The Wall Street Journal-20080201-Mr- Lynn Hits the Road to Run His Fund- Janus Overseas- Manager Seeks Returns -Anywhere-- India Needs Homes- He Says
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Mr. Lynn Hits the Road to Run His Fund; Janus Overseas' Manager Seeks Returns 'Anywhere'; India Needs Homes, He Says
Full Text (816 words)'Go-anywhere" is how Brent Lynn describes the Janus Overseas Fund he manages, and he backs up the claim.
Mr. Lynn was recently in China, for example, getting a firsthand look at some of his key shareholdings. It was the fourth trip to Asia in the past two months for the Denver-based portfolio manager, and given the uncertainty around emerging markets nowadays, both Mr. Lynn and his mutual fund will likely be up in the air more than anyone might have expected.
"When things are tough, that's perhaps the most important time to be on the road," he says. With Mr. Lynn, that's often the road less- traveled. He committed several years ago to rapidly developing countries, including China, India and Brazil. He has also invested, then and now, in the broad technological and social changes driving the growth of emerging economies.
"As billions of people get wealthier, as new industries are formed in these countries," Mr. Lynn says, "there are tremendous opportunities for companies that are well-positioned to grow earnings and cash flows and to become larger."
Mr. Lynn, 43 years old, took sole responsibility for Janus Overseas in June 2003 after 18 months co-managing it with noted investor Helen Young Hayes. The fund's calculated moves have generated hefty returns for shareholders, especially since 2005 when Mr. Lynn's growth-stock focus began to gather steam.
Janus Overseas finished 2007 with a 27.8% gain, according to Lipper Inc., better than all but 3% of its rivals in the fund tracker's international-multicap-growth fund category, which averaged a 15.4% return. The Janus portfolio also led most challengers with a three- year annualized 35.5% gain and a five-year average return of 32.2%.
"I basically believe in two things: fundamental research and high conviction, long-term investing," Mr. Lynn says. "Short term, markets can be very volatile, highly unpredictable and sometimes irrational. Long term, stocks will move with earnings, cash flows and business fundamentals."
Janus Overseas assets under management swelled to $10.9 billion at the end of 2007 from $6.4 billion a year earlier, according to Morningstar.
Concern that this added bulk could hinder Mr. Lynn's flexible style prompted Janus to close the Overseas fund to new investors in December. "The move is a welcome one given the fund's growth in assets," wrote Russ Kinnel, director of fund research at Morningstar Inc., in a note. The fund, he added, "has enjoyed huge returns thanks to a big bet on India and other emerging markets."
Those bets include Reliance Industries Ltd., an Indian conglomerate with operations in petrochemicals, gas production and oil refining that has benefited from strong energy demand. Reliance is opening a new avenue in retailing across India, intending to broaden its reach to the country's growing consumer class, Mr. Lynn says.
New wealth in fact is a central theme for Mr. Lynn's investments. Often this leads him to sectors that are out of favor in more-mature regions. Residential housing, for example, is a brisk business in China, India and Brazil, he notes, and several of the fund's largest stakes involve property sales and mortgage lending.
In China, the fund owns shares of developer and broker China Overseas Land & Investment Ltd. "It's extremely well run, with access to capital and the ability to take advantage of tremendous demand," he says. The housing situation in India, Mr. Lynn adds, is in "serious need of an upgrade," and demand outstrips supply. The fund has a position in Housing Development Finance Corp. Ltd., one of India's largest mortgage-finance firms.
The global markets shake-up so far this year has rattled Janus Overseas along with other like-minded funds. Mr. Lynn had been expecting some giveback, and took profits in several holdings in India, Brazil and China for valuation reasons in the past 12 months.
Some of the proceeds have been plowed into technology stocks, where Mr. Lynn enthusiastically reports finding bargains. "We are now seeing some of the world's great technology companies on sale for valuations that we haven't seen in a number of years," he says. These aren't fledgling firms either, Mr. Lynn notes, but major global players including South Korea's Samsung Electronics Co. Ltd., Taiwan Semiconductor Manufacturing Co. Ltd., and Japan's Sharp Corp. and Sony Corp.
More Layoffs at Fidelity
Mutual-fund giant Fidelity Investments said it laid off 250 workers in its information technology and personal investments division yesterday.
It was the second round of layoffs since November, when Fidelity eliminated about 200 jobs, many of them at its call centers.
Fidelity spokeswoman Anne Crowley said two-thirds of yesterday's layoffs were driven by duplication created by the recent merger of several departments into a new personal investments division. About half of the employees worked in Massachusetts, where Fidelity has its headquarters.
Ms. Crowley said there are no current plans for more layoffs, and said Fidelity added 4,500 jobs in 2007, raising its ranks to 46,500 employees.
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Jennifer LevitzWrite to Jonathan Burton at [email protected]
