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Is Janus Henderson Group among the investment grade asset managers on the ASX?

Yesterday evening international equities and fixed income fund manager Janus Henderson Group PLC (ASX: JHG) reported its financial results for the quarter ending December 31 2018. Below is a summary of the results with comparisons to the prior corresponding quarter.

  • Quarterly income (profit) of US$106.8m, or adjusted income of US$117.5m backing out differing tax rates
  • Diluted EPS of US54 cents, or US59 cents on an adjusted basis
  • Assets under management of US$328.5b, down 13% on prior quarter
  • Net outflows of US$8.4b over quarter
  • Completed US$50m of share buybacks over quarter, US$100m over 2018, authorised US$200m in 2019
  • Paid quarterly dividend of US36 cents

Janus Henderson trades on the NYSE and ASX after the Janus US-based fixed income manager and Henderson UK-based equities merger agreed a merger in 2017.

The shares trade on a 1 for 1 basis so they should track each others value on an FX-adjusted basis across both exchanges and meaning owners of the ASX CDIs are beneficiaries of a falling Australian dollar.

Unfortunately, the stock is down 25% over the last six months after some powerful headwinds hit the group over the final quarter of 2018 in the form of an equity market correction and worries that the UK might leave the EU without an ongoing free trade agreement.

I must admit to a mistake in talking up the merged firm’s prospects back in 2017 as the share price performance (at least) has been disappointing since then.

Should you buy?

However, I remain of the view that this is one of the better quality asset managers available to ASX investors, although, inter alia, its size and cost control preclude it from investment grade status in my opinion.

That’ not to say the stock won’t move higher as it looks cheap on a conventional basis and will likely rally hard if we see a Brexit agreement and stronger equity markets in 2019.

As I’ve written multiple times before the only two ‘investment grade’ asset managers I’ve seen on the ASX are Macquarie Group Ltd (ASX: MQG) and Magellan Financial Group Ltd (ASX: MFG).

Others such as Wilson Asset Management Limited (ASX: WAM) have some good qualities, but fall down in different areas. While I’ve also covered the rise of and recommended Australian Ethical Limited (ASX: AEF) many times over the years, although its current scale means it remains a bet higher up the risk scale.

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Tom Richardson owns shares of Macquarie Group Limited and Magellan Financial Group.

You can find Tom on Twitter @tommyr345

The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of Australian Ethical Investment Ltd. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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