Janus Henderson Client Exodus Persists as Peltz Seeks Change

(Bloomberg) -- Janus Henderson Group Plc's client exodus is getting worse, giving activist investor Nelson Peltz -- its largest shareholder -- more leverage to push for sweeping changes at the embattled asset manager.

The company saw $5.2 billion of net outflows in the fourth quarter, according to a statement Thursday, which was more than analyst estimates and capped the 17th straight quarter of outflows for the asset manager.

The streak is likely to continue, with Janus Henderson executives telling analysts that they expect $2.2 billion of outflows in the first quarter from one client alone.

“We certainly have some challenges that we're working on,” Janus Henderson Chief Executive Officer Dick Weil, who is retiring next month, told analysts on Thursday. “I'm proud of the progress that we've made although frustrated that we haven't delivered the consistent organic growth which we've aspired to.”

Peltz and Ed Garden, co-founders of Trian Fund Management, joined the fund firm's board recently, a move that gives them more say over how Janus Henderson is run. Trian, which owns almost 17% of Janus Henderson and is its biggest shareholder, started to press for change more than a year ago.

Janus Henderson said it planned to sell its quantitative equities business Intech Investment Management to a consortium of Intech's management and other unnamed investors. The unit managed 29 billion pounds ($39.3 billion) in assets as of the end of September, according to its website.

“This morning's move is clearly a step in the right direction,” Evercore ISI analysts including John Dunn wrote in a note after the earnings release. They said quantitative investments was one of the “main culprits” for recent outflows and the sale would allow management to develop new business in exchange-traded funds, fixed income and environmental, social and governance, or ESG, investing.

Janus Henderson shares rose 0.7% to $38.43 at 11:24 a.m. in New York.

What Bloomberg Intelligence Says
“Janus Henderson's announced divestiture of its quantitative equities business (Intech), which we had expected, is a key positive as it will speed the stemming of asset outflows, as well as allow the company to focus on its core active, fundamental investing business.”
--Lento Tang, industry analyst, and Sarah Jane Mahmud, senior government analyst

The merger that formed Janus Henderson in 2017 was intended to provide scale amid an investor shift out of the actively-managed funds it specializes in and into cheaper, index-tracking products.

At the time of the merger between Henderson Group with Janus Capital Group, assets under management totaled about $330 billion. On Thursday, the firm said that figure had risen to $432 billion.