Janus Capital Group Inc., the firm that hired bond legend Bill Gross last month, is positioned to pick up client deposits as his move sets an enormous amount of money in motion, said Chief Executive Officer Richard M. Weil.
"Bill's decision to join Janus is obviously bigger than just Janus," Weil said in an earnings conference call with investors and analysts today. The move changes the "entire fixed income landscape," and Janus's funds are "very well- positioned to gather additional assets," he said.
Janus is in conversations with countless institutions and advisors, Weil said in the conference call, as the firm seeks to capture a chunk of the billions of dollars leaving Pacific Investment Management Co. after Gross's exit. Weil said it was a "happy confluence" that Gross joined the firm at the same time it announced the acquisition of VelocityShares LLC to expand in exchange-traded products, the fastest-growing part of the fund industry.
Large investors are moving money from PIMCO, the firm Gross co-founded in 1971 and built into a $2 trillion asset manager, after his unexpected exit Sept. 26. Clients rattled by the change pulled a record $23.5 billion in September from the $202 billion PIMCO Total Return Fund he managed, and are moving money to competing funds, or parking it in money-market funds and exchange-traded funds.
"It's important to note that not everybody is going to make a decision on the first day," Weil said, and it may be "a one-year-plus kind of transitional period rather than anything that is immediate."
Net Income
Janus today reported net income that increased 25% to $40.9 million, or 22 cents a share, from $32.6 million, or 17 cents a share, a year earlier, the Denver-based firm said today in a statement. Earnings matched the 22-cent average estimate of five analysts surveyed by Bloomberg.
Janus shares rose 1.5% to $14.49 at 10:55 a.m. in New York. The shares, which jumped a record 43% on the day Gross anounced his decision, have climbed 18% this year, compared with a 2.3% decline in the 18-company Standard & Poor's Index of asset managers and custody banks.
While Gross's addition will attract clients as the firm builds its fixed-income unit, third-quarter subscriptions do not yet reflect new money as a result of the hire, Weil said on the call.
Raising Profile
Weil has raised the firm's profile in the past month, hiring Gross and agreeing to buy VelocityShares to expand in exchange-traded products. Customers pulled a net $2.4 billion from Janus's equity funds in the quarter, while putting in $300 million into the firm's fixed-income products. Since taking over in 2010, Weil has struggled to stem defections even as he expanded Janus's fixed-income team and created a multi-asset investing group.
