Janus earnings tempered by outflows from quant funds

Janus Capital Group Inc., owner of the Janus, Intech and Perkins funds, missed analysts' estimates by a penny after investors withdrew more money than expected from its quantitative investment unit.

Janus Capital Group Inc., owner of the Janus, Intech and Perkins funds, missed analysts’ estimates by a penny after investors withdrew more money than expected from its quantitative investment unit.

Net income was 17 cents a share, compared with a loss of $818.1 million, or $5.22, a year earlier, the Denver-based company said in a statement today. That fell short of the 18- cent average estimate of 16 analysts surveyed by Bloomberg as investors pulled $4.3 billion from the company’s Intech unit.

“Performance in the core businesses has been fantastic, but the bigger issue was outflows at Intech that were worse than expected,” Mark Lane, an analyst with William Blair & Co. in Chicago, said in an interview. Lane, who rates Janus “market perform,” estimated the company would earn 18 cents a share.

Money managers have largely benefitted from the 49 percent gain by global stocks, measured by the MSCI World Index, in the year ended March 31. That helped lift the amount of money Janus oversees for clients by 49 percent and the fees it generates by 50 percent. About 94 percent of its mutual-fund assets are in equities, according to the firm.

Janus fell $1.03, or 6.8 percent, at 9:55 a.m. in New York Stock Exchange composite trading. The company had risen 13 percent this year through yesterday, compared with a 10 percent gain for Standard & Poor’s 15-member index of asset managers and custody banks.

Revenue rose 45 percent from a year earlier to $246.9 million, compared with the average analyst estimate of $254 million. Expenses, excluding an accounting charge in the first quarter of 2009, increased 25 percent to $179.6 million as distribution costs leapt by 75 percent to $35.1 million.

Assets under management rose 49 percent from a year earlier to $165.5 billion, boosting investment-management fees by 50 percent to $205.8 million.

Market appreciation added $7.8 million to Janus’s assets, while investors withdrew a net $1.9 billion in the three months ended March 31.

Excluding money-market accounts, the firm’s Janus-branded funds attracted $1.4 billion from investors and the company’s Perkins unit took in $1 billion.

Those inflows were outweighed by the outflows at Intech, which invests using mathematical, or quantitative, models. Investors have pulled $9.2 billion from Intech in the last three quarters.

Intech manages money mostly for institutions in private accounts. None of its mutual funds beat their benchmark indexes in the year ended March 31. Its largest mutual fund, the $827.7 million Risk-Managed Growth Fund returned 34 percent in 2009, trailing 52 percent of rival funds, according to Bloomberg rankings.

About 84 percent of the firm’s mutual funds ranked in the top half of their Lipper categories in the three-year and five- year periods ended March 31.

Janus hired Richard M. Weil, the former head of the Pimco Advisory unit of Pacific Investment Management Co., as chief executive officer in January to fill a vacancy created when Gary Black quit in July. The company had been run on an interim basis by Tim Armour, a director.

Janus’s stock rose 67 percent in 2009, when the Standard & Poor’s index of asset managers increased 24 percent. The shares plunged 76 percent in 2008, compared with the 50 percent decrease for the index.

Earnings a year ago were hurt as Janus wrote down goodwill and intangible assets by $856.7 million to reflect declines in global markets, the company’s stock price, assets under management and Janus’s operating forecast, according to the company’s 2009 annual report.