BOSTON (Reuters) - Janus Capital Group Inc’s JNS.N new star bond fund manager also turns out to be one of the fund firm’s top investors.
Shares of the Denver company rose 11 percent on Thursday after fourth-quarter earnings came in above expectations with the help of new hire Bill Gross, even as it acknowledged that half the money in his fund came from Gross himself.
Since the surprise Sept. 26 announcement of Gross’ hiring from Pacific Investment Management Co, shares of Janus have surged 63 percent.
Janus reported net deposits of $2 billion to its funds for the quarter. This was the first quarter since 2009 that clients added more cash than they withdrew.
The inflows and improving performance trends marked a long-awaited milestone for Janus and Chief Executive Officer Richard Weil.
Speaking on conference call with analysts, Weil said Gross had invested more than $700 million into the fund he took over, Janus Global Unconstrained Bond Fund (JUCAX.O). That takes some of the shine off the fund’s rapid rise to $1.4 billion in total assets at Dec. 31.
If more of the fund’s flows had come from outside investors, it would be seen as a bigger vote of confidence in Gross, whose last year at Pimco was marred by infighting and lagging performance.
But that still left half the assets coming from other sources, and Weil said the money showed that Gross shares his clients’ interests. “He believes in eating his own cooking,” Weil said.
Sandler O‘Neill analyst Michael Kim said the disclosure of Gross’ big position “does call into question the sustainability” of the fund’s flow trends.
Still, Kim said the stock was reacting to other positive news from Janus, such as broader distribution of its funds and new products.
Since arriving in 2010 from Pimco, Weil has struggled with Janus’ traditional lineup of out-of-favor active equity funds. He said on Thursday’s call that the quarter showed Janus making headway but cautioned it must sustain inflows.
“We’re reporting on progress rather than victory,” Weil said.
Janus said its total assets under management were $183.1 billion at Dec. 31, up from $174.4 billion on Sept. 30.
Fourth-quarter net income rose to $46.7 million, or 24 cents per share, from $38.3 million, or 21 cents per share, a year earlier. The results beat the analysts’ average estimate by 4 cents a share, according to Thomson Reuters I/B/E/S.
Reporting by Ross Kerber; Editing by Lisa Von Ahn and Tim McLaughlin