On Mar 6, 2015, we issued an updated research report on investment management firm – Janus Capital Group, Inc. JNS. Shares of this Denver, CO-based company gained more than 47% in a year’s time. We believe this growth story comes on the back of the company’s continued focus on lowering outflows as well due to the strategic moves it undertook in 2014.
Plagued by an uncertain market environment, Janus Capital faced challenges in reducing its net outflows. Nevertheless, overall net outflows stood at $4.9 billion in 2014, reflecting a whopping 75% decline from $19.7 billion in 2013. The decrease was primarily attributable to reduced net redemptions in the company’s fundamental and mathematical equity strategies and higher net sales in fixed income strategies.
Janus Capital has taken several initiatives to strengthen its businesses. Notably, period-end fixed income assets recorded a 3-year CAGR (2012-2014) of 14.2% and came in at $31.3 billion as of Dec 31, 2014. Further, the fixed income business is set to strengthen as the company hired ‘legendary bond king’ Bill Gross in Sep 2014.
Apart from hiring Gross, the company completed the acquisition of VS Holdings Inc., the parent company of VelocityShares, LLC in Dec 2014. Connecticut-based VelocityShares is a major provider of institutionally-focused exchange-traded products (ETPs), including exchange-traded funds (ETFs), that are focused on offering volatility management solutions. The acquisition reflected efforts of the company to tap opportunities in the growing ETF market as well as comes in line with the company’s strategy of “intelligent diversification.”
We remain optimistic as the company’s sustained investment for long-term growth as well as its continuing efforts towards improving operating leverage should pay off well in the future.
Despite the positives, we remain cautious owing to several issues faced by Janus Capital that pose a threat to the company’s financials. These include a volatile equity market, negative performance fees and the prevailing stringent regulatory landscape.
Over the past 60 days, the Zacks Consensus Estimate advanced over 1% to 95 cents per share for 2014 while it remained stable at $1.28 for 2015.
Janus Capital currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the finance space include OM Asset Management Limited OMAM, Cowen Group, Inc. COWN and Woori Bank Co., Ltd. WF. All three stocks sport a Zacks Rank #1 (Strong Buy).
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