Janus Capital Group Inc., which has just racked up its strongest fund flows in five years, is promoting president and chief investment officer Gary Black to chief executive.
The Denver the fund company announced the promotion Wednesday during its quarterly earnings call.
As CEO, Mr. Black will succeed Steve Scheid on Jan. 3 but remain chief investment officer. Mr. Scheid, who has been CEO since April 2004, will remain chairman, in what he called “a passive role.”
“This is the opportune time to make this transition,” Mr. Black said. “Performance is strong, flows are up, and Janus is stable.”
Mr. Scheid said he and Mr. Black have worked as “co-CEOs” and made every big decision together since April 2004.
Mark Lane, an analyst with William Blair & Co., said Mr. Black’s ascent was “hardly surprising.”
“Mr. Scheid was someone who had been on the board and had come in to run the company,” Mr. Lane said. “He was perceived as someone who would be there on a temporary basis to stabilize the business.”
Janus said net inflows to its stock and bond funds totaled $1.7 billion in the third quarter. The flow had not been positive since the second quarter of 2003; Mr. Scheid said it improved in five of the last six quarters.
The third-quarter news was not all positive. The net fund flow was negative, by $2.1 billion, for Janus-branded products; the positive total reflected net inflows of $5.1 billion at Intech, a subsidiary.
“Intech is doing well, and they are accelerating Janus’ plans for growth,” Mr. Lane said. “Though Janus-branded products are still having outflows, their investment performance is quite strong, so when growth comes back in favor, they should be well-positioned to capitalize.”
Janus’ net income fell to $31.7 million, or 15 cents per diluted share, from $47.3 million, or 20 cents per share, a year earlier. Assets under management at the end of the quarter totaled $139.4 billion, 7.1% more than a year earlier.
Janus has spent years reeling from the bear market and market-timing scandals. It has been shuffling executives since Mr. Scheid succeeded Mark Whiston as CEO and Mr. Black was hired as president, then a newly created post.
Mr. Scheid, a former Charles Schwab Corp. executive, joined the Janus board as an independent director in December 2002 and became chairman the next month.
In May 2004 the firm added two independent directors, Deborah R. Gatzek and Michael D. Bills. And in June of this year it hired David Martin from Schwab as executive vice president of finance; a month later he was named chief financial officer when the incumbent, Loren Starr, resigned.
Mr. Black, 45, was the chief investment officer for Goldman Sachs Asset Management’s global equities business.
Mr. Scheid, 52, said he and the board believe Janus needs a “seasoned investment professional back in the driver’s seat.”
During the conference call Mr. Scheid announced another top-level change — the resignation of Robert Burt, an independent director since March 2003.
Mr. Burt “disagreed with some of the strategies we are pursuing to increase shareholder value,” Mr. Scheid said. He said the resignation was not related to Mr. Black’s promotion.
Mr. Scheid said Janus plans to keep hiring wholesalers, a team that has doubled in the past year. He said he expects to introduce new products in the next 90 days. He said the firm is also looking to enter the mutual fund wrap and managed account businesses.
“We are not on the positive side just yet,” Mr. Scheid said. “We continue to expand and invest in our intermediary and institutional businesses.”
