The Janus Henderson Group PLC (ASX: JHG) share price fell 10% following the release of the fund manager’s 2nd quarter result yesterday evening.
Janus Henderson is a global asset management business headquartered in London, UK. It offers a wide range of financial products to individuals, advisers and institutional investors around the world including in the US, UK and Australia.
Janus Henderson currently manages more than US$350 billion of assets, has more than 2,000 employees worldwide and 28 offices across the globe. Basically, it’s a big business.
Big Outflows In A Frothy Market
Although Janus Henderson’s total Assets Under Management (AUM) increased by US$2.5 billion from last quarter, the business experienced US$9.8 billion in outflow for the period. So while AUM went up due to stronger markets, it was offset by a loss of client funds via redemptions, which is not a positive sign for a funds management business.
Total revenue for the quarter was US$535.9 million, which produced operating income of US$118.5 million. The US Generally Accepted Accounting Principles (GAAP) diluted earnings per share (EPS) result was US$0.56, some 16% higher than 1st quarter US GAAP EPS of US$0.48.
The average net management fee margin for the period was 42.2 basis points, down slightly from last quarters figure of 42.9 basis points.
The business continues its commitment to return excess cash to shareholders with US$244 million of capital returned via dividends and share repurchased calendar year to date.
Their strategic priorities are to focus on producing dependable investment outcomes, to excel in client experience, increase operational efficiency, proactive risk control and develop new growth initiatives.
Is It Time To Sell Janus Henderson Shares?
It seems investors were expecting more from Janus’ update given the share price reaction this morning. Overnight, two brokers reduced their price target on the shares, one by 8.3% to $33 per share and the other by 9.8% to $30.35 per share.
Given the share price is currently $28.60 per share, it implies some upside to the brokers’ targets. However at this time with Brexit lingering and the business experiencing fund outflows, the shares aren’t for me.
This excellent article was contributed by David Lennan.
Disclosure: At the time of writing David does not hold a financial interest in any of the companies mentioned.