Janus Capital Group Inc. (JNS:US), owner of the Janus, Intech and Perkins funds, said second-quarter profit fell 44 percent after clients withdrew money for the 12th straight quarter and markets declined.
Net income decreased to $23.4 million, or 13 cents a share, from $41.9 million, or 23 cents, a year earlier, the Denver- based company said today in a statement. Excluding certain items, analysts had expected earnings of 14 cents a share, according to the average of 15 estimates in a Bloomberg survey.
“Janus is heavily skewed toward equity retail mutual funds and retail investors continue to avoid those types of products,” Michael Kim, an analyst with Sandler O’Neill & Partners LP in New York, said in an interview before results were announced.
Chief Executive Officer Richard M. Weil, a former executive at Pacific Investment Management Co., has struggled to hold onto clients amid poor fund performance and falling equity markets. Clients pulled $4 billion from the firm in the quarter, and market losses dragged assets down by $7.6 billion as the MSCI ACWI Index of global stocks declined 6.4 percent.
Janus fell 2.6 percent to close at $6.80 in New York trading. The shares (JNS:US) have gained 7.8 percent this year, compared with the 4.7 percent gain by the Standard & Poor’s 20-company index of asset managers and custody banks.
Janus’s withdrawals included $2 billion from Janus-branded products, $2.5 billion from its quantitative investing unit Intech and $500 million from its Perkins unit, which specializes in stocks seen as undervalued.
Janus’ fixed-income products, a line-up Weil has worked to expand, attracted $1.1 billion in deposits. Bond-focused products account for about 11 percent of Janus’s assets.
The amount of money Janus invests for clients declined 10 percent to $152.4 billion from a year earlier helping to lower revenue by 22 percent to $206 million. Assets fell by 7.1 percent in the quarter.
Lower marketing expenses and falling compensation costs, linked to poorer performance, helped expenses decline by 16 percent to $153.9 million.
The company has also suffered from a policy that adjusts fees lower or higher based on fund performance over trailing periods of 12 to 36 months. That reduced earnings by $21.9 million in the quarter.
Janus’s funds probably lost money in the quarter from investments in Zynga Inc. (ZNGA:US), the largest developer of games on Facebook Inc.’s social network. Janus nearly doubled its holdings in Zynga in the three months ended June 30 as the game maker lost more than half its stock value.
Zynga fell as much as 40 percent today in early trading after missing analysts’ second-quarter revenue and profit estimates.
Invesco Ltd. (IVZ:US), the Atlanta-based manager of the Invesco, Van Kampen and PowerShares funds, said today second-quarter net income fell 16 percent to $153.9 million, or 34 cents a share, from $183 million, or 39 cents, a year earlier after investors withdrew $8.3 billion in the quarter.
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