The stock of Stilwell Financial ceased trading on the New York Stock Exchange last Thursday, replaced by shares of mutual fund giant Janus Capital Group Inc. The event marked the end of Stilwell, Janus' erstwhile parent company, and also signaled the end of a long-fought battle for Janus executives to wrest control of the nation's sixth-largest equity manager..
But Jan. 2 also marked what company executives hope will be a turnaround for Janus.
From Breathtaking To Heart-Wrenching
The firm is known to have exploited breathtaking gains in technology and growth investing in the late 1990s only to suffer heart-wrenching declines in assets under management during the bear market of the past three years. Assets in the company's funds have slid from more than $175 billion at the end of 1999 to just $80 billion as of the end of November, according to Financial Research Corp.
Last week's change in the stock's name, mostly symbolic, follows a September announcement that, effective Jan. 1, Stilwell would merge all of its operations into one organization under the Janus Capital name. Executives said the move is intended to cut costs and eliminate redundancies.
As of the new year, Mark Whiston, who had been Janus' president of retail and institutional services, took over the company. He replaces founder Tom Bailey, who resigned during the summer after holding Janus' top post for 33 years. Meanwhile, Enhanced Investment Technologies (INTECH) and Bay Isle Financial, both formerly subsidiaries of Janus sister company Berger Financial, fell under Janus' purview.
On Thursday, Janus Capital stock began trading under the ticker symbol JNS, which replaces the Stilwell ticker of SV, at $13.24 a share, its value at the market's close on Dec. 31, according to Morningstar. The stock declined 51.9% last year.
But since it announced in September that it would take over Stilwell, Janus, whose name has become nearly synonymous with growth investing, has already taken steps to move away from its reputation as a growth shop. The firm is merging funds and adding new ones. Most significantly, it will market the funds of its subsidiaries, such as Bay Isle Financial and Berger Funds, under the Janus name.
Janus said that as of the end of 2000, 89.3% of its assets were invested in growth products. By contrast, 67.3% of its assets were invested in growth vehicles as of Nov. 30.
But will this be enough to stem the outflow of assets from Janus' funds? Not entirely, said Robin Beery, the firm's director of marketing, but it's a start.
"One of the challenges we've faced over the last three years is that we didn't offer a lot of products outside of growth to our investors," Beery said. "We have given our investors no choice as to where they can go."
Out of Favor'
By contrast, she said, Janus investors can now take advantage of value and risk-managed products offered by Janus subsidiaries Berger and Bay Isle. "Growth is out of favor," she added. "We will offer investors some more options to stay with Janus."
Beery said Janus is considering launching more products later this year, but wants to establish marketing and sales strategies for this latest batch of products before it introduces yet more new vehicles.
In addition, Janus' marketing campaign will turn to promoting the virtually unknown brand names of its subsidiaries, including Bay Isle. "We're really starting from scratch," Beery said, adding that the firm will more frequently play up its subsidiaries in advertising. "I think the challenge for us will be to get our investors and our advisors to think of Janus as more than the aggressive growth shop."
Janus will have to convince the likes of Christopher Schulz, an analyst who has covered Stilwell for The Spin-Off Report of New York. "It certainly is a victory for Janus to be taking over everything, but at the same time, the Janus of today is no longer what it used to be," he said. "A lot of the principal decision makers have cashed out."
Schulz grimly referred to the potential turnaround at Janus as "a matter of salvaging what can be salvaged," and said that the key to such a recovery will be introducing radically different fund products," which, he said, may prove difficult.
"Are people able to turn around these big asset management companies?" he wondered, adding, "At the end of the day, you have a whole bunch of egos tripping over themselves."