Janus Mutual Fund - fighting for survival?

Can any one forget the assault of the well-known and much publicised foreign institutional investor (FII), Janus Mutual Fund, on the Indian markets last year? This was when newspapers excitedly reported how the FII had picked up a 5 per cent stake in the Indian petrochemical major, Reliance Industries Ltd. through sustained market purchases?

This, at a time when investors, world over, were still in a state of shock having finished chasing and losing their life’s savings on tech stocks. The Janus move had brought life back into the beleaguered Reliance scrip, as well as into the stock markets, which had begun to reel under the pressure of bear onslaught on tech stocks.

However, what is probably not known is that the same Janus Capital Corporation, a hot shot mutual fund company, is now fighting hard for survival, having got hit by several hail storms such as plunge in profits, insider stock sales and friction with its parent Stilwell Financial Inc.

The Denver-based Janus, which sizzled the world in the late nineties with its soaring growth funds, has lost a lot of money through its concentrated bets on tech stocks! So much so that it has had to resort to job cuts and go on a cost cutting spree.

The earnings decline at Janus dragged down parent company Stilwell's first-quarter profit by 41 percent and its stock lost 32 percent in the first three months of the year, compared with a 13 percent drop in the benchmark, Lipper Management Company Price Index.

It is also being speculated that in the current turmoil several key executives are likely to leave Janus. That, according to an analyst at Lehman Brothers, is a real blow up scenario. However, Janus dismisses talk of a potential exodus, saying just three stock portfolio managers have left since its inception in 1970. However, talks about any exodus was rebutted by James Goff, a senior fund manager who also sits on the six-member investment committee of Janus.