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Bill Gross Put $700 Million Into Janus Unconstrained Fund

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Bill Gross invested more than $700 million of his own money in his unconstrained bond fund, Janus Capital Group Inc.’s (JNS) Chief Executive Officer Dick Weil said Thursday during a conference call with investors and analysts.

Gross is “proud to eat his own cooking,” Weil said on a call discussing fourth-quarter earnings. Gross will also manage a new exchange-traded product for the firm, which the firm is planning in coming months, Weil said.

Janus rose as much as 9.9 percent, the most since the firm announced Gross’s decision to join, as it attracted the first net subscriptions in more than five years. Janus drew money across fixed-income funds and there were more of its products on brokerage platforms run by Fidelity Investments and Charles Schwab Corp., Weil said.

“2014 was a major step forward for Janus,” Weil said. [Gross' investment was reported earlier in January, but not confirmed by Janus until Thursday.]

Gross, a bond legend who surprised the financial world by joining Denver-based Janus, has a history of putting his own money into the funds he manages, a move that can be seen as a vote of confidence in his strategy and can help attract bigger investors. His contribution accounts for a quarter of the $2.8 billion that Janus attracted into its fixed-income funds in the fourth quarter, helping to break a streak of 21 straight quarters of investor withdrawals.

Janus shares rose 9.4 percent to $17.81 at 10:51 a.m. in New York, the most since Sept. 26. Janus shares, which surged a record 43 percent that day, climbed 30 percent last year, compared with 7.6 percent for the 18-company Standard & Poor’s Index of asset managers and custody banks.

Beating Estimates

Janus today reported fourth-quarter earnings that rose 18 percent as it broke a 21-quarter streak of net investor withdrawals. Net income increased to $45.2 million, or 24 cents a share, from $38.3 million, or 21 cents, a year earlier, the firm said today in a statement. Earnings beat the 21-cent average per-share estimate of 12 analysts surveyed by Bloomberg.

Weil, 51, has raised Janus’s profile in the past year, hiring Gross and buying an exchange-traded product provider. Since taking over in 2010, Weil had struggled to stem client defections as he expanded the fixed-income team and created a multi-asset investing group.

Net Subscriptions

Janus attracted $2 billion net subscriptions in the fourth quarter, as money gathered by fixed-income products offset withdrawals of $800 million from stock funds.

Janus had “strong growth on the fixed-income side of the business, much of that related to Bill coming on board and raising some assets,” Michael Kim, an analyst with Sandler O’Neill & Partners LP in New York, said in a telephone interview. Kim has a “hold” recommendation on the shares.

The 70-year-old Gross started overseeing the Janus Global Unconstrained Bond Fund after surprising executives at Newport Beach, California-based Pimco and its parent Allianz SE with his departure. He had built one of the industry’s best long-term records while running the $143.4 billion Pimco Total Return Fund and helped expand Pimco to oversee about $2 trillion at its peak.

The Janus Global Unconstrained Bond Fund, which Gross has run since Oct. 6, expanded to $1.4 billion in assets as of Dec. 31, from $13 million before he joined Janus, according to data compiled by Bloomberg. The fund lost 1.1 percent in the past three months through Jan. 21, trailing 62 percent of peers, according to data from Chicago-based research firm Morningstar Inc.

Revenue climbed 13 percent to $254.8 million, as negative performance fees shrank to $800,000, from $18.5 million in the same period last year. Expenses rose 9.5 percent to $174.3 million, driven by higher costs tied to employee compensation, benefits and incentives.


To contact the reporter on this story: Mary Childs in New York at [email protected] To contact the editors responsible for this story: Christian Baumgaertel at [email protected]