Don't Blame Enron for Janus' Woes

Janus stock pickers don't know what Enron's (ENE Quote - Cramer on ENE - Stock Picks) collapse means yet, but they want everyone to know it's not their problem anymore.

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A gaggle of Janus managers in Manhattan for their annual press conference said the Denver firm, among the largest institutional investors in Enron on Sept. 30, finished selling the energy trader's ravaged shares in the middle of last month. Amazingly, the managers say some funds turned a profit on the stock, which is down 96% over the past 90 days, and that Janus' overall loss on the stock was just 0.12% by their math.

"Enron certainly has been a disappointing situation," said Warren Lammert, manager of the (JAMRX Quote - Cramer on JAMRX - Stock Picks)Janus Mercury fund. "I don't think the complete story is known yet and it won't be for many months, but a number of our funds, including mine, made money on Enron. We've been a net seller of the stock since March and were completely out by mid-November." Lammert's fund, down 35% over the past year, owned 1% of the company on April 30, according to its most recent shareholder report.

Just a year ago the Houston energy trader had a $70 billion market cap and a must-own rep among growth-fund managers, including several at Janus. Enron's execs deftly built an earnings machine out of tenuous and complex financial deals, but those deals and earnings they churned out were sketchy and fleeting. The stock once traded for $84; now you can buy it for 70 cents.

When the stock collapsed, it was touted far and wide as a Janus blunder. The firm's aggressive, concentrated funds inflated and shriveled with the Nasdaq bubble, and stumbling faves such as Cisco(CSCO Quote - Cramer on CSCO - Stock Picks) and EMC (EMC Quote - Cramer on EMC - Stock Picks) led to big losses. While Lammert and his colleagues admitted to missteps since the Nasdaq's peak last year, they say Enron didn't hurt them nearly as much as was believed.

Lammert called the buckling stock's impact "very minor," and Scott Schoelzel, manager of the (JAVLX Quote - Cramer on JAVLX - Stock Picks)Janus Twenty fund, said he sold his stake in six or seven trading days when Enron Chief Executive Jeff Skilling left the firm Aug. 8. The Twenty fund, down 38% over the past 12 months, had 2.8% of its assets invested in the stock, according to its April 30 shareholder report, the most recent data available.

Janus began building its Enron position in the first quarter of 1999, a year when the energy trader's shares rose 58%. At the end of last year's first quarter, the firm owned 67 million shares, but between then and Sept. 30, Janus whittled its stake to 41 million shares. The stock fell 81% over that stretch.

While the stock might not have been a titanic loser for Janus, the firm's big stake as recently as Sept. 30 does undermine its carefully crafted image as a dogged researcher. On Thursday the firm's managers said they aren't changing their process in light of Enron's collapse, but they are looking more closely at the businesses they own.

"After what we've been through over the past 18 months, we've become more critical, but hopefully not cynical," said Schoelzel, who added that he wasn't interested in the stock today. "There's going to be an energy-trading business; I don't know how Enron fits into it now."

The bottom line is that the story of Janus' tumble this year has more villains than just Enron.