Can Janus (NYSE:JNS) get anything right? After struggling with mutual fund redemptions caused by credibility concerns over past improprieties, the company had a plan in place. According to Fortune, key executives were working on a management buyout of the company over the summer. They had supposedly even hired Morgan Stanley (NYSE:MWD) to oversee the transaction.
Taking Janus private seemed reasonable. Sure, a few notable fund families, T. Rowe Price (NASDAQ:TROW) and Eaton Vance (NYSE:EV) among them, have been hailed as market winners over the past few decades. However, mutual fund giants such as Fidelity and Vanguard are not publicly traded, and they have obviously had no problem in growing their asset bases.
Taking an unloved Janus off the market seemed like a simple solution. However, proving that irony bites both ways, when the company was looking to buy itself out at a depressed price, the winds of Wall Street began to lift shares of Janus higher -- supposedly above and beyond the proposed buyout price.
Sorry, Janus. You can't even get it right when you want to get it wrong.
Then again, assuming that Janus isn't gobbled up by someone else -- and that's clearly a possibility -- I like having a publicly traded Janus around. That's because I like Janus. One of my first investments, back in 1990, was the Janus Venture mutual fund. I haven't owned a Janus fund in years, but I still like what the company has been up to since its ethical debacle.
Part of the company's $225 million settlement involved lowering fund expenses. The company has also been exploring the intriguing notion of basing management fees on performance. It's par for the course in the hedge fund world but pretty much unheard of in the mutual fund space.
Then again, I'm a cheap date when it comes to falling for a mutual fund. The same can't be said for Shannon Zimmerman, who is pretty meticulous in his recommendations for the Motley Fool Champion Funds newsletter service. His screens are vigorous, and he has yet to pick a Janus fund for his subscribers.
That's OK, for now. The company still needs to convince a few more skeptics. If it doesn't, and the stock starts heading lower again, I guess we'll see whether the story of a management buyout at a lower price was true after all.
Shannon Zimmerman has recommended several of T. Rowe Price's mutual funds -- as well as Oakmark I -- to readers of his Champion Funds newsletter service. Click here if you'd like to see what else Shannon likes. It's a free, no-risk trial.
Longtime Fool contributor Rick Munarriz prefers stocks over mutual funds, but old habits die hard -- he always seems to have a fund or two in his portfolio. At the moment, it's Oakmark's international small-cap fund. He doesn't own shares in any of the companies mentioned in this story. T he Fool has a disclosure policy. He is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early.
