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JHG

Janus Henderson Group NYSE:JHG Stock Report

Last Price

US$21.83

Market Cap

US$3.6b

7D

-6.4%

1Y

-47.9%

Updated

24 Sep, 2022

Data

Company Financials +

Janus Henderson Group plc Competitors

Price History & Performance

Summary of all time highs, changes and price drops for Janus Henderson Group
Historical stock prices
Current Share PriceUS$21.83
52 Week HighUS$48.55
52 Week LowUS$21.37
Beta1.47
1 Month Change-13.54%
3 Month Change-14.79%
1 Year Change-47.88%
3 Year Change-1.31%
5 Year Change-37.34%
Change since IPO-28.66%

Recent News & Updates

Aug 23

Janus Henderson: Transition Underway

JHG’s new CEO has set out his initial impression of the business and highlighted areas of focus. A full strategic plan and framework will be developed and communicated to the market over the coming quarters. Executive team changes are already occurring and more can be expected. Acquisitions have been flagged as a means to fill in product offering gaps. The stock is cheap. However, investors should be mindful that the company is likely to go through a period of operational disruption that has both upside and downside risk. Introduction Janus Henderson Group (JHG) published 2Q22 results in late July. In this note, I depart from my usual approach of analyzing key quarterly operational performance outcomes, and instead focus on what can be discerned from the materials and commentary put forward by the group’s new CEO. In addition, I provide an update on my fundamental valuation of the stock, full details of which are set out below. New Leadership – Significant Disruption Expected 2Q22 was the first set of JHG quarterly results to be delivered by the group’s new CEO, Ali Dibadj. In my May 2022 JHG Seeking Alpha note, I commented that “it would come as no surprise if Dibadj announced a raft of new strategic initiatives in late 2022”; the CEO’s commentary at 2Q22 confirms that changes are indeed coming. In his 2Q22 management speech and the subsequent Q&A session, the new CEO made the usual obligatory complimentary remarks about his new employer, with references to JHG’s “very talented and motivated employees”, the existence of a “portfolio management powerhouse at the firm”, and the “potential” in the business. More interesting, and relevant to the investment case for the stock, were Dibadj’s comments referencing headwinds for the business, market share losses, and share price underperformance. As to Dibadj’s thoughts regarding the underlying causes of JHG’s problems, his comment regarding the lack of a sense of accountability and urgency struck me as highly pertinent. In his management speech, the CEO wrapped up his initial summary of JHG’s strategic position and outlook as follows: Source: JHG 2Q22 Presentation, slide 17. The transition period that the CEO referred to is likely to involve material costs and organizational disruption. It was something of a relief to see the company acknowledge the need to drive increased efficiencies in order to help fund and facilitate these changes; however, it would be prudent to anticipate significant restructure charges in coming periods. Dibadj has already made some personnel changes. A few days before Dibadj formally joined JHG, the company announced the departure of Global Head of Distribution, Suzanne Cain – the wording of the announcement refers to a separation agreement, which is often a sign that the departure was not on the best of terms. Whilst Cain left prior to Dibadj taking the reins, it is likely that he approved the decision, and in my opinion, he may well have triggered the move. Further executive changes have been announced in recent weeks. Two new appointments were made to the North America sales team in mid-July, and a new Global Head of Enterprise Data Management was appointed just nine days later. We can expect to see more press releases of this nature in the coming months. I also expect that there will be plenty of senior staff movements that will not quite be high-profile enough to warrant press releases, but that will be material in terms of impact on the business. Introducing new and more detailed performance metrics to drive improvements in accountability and urgency sounds like a sensible move, but to do so without incurring downsides relating to micromanagement and staff burnout risk is not easy. Whilst high rates of staff turnover at senior levels is somewhat concerning, it ought not to come as a surprise given that Dibadj is a) an external appointment, and b) has a background in strategy-focused roles (Dibadj was Head of Strategy at AllianceBernstein). I think that it is fair to say that Dibadj was hired to be an agent of change – and it looks as though he intends to strive to meet that expectation. Shaking up JHG’s sales team and approach is likely to be a major group focus over the next six to twelve months. Excellence in strategic analysis alone is not sufficient to drive successful organisational change – leadership and people management skills will be vital if Dibadj is to deliver results for the Board and shareholders. For those investors hoping for a quick fix and turnaround in JHG’s fortunes, I’d point to the comment from the CEO below: But in this industry, as you know, each change one makes takes a long time, typically more than a year to deliver signs of progress. Source: Seeking Alpha JHG 2Q22 Results Transcript, page 10. Other noteworthy points that the CEO raised include: Product investment performance is good, but is not being properly leveraged due to low levels of brand awareness. Sales resources can be better aligned to faster growing markets/channels. JHG’s client service levels are high and a competitive advantage. Product Offering Gaps – Acquisitions Ahead? Dibadj believes that JHG’s clients want to do more business with the group, but are unable to do so due to gaps in the product set. The term ‘gap’ here is very broad, with the CEO mentioning asset classes, channels, geographies and vehicles. I find this aspect of the CEO’s analysis rather vague, as almost all fund managers would have product gaps when looked at from such a wide perspective. The move to fill in the gaps is already underway, with a team of four investment managers recently hired from Danske Bank Asset Management to run a new JHG emerging market debt offering. I would much rather see a business filling in product gaps organically than via acquisition. The former approach takes time of course, and I suppose that few CEOs are willing and incentivized to focus on something that may not deliver meaningful results during their tenure (and unfortunately too few Boards are willing to drive longer-term agendas). In my experience, acquisitions by large fund managers of successful smaller businesses tend to deliver handsome rewards for the owners of the acquired fund managers and very mixed results for shareholders of the acquiring entity. High-performing innovative, specialist and boutique operations have a habit of fading to average after being swallowed up by industry mammoths. One thing in JHG’s favor at present is that weaker investment markets will hopefully reduce the risk of the company paying excessively high prices when shareholder funds are used for the purposes of filling in product gaps.

Shareholder Returns

JHGUS Capital MarketsUS Market
7D-6.4%-6.0%-5.2%
1Y-47.9%-25.7%-23.0%

Return vs Industry: JHG underperformed the US Capital Markets industry which returned -25.7% over the past year.

Return vs Market: JHG underperformed the US Market which returned -23.1% over the past year.

Price Volatility

Is JHG's price volatile compared to industry and market?
JHG volatility
JHG Average Weekly Movement5.1%
Capital Markets Industry Average Movement0.5%
Market Average Movement6.9%
10% most volatile stocks in US Market15.8%
10% least volatile stocks in US Market2.8%

Stable Share Price: JHG is not significantly more volatile than the rest of US stocks over the past 3 months, typically moving +/- 5% a week.

Volatility Over Time: JHG's weekly volatility (5%) has been stable over the past year.

About the Company

FoundedEmployeesCEOWebsite
19342,000Ali Dibadjhttps://www.janushenderson.com

Janus Henderson Group plc is an asset management holding entity. Through its subsidiaries, the firm provides services to institutional, retail clients, and high net worth clients. It manages separate client-focused equity and fixed income portfolios.

Janus Henderson Group plc Fundamentals Summary

How do Janus Henderson Group's earnings and revenue compare to its market cap?
JHG fundamental statistics
Market CapUS$3.60b
Earnings (TTM)US$487.90m
Revenue (TTM)US$2.56b

7.4x

P/E Ratio

1.4x

P/S Ratio

Earnings & Revenue

Key profitability statistics from the latest earnings report
JHG income statement (TTM)
RevenueUS$2.56b
Cost of RevenueUS$805.70m
Gross ProfitUS$1.75b
Other ExpensesUS$1.27b
EarningsUS$487.90m

Last Reported Earnings

Jun 30, 2022

Next Earnings Date

Oct 27, 2022

Earnings per share (EPS)2.96
Gross Margin68.53%
Net Profit Margin19.06%
Debt/Equity Ratio5.9%

How did JHG perform over the long term?

See historical performance and comparison

Dividends

7.1%

Current Dividend Yield

52%

Payout Ratio