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CEO, President of Janus Capital Management Will Step Down

Executives: Tom Bailey, founder of its Janus Fund, will remain chairman. The investment advisor is reorganizing as its funds continue to slump.

June 13, 2002|From Times Wire Services

Tom Bailey, who launched the Janus Fund with a handful of investors in 1969 and helped make it into a mutual fund powerhouse, said Wednesday that he will step down as chief executive and president of Janus Capital Management at the end of the month.

Bailey, 64, decided to stop running Janus' daily operations after investment director Helen Young Hayes and research director Jim Goff began overseeing the investment team in January, spokeswoman Jane Ingalls said. Bailey will remain chairman of Janus' funds, and a five-person committee will manage Janus during the search for a new chief executive.

Denver-based Janus, the sixth-largest fund group, is overhauling management as investors flee its slumping funds.

Last year, Janus clients withdrew $12.1 billion from its stock and bond funds, the largest net outflow among the 25 biggest U.S. fund firms, according to Boston-based consulting firm Financial Research Corp. Investors said Janus, whose growth was fueled by rapidly rising technology stocks in the 1990s, may continue to diversify by adding more shares of companies with slower, more consistent growth.

There is no clear successor to Bailey, industry experts said.

Neither Hayes nor Goff is likely to be tapped CEO, said fund industry consultant Geoff Bobroff. He predicted that Janus and its parent firm Stilwell Financial Inc. will look outside for a chief executive.

"One of the big challenges that they have, and they clearly recognize it, is the culture at Janus is very unique, and it's going to take a fair amount of time to find someone," Bobroff told Reuters.

Although Bailey last year said he intended to remain as chief executive even after selling his stake in the money manager, some investors said the sale made his departure a foregone conclusion.

Janus had the fastest growth rate from 1996 to 2000 among mutual fund groups with at least $25 billion under management, according to Financial Research. The company's focus on tech stocks such as Nokia, Cisco Systems Inc. and AOL Time Warner Inc. made its funds top performers.

But as the tech and telecom sectors led declines in U.S. stock markets starting in March 2001, Janus' performance slid sharply, leading to investors' massive withdrawals. Assets under management at Janus dropped by more than half to $159 billion as of May 31, from $330 billion at their peak in March 2000, the company said.

Janus handed stock investors the biggest average loss among the 20 largest fund families in 2001 for the second straight year, according to a study by Boston-based investment management firm Kanon Bloch Carre. Its diversified U.S. stock funds lost a weighted average of 24% last year, the study said.

Janus has diversified its investments in the last year, reducing its concentration in tech companies and increasing its "value"-oriented holdings such as Warren Buffett's Berkshire Hathaway Inc. Bailey founded Janus with about 30 investors and $500,000 in assets. In 1983, railroad operator Kansas City Southern Industries Inc. bought a majority stake in the money manager, which it spun off in 2000 along with other financial services business under the Stilwell umbrella.

Stilwell shares fell 43 cents to $19.13 on the New York Stock Exchange. The stock is down 41.6% in the last year, more than twice the decline of the blue-chip Standard & Poor's 500 index.

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