(August 9) – “Has Janus peaked?”, asks Aaron Lucchetti and Christopher Oster in today’s Wall Street Journal.
“The Denver investment firm whose mutual funds sizzled in 1998 and 1999 slid back behind the pack during the first seven months of 2000. Through Monday, 15 of Janus’s 18 retail stock and bond funds trailed their category averages. That’s a far different Janus face than last year, when 15 of its 18 funds beat the average, and 1998, when 16 of 16 Janus funds bested the peer groups.”
“Funds at $307 billion-in-assets Janus Capital, a unit of Stilwell Financial Inc., are up on average just 1.6% through Monday, lagging behind more than 60% of comparable portfolios, according to Morningstar Inc., a Chicago fund tracker. Last year, Janus funds averaged gains of 65%.”
“Of course, seven months of mediocrity doesn’t cancel out the long-term records that Janus’s stock funds have accumulated on the backs of high-flying tech stocks like Cisco Systems Inc., America Online Inc. and Nokia Corp. But Janus’s recent weakness nevertheless underscores some of the risks in its strategy: a devotion to volatile technology stocks, an increasing reliance on large stakes in young companies and a growing presence of more hard-to-trade private placements in funds.”
” ‘We view our performance, and that of the companies in which we invest, as a marathon, not a sprint,’ a Janus spokeswoman said in a written statement. ‘Like Janus, many of the companies in which we invest are really just getting warmed up.’ “
“Still, some inside and outside of Janus worry that the company is in overdrive and needs to come to terms with its rapid growth. This year alone, investors have poured more than $38.5 billion of new cash into Janus retail funds, which are sold to individual investors. That amount is greater than most fund companies manage firm-wide. Janus has closed seven of its 15 retail stock funds to new investors in an effort to help slow the tsunami of cash.”
” ‘The common concern at Janus is “too much, too fast,” ‘ says Michael Stolper, a Janus director, who adds that he believes the firm will meet the challenge of its new assets.
Investing the money presents a greater challenge for Janus simply because it is so picky about the stocks it likes. Janus’s analysts and portfolio managers look for companies building cash flow, revenue and market share, and which have the opportunity to dominate an industry.”