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Janus Capital Group Inc. Q1 2010 Earnings Call Transcript

Janus Capital Group Inc. Q1 2010 Earnings Call Transcript

Janus Capital Group Inc. (JNS)

Q1 2010 Earnings Call

April 22, 2010; 10:00am ET


Rick Weil - Chief Executive Officer

Greg Frost - Chief Financial Officer


Roger Freeman - Barclays Capital

Michael Kim - Sandler O'Neill & Partners

Jeff Hopson - Stifel Nicolaus & Company

Robert Lee - Keefe, Bruyette & Woods

Mark Irizarry - Goldman Sachs

Bill Katz - Citi

Mike Carrier- Deutsche Bank Securities

Cynthia Mayor - Bank of America/Merrill Lynch

Ken Worthington - JP Morgan

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Good morning. My name is Jasper, and I will be your conference facilitator today. I would like to welcome everyone to the Janus Capital Group, first quarter 2010 earnings conference call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer period. In the interest of time, questions will be limited to one initial and one follow-up question.

Before the company begins, I would like to reference their standard legal disclaimer. This also accompanies the full slide presentation located in the Investor Relations area of

. Statements made in the presentation today may contain forward-looking information about management's plans, projections, expectations, strategic objectives, business prospects, anticipated financial results, anticipated results of litigation and regulatory proceedings, and other similar matters.

A variety of factors, many of which are beyond the company's control affects the operations, performance, business strategy, and results of Janus, and can cause actual results and experience to differ materially from the expectations and objectives expressed in their statements. These factors include, but are not limited to the factors described in Janus's reports filed with the SEC, which are available on their website

, and on the SEC's website


Investors are cautioned not to place undue reliance on forward-looking statements, which speaks only as of the date on which the statements are made. Janus does not undertake to update such as statements to reflect the impact of circumstances or events that arise after the date these statements were made. Investors should however; consult any further disclosures Janus may make in the reports filed with the SEC. Thank you.

Now it is my pleasure to introduce Rick Weil, Chief Executive Officer of Janus Capital Group. Mr. Weil, you may begin your conference.

Rick Weil

Thank you very much. Good morning everybody. Welcome to the Janus Capital Group first quarter 2010 Earnings Call. As the operator said, I am Rick Weil, CEO of Janus Capital Group; and I have with me Greg Frost, our CFO for this call.

Our agenda today will be to follow the quarterly earnings presentation book that you all have. I will first provide a summary of earnings investment performance inflows. I will drill down a bit into some of those elements, and then Greg Frost will present our financial results in some more detail; and finally I will cover a bit about our vision and priorities. Last we will take some questions.

Okay, quarter one 2010 EPS was $0.17 a share versus $0.20 in the fourth quarter of 2009. As I said Greg will cover the financial results in more detail in a minute. First quarter net flows for the company were a negative $1.9 billion. $4.3 billion of net outflows at INTECH more than offset positive $1.4 billion for Janus, and positive $1 billion for Perkins. Overall AUM at March 31 was up to $165.5 billion, a 4% increase over December 31, 2009.

Long-term performance remains strong across out mutual fund complex, with 84% of our funds in the top two lipper quartiles on a three and a five year basis as of March 31. Additionally, we were very pleased to win Lipper 9 awards for best funds based on risk-adjusted returns. 49% of our funds have a four or five overall morning star rating at March 31, 2010.

Flipping to page 3 of the book. In the lower left corner you can see the flows for INTECH. I would like you to focus a moment on INTECH. INTECH suffered $4.8 billion of gross outflows in Q1; consistent with the $4.6 billion of gross outflows last quarter. Outflows are very hard to predict. INTECH has been successful at building large relationships, which means individual decisions can drive large blocks of assets.

Outflows are very importantly affected by investment performance to state the obvious, and there is a lagged basis for that, and they are also subject to broader industry flows. Relevant to continuing rate of outflows we note, and now I am listing from a bullet on page four, that short term performance at INTECH has been improving with 75% of their strategies, which is actually 96% of their assets on an asset waited basis. Outperforming respective bench marks for the six months ended March 31; that’s clearly a good start, but just as clearly consistent out performance in future quarters is needed to address this situation.

Gross inflows were $500 million in the first quarter for INTECH. This was down from prior periods. While we do not give guidance on flows, I can tell you that funded gross inflows at INTECH in April are already materially higher than the $500 million of gross inflows in the first quarter. Through the recent crisis, INTECH, as well as many other mathematical or quantitative managers, have faced particularly challenging, disrupted and chaotic market conditions.

I believe the current stabilizing market condition should offer better opportunities for INTECH’s process, to generate historic levels of return going forward. But it is very clear that INTECH’s future depends on continuing positive investment performance to drive an improved picture in close.

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