Janus Funds’ Shift in Holdings Shows Some Boost Stock Bets
Some Janus Capital mutual fund managers appear to have turned less gun-shy about making new stock bets in May.
Several of Janus’ biggest funds reported that their cash holdings were down sharply as of May 31 from April 30 levels.
Denver-based Janus generated stellar returns for its shareholders in the late 1990s by riding the technology-stock boom, then incurred steep losses in most of its funds in the second half of last year and in the first quarter of this year as tech stocks collapsed.
The losses--and rising redemptions by unhappy fund shareholders--drove some Janus managers to build up hefty cash balances earlier this year.
Even by late April, with a rally well underway on Wall Street, some Janus funds reported cash levels as a percentage of assets far above the 5.5% average of the stock fund industry overall.
By May 31, however, Janus’ cash levels were down almost across the board, the latest data posted on the company’s Web site show.
Cash as a percentage of a fund’s total assets can drop for two reasons: A fund manager can put cash holdings to work, buying additional stock; or a market rally can boost the value of shares in the portfolio relative to cash held.
For several Janus funds the drop in cash levels was steep in May, even as major market indexes either rose slightly or declined after April’s rally. That suggests those Janus managers were aggressively putting more money into the market:
* At Janus Global Technology, cash as a percentage of total assets fell from 24.9% at April 30 to 15.7% as of May 31, company data show.
* The Olympus fund’s cash percentage dropped from 17.2% to 8.3% in the month.
* At the Enterprise fund, the cash weighting slid from 12.5% to 6.4%.
But some Janus funds showed higher cash levels at the end of May than at April 30. The Orion fund, for example, had 12% in cash at May 31, versus 10.7% at the start of the month.
A few Janus funds have stayed nearly fully invested in stocks throughout the tech bust. The flagship Janus Fund had 3.2% in cash at the start of the year, 2.8% at the end of April and 2.5% at the end of May.
Many Janus funds still have hefty holdings of tech stocks. But those holdings have been pared relative to other stock industry groups as tech stocks have slumped further this year and as Janus managers have diversified into non-tech sectors.
At Janus Twenty fund, for example, the five largest stock holdings at Dec. 31 were Cisco Systems, EMC, General Electric, Nokia and Sun Microsystems.
As of April 30, the most recent data available from Janus, the fund’s top five holdings still included GE and Nokia. But the other three were insurance giant American International Group, AOL Time Warner and brokerage Goldman Sachs.
By contrast, the Olympus fund this year has boosted its bet on some tech names. Nvidia (a maker of processors for 3D computer graphics) and Juniper Networks were listed in the fund’s 10 largest holdings as of April 30. They weren’t on the list at year-end.
Despite the rebound in many tech shares since early April, most Janus funds still are down much more sharply year to date than the 8% decline of the average U.S. stock fund.
In a recent letter to shareholders, Janus conceded that it failed to recognize “how quickly the end would come [for the 1990s bull market] and how severe it would be.
“In retrospect, we certainly could have reacted more quickly to the rapidly changing economic landscape,” Janus said. “With that said, we’re focusing our efforts on positioning our portfolios for what we think lies ahead, and we’re confident we’re making the right decisions based on our extensive research.”
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Hoarding Less
Though several Janus stock mutual funds still hold significant amounts of cash, those cash levels fell in May, according to the latest portfolios made available at the firm’s Web site. A sampling of cash levels at various Janus funds:
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Cash level as pctg. of assets: YTD fund Janus Fund Dec. 31 April 30 May 31 return: Twenty 11.8% 22.1% 19.9% -19.1% Global Technology 2.8 24.9 15.7 -30.3 Orion 16.0 10.7 12.0 -21.5 Mercury 6.5 13.3 11.8 -19.2 Olympus 16.7 17.2 8.3 -24.8 Overseas 16.4 9.7 7.3 -15.9 Equity-Income 15.9 10.0 7.0 -7.0 Enterprise 2.7 12.5 6.4 -30.4 Worldwide 14.1 8.3 5.8 -13.8 Janus Fund 3.2 2.8 2.5 -12.8
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Sources: Janus Funds, Bloomberg News
