Mr. Gross's decision to join, as it attracted the first net subscriptions in more than five years. Janus drew money across fixed-income funds and there were more of its products on brokerage platforms run by Fidelity Investments and Charles Schwab Corp., Mr. Weil said.

“2014 was a major step forward for Janus,” Mr. Weil said.

Mr. Gross, a bond legend who surprised the financial world by joining Denver-based Janus, has a history of putting his own money into the funds he manages, a move that can be seen as a vote of confidence in his strategy and can help attract bigger investors. His contribution accounts for a quarter of the $2.8 billion that Janus attracted into its fixed-income funds in the fourth quarter, helping to break a streak of 21 straight quarters of investor withdrawals.

Janus shares rose 9.4% to $17.81 Thursday morning in New York, the most since Sept. 26. Janus shares, which surged a record 43% that day, climbed 30% last year, compared with 7.6% for the 18-company S&P Index of asset managers and custody banks.

BEATING ESTIMATES

Janus Thursday reported fourth-quarter earnings that rose 18% as it broke a 21-quarter streak of net investor withdrawals. Net income increased to $45.2 million, or 24 cents a share, from $38.3 million, or 21 cents, a year earlier, the firm said Thursday in a statement. Earnings beat the 21-cent average per-share estimate of 12 analysts surveyed by Bloomberg.

Mr. Weil, 51, has raised Janus's profile in the past year, hiring Mr. Gross and buying an exchange-traded product provider. Since taking over in 2010, Mr. Weil had struggled to stem client defections as he expanded the fixed-income team and created a multi-asset investing group.

Janus attracted $2 billion net subscriptions in the fourth quarter, as money gathered by fixed-income products offset withdrawals of $800 million from stock funds.

Janus had “strong growth on the fixed-income side of the business, much of that related to Bill coming on board and raising some assets,” Michael Kim, an analyst with Sandler O'Neill & Partners LP in New York, said. Mr. Kim has a “hold” recommendation on the shares.

The 70-year-old Mr. Gross started overseeing the Janus Global Unconstrained Bond Fund (JUCIX) after surprising executives at Newport Beach, Calif.-based Pimco and its parent Allianz SE with his departure. He had built one of the industry's best long-term records while running the $143.4 billion Pimco Total Return Fund (PTTRX) and helped expand Pimco to oversee about $2 trillion at its peak.

The Janus Global Unconstrained Bond Fund, which Mr. Gross has run since Oct. 6, expanded to $1.4 billion in assets as of Dec. 31, from $13 million before he joined Janus, according to data compiled by Bloomberg. The fund lost 1.1% in the past three months through Jan. 21, trailing 62% of peers, according to data from Chicago-based research firm Morningstar Inc.

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