Morningstar | Market Gains Help Offset Ongoing Outflows in Janus Henderson's 1Q; No Change to USD 24 per Share FVE
There was little in narrow-moat Janus Henderson's first-quarter results that would alter our long-term view of the firm. We are leaving our USD 24 (AUD 33) per share fair value estimate in place. The firm closed out the March quarter with USD 357.3 billion in assets under management, up 8.8% sequentially but down 3.9% on a year-over-year basis. Net outflows of USD 7.4 billion during the period were on par with what we saw during the fourth quarter of 2019. As organic growth has been negative at the firm the past three years, we had little expectations that we would see things improve all that much this year, especially given the marked sell-off in equities during the December quarter. Aside from multi-asset products (USD 700 million in inflows), every segment recorded net redemptions during the period. We expect this trend to continue in the near to medium term, given the sales headwinds posed by market and regulatory issues in both the U.S. and U.K. markets.While average AUM was down 7.3% year over year, first-quarter revenue declined 11.6% on declining management fee rates and weaker performance fee income. While this was slightly worse than our full-year forecast calling for a high-single-digit decline in Janus Henderson's top line, the firm does face easier comparables in the back half of 2019. As for profitability, first-quarter operating margins of 24.0% were about 600 basis points lower when compared with the prior year's period. While this is below our expectations for operating margins to remain closer to 27%-28% over the course of our five-year forecast period, the firm is still working through costs associated with the merger integration (which should wane over the next several quarters). As for efforts to return capital to shareholders, the company left its quarterly dividend in place at USD 0.36 per share and repurchased USD 31 million of common stock during the first quarter.
Janus Henderson Group is a global investment manager. Co. manages a range of investment products for institutional and retail investors, across five capabilities, being European Equities, Global Equities, Global Fixed Income, Multi-Asset and Alternatives, including Private Equity and Property. Management operates across product lines, distribution channels and geographic regions. All investment product types are sold in most, if not all, of these regions and are managed in various locations. As of Dec 31 2016, Co. had total assets under management of £101.00 billion.
Morningstar, Inc. is a leading provider of independent investment research in North America, Europe, Australia, and Asia. The company offer an extensive line of products and services for individual investors, financial advisors, asset managers, and retirement plan providers and sponsors.
Morningstar provides data on approximately 530,000 investment offerings, including stocks, mutual funds, and similar vehicles, along with real-time global market data on more than 18 million equities, indexes, futures, options, commodities, and precious metals, in addition to foreign exchange and Treasury markets. Morningstar also offers investment management services through its investment advisory subsidiaries and had approximately $185 billion in assets under advisement and management as of June 30, 2016.
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