) has always been an outlier in the Janus empire. Its managers, with offices in San Francisco and Chicago, operate independently of Denver-based Janus (JANSX
). While Janus is synonymous with earnings-driven growth stocks, the team that runs the $5.8 billion mid-cap fund zeroes in on value-priced equities.
Their searches led them to the energy sector in 1999, when oil was trading near $13 a barrel. "We aren't great economists or energy analysts," says Tom Perkins, 61, who leads the fund with his older brother, Bob, 65. "But it seemed to us that [number] was probably out of bounds for the price of energy."
An oversized bet on energy companies helped fuel the fund's annualized 13.8% gain in the 2001-2005 period. The team, which includes 37-year-old Assistant Manager Jeff Kautz, recently cut the fund's energy weighting to 10%, from 15%, and shifted emphasis to production companies such as Noble Energy (NBL
) and Anadarko Petroleum (APC
). "We feel more comfortable having the assets in the ground," Perkins says.
In order to stay focused on the risk-reward tradeoff, the trio sets targets, ideally a 40% potential gain with a worst-case loss of no more than 20%. "We are much more concerned with how the fund performs on the downside than with how we do on the upside," says Perkins.
The managers take profits when stocks reach those price targets. That happened in 2005, when they sold longtime holdings Legg Mason (LM
) and Franklin Resources (BEN
) and replaced them with a languishing Alliance Capital Management (AC
). With a 6% yield and a full line of global investment products, Alliance Capital looked like a smart bet. Since then, the stock has gained 42% and has become the fund's largest holding.
Finding those deals is tough, which is why the fund has 13% in cash. Perkins doesn't expect to put that money to work anytime soon. "The values aren't there the way they used to be," he says.
In their spare time, the Perkins brothers practice philanthropy. Tom supports reproductive rights groups, while Bob sponsors a charter school in Chicago and other educational initiatives. Kautz is involved in educational programs, too. Since nearly all of their money is invested in the fund, the better the performance, the more they have to give away. By Lauren Young