Janus Capital Spinoff Planned for 4th Quarter

Kansas City Southern Industries Inc. said Friday that the long-awaited spinoff of its money management unit, which includes Janus Capital Corp., America’s fastest-growing mutual fund company, is scheduled for this year’s fourth quarter.

The spinoff of Janus was supposed to occur last year, but the transaction was delayed when the Internal Revenue Service raised concerns. The Kansas City, Mo.-based company, which also operates a 10,000-mile railroad network that links the U.S. and Mexico, filed a revised proposal with the IRS in January.

Kansas City Southern needs approval from the IRS to avoid hefty taxes.

The timing of the spinoff is noteworthy, analysts say.

Last year, investors flooded Janus with money on the strength of the performance of its well-known large-growth stock funds such as the Janus Fund, Janus Twenty and Janus Olympus.

Indeed, in the last 12 months, assets of the 21 Janus funds tracked by Lipper Inc. increased 73%.

Janus continues to attract new cash today, but market conditions have changed. Since April, large- growth stocks are losing money, while other types of equities, such as small-company stocks and so-called value stocks, have soared.

So, if Kansas City Southern goes through with the spinoff, it could happen just as Janus’ large-growth stock luster begins to dull, some analysts say.

Janus’ “future earnings potential may not be as bright as a few months ago,” said Chris Brown, a fund analyst at Financial Research Corp., a financial services consulting firm in Boston.

However, Janus is still one of the strongest companies in the industry, Brown said, with a significantly larger asset base than it had last year. And those assets will continue to generate profit for the company going forward, he said.