Greed and Fear on the BuySide

by StockJockey

Thursday, March 27, 2008 - 4:18 pm

Gary Black, the CEO of Janus Capital (JNS-NYSE) has turned things upside down since assaulting over the corner office. He has taken no prisoners, blowing out portfolio managers and much of the administrative staff.

And while he might not be making friends, he is getting results, and Janus has been putting up good numbers thanks to star portfolio managers such as David Decker. Assets under management moved in the right direction in 2007, thanks in part to fund inflows for the first time early this decade. Naturally, Gary wants a raise:

The chief executive officer of Janus was paid more than $5m (€3.16m) less in 2007 than in the prior year, and the asset manager intends to ask shareholders to approve an increase in the amount of money its executives can be paid after a series of high-level departures last year.

According to a filing with the US Securities & Exchange Commission, Janus chief executive Gary Black was paid a total of roughly $9m last year, including a cash bonus of $6.3m and stock and options grants. Black was paid about $15m the prior year, though that amount included a one-time $4m payment as a “one-time performance award” he was granted in 2004 when he joined the company. Financial News

And with inflation on the rise, Black would like to see the upper band of the compensation limit lifted. Puhleeze:

In addition, Janus said in its filing that it would ask shareholders to approve a raise in the maximum allowable annual compensation to a single executive from $15m to $25m, saying the proposed change is “driven by inflationary adjustments and the addition of certain investment personnel that joined our Executive Committee.

More power to you if you can get it Gary, but with the stock trading well of the 52-week highs, and retail investors disenchanted with with asset management stocks, the timing is looking a bit suspect.

And with blood in the water, Credit Suisse is making a rare call to short call on Janus’ peer Blackrock; possibly afraid that muliple contraction will finally hit the stock. You sure do not see this too often:

WE ARE DOWNGRADING OUR RATING on BlackRock to Underperform from Neutral, while we are leaving our target price at $194 and our 2008/2009 earnings-per-share estimates constant at $8.75/$10.60.

In conclusion, we believe the BlackRock stock’s recent upward move has given us an attractive opportunity to downgrade the shares. As we believe investors should still be net short the asset-manager industry over the next three to six months, we would recommend both (1) a naked short position in BlackRock......

BlackRock (BLK: NYSE) Credit Suisse ($221.89, March 27, 2008) Barrons

It is time to tighten the belt Gary, not ask for a raise. You sure have chutzpah, but might want to consider asking Jimmy Cayne where you can rent a bodyguard, especially if you cannot get the stock moving the right direction.