Skip to Content
Stock Analyst Update

Peltz's Stakes in Invesco, Janus Henderson Boost Shares

We're unlikely to alter our fair value estimates for either narrow-moat firm.

Mentioned: ,

We're unlikely to alter our fair value estimates for either narrow-moat rated Invesco (IVZ)  or narrow-moat Janus Henderson Group (JHG) following news that activist investor Nelson Peltz has acquired 9.9% stakes in each of the two firms, encouraging the two asset managers to consider additional acquisitions (beyond the mergers they’ve both done the past five years) including a potential merger of the two firms. While we don't disagree with Peltz's general assessment of the asset management industry, as much like him we believe that the traditional asset managers, which have been beset by fee and margin compression in the face of an ongoing secular shift into low-cost passive products, need to consolidate both internally and externally to increase their scale (to help offset some of the fee compression), as well as offset underperforming offerings with newer products that have the potential for both growth and pricing stability, we think a combination of Invesco (which had $1.145 trillion in AUM at the end of June 2020) and Janus Henderson (with $337 billion in managed assets) would only make sense if Invesco were able to acquire Janus Henderson on the cheap. Although the two firms have comparable product profiles, Janus Henderson has a much heavier equity footprint, which raises the risk of elevated outflows in any sort of merger situation. And as we've noted in the past, from what we've seen from many of the deals that have been done in the industry over the past decade much of the cost savings that come from combinations are medium-term fixes at best, as market dislocations (like we saw in late 2018 or at the start of this year) and ongoing fee compression diminish the value created by these deals as we move further out the time horizon. That said, should we see any signs that either Invesco or Janus Henderson are moving forward with deals to enhance their scale (including a merger of the two firms) we would reassess our fair value estimates for the firms.

Morningstar Premium Members gain exclusive access to our full analyst reports, including fair value estimates, bull and bear breakdowns, and risk analyses. Not a Premium Member? Get this and other reports immediately when you try Morningstar Premium free for 14 days.

Greggory Warren does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.

Transparency is how we protect the integrity of our work and keep empowering investors to achieve their goals and dreams. And we have unwavering standards for how we keep that integrity intact, from our research and data to our policies on content and your personal data.

We’d like to share more about how we work and what drives our day-to-day business.

We sell different types of products and services to both investment professionals and individual investors. These products and services are usually sold through license agreements or subscriptions. Our investment management business generates asset-based fees, which are calculated as a percentage of assets under management. We also sell both admissions and sponsorship packages for our investment conferences and advertising on our websites and newsletters.

How we use your information depends on the product and service that you use and your relationship with us. We may use it to:

  • Verify your identity, personalize the content you receive, or create and administer your account.
  • Provide specific products and services to you, such as portfolio management or data aggregation.
  • Develop and improve features of our offerings.
  • Gear advertisements and other marketing efforts towards your interests.

To learn more about how we handle and protect your data, visit our privacy center.

Maintaining independence and editorial freedom is essential to our mission of empowering investor success. We provide a platform for our authors to report on investments fairly, accurately, and from the investor’s point of view. We also respect individual opinions––they represent the unvarnished thinking of our people and exacting analysis of our research processes. Our authors can publish views that we may or may not agree with, but they show their work, distinguish facts from opinions, and make sure their analysis is clear and in no way misleading or deceptive.

To further protect the integrity of our editorial content, we keep a strict separation between our sales teams and authors to remove any pressure or influence on our analyses and research.

Read our editorial policy to learn more about our process.