Janus Capital Group Inc., the firm that hired bond legend Bill Gross in September, said profit rose 46% in the first quarter as the market rally lifted assets and its funds attracted new money for the second straight quarter.
Net income increased to $44.6 million, or 23 cents a share, from $30.5 million, or 16 cents, a year earlier, the Denver-based firm said Thursday in a statement. Earnings beat the 21-cent average per-share estimate of five analysts surveyed by Bloomberg. The shares rose as much as 4%, the most since Jan. 22.
Chief Executive Officer Richard M. Weil, 51, has drawn attention to Janus in the past year by
hiring Mr. Gross, the Pacific Investment Management Co. co-founder, and agreeing
to buy an exchange-traded product provider. Since taking over in 2010, Mr. Weil has worked to stem client defections by focusing on fund performance, expanded the fixed-income team and created a multiasset investing group.
Mr. Weil said Thursday in a conference call with analysts that the most significant driver of the quarter was the strength of its active stock funds, which attracted a net $1.6 billion the first three months of the year.
After more than five years of client withdrawals, the firm has benefited from two straight quarters of new money, attracting $1.1 billion net subscriptions in the period ended March 31, including new money into fundamental stock funds and
$800 million into its bond offerings. Investors removed $1.3 billion from Janus's mathematical equity strategies.
SHARES CLIMB
Janus shares were up 3.7% at $18.60 late morning in New York. The shares have risen 11% this year before, compared with a 2% gain for the 18-company Standard & Poor's Index of asset managers and custody banks.
The strength in earnings was mainly driven by better-than-expected performance fees, Daniel Fannon, an analyst with Jefferies Group in San Francisco, wrote in a note to clients.
“Importantly flows remained positive at $1 billion, as the active equity segment continues to improve. We continue to believe JNS is well poised for improving growth trends across its franchise.”
Janus's funds charge fees that rise or fall in connection with performance, and slumping performance can cut into its revenue. Negative performance fees lowered revenue by $2.3 million in the quarter, compared with a reduction of $800,000 in the three months ended Dec. 31.
Janus's assets were $189.7 billion as of the end of March, up from $183.1 billion at year-end.
Mr. Gross runs the firm's $1.46 billion Janus Global Unconstrained Bond Fund, which is
beating 79% of its peers this year through April 22 after a performance rebound, according to Morningstar Inc. data.
The 71-year-old Gross started overseeing the unconstrained fund on Oct. 6 after losing a power struggle with management at Newport Beach, Calif.-based Pimco. He had built one of the industry's best long-term records while running the Pimco Total Return Fund.
