• 07/05/2016

Janus’ hunt for healthcare game changer goes beyond numbers: let’s talk

Fundamentally Responsible Investing, managing healthy, sustainable growth

By Carmen Reid

With an integrated investment approach and a strong sense of Environmental, Social and Corporate Governance factors (ESG), Janus Capital Group has enjoyed another winning year. The firm received two House Awards under Healthcare Sector and US Small/Mid Cap Equity in the BENCHMARK Fund of the Year Awards 2016.

There are many similarities in the core approach to investing taken with Janus Global Life Sciences and Janus US Small Cap Growth strategies. Each has dedicated, experienced teams who foster a collaborative style to promote the generation of fresh ideas. The management teams aim to be long-term, fundamental investors who dive deep into their markets to sift out the best possible opportunities. Always, the search is for companies with a sustainable competitive advantage, differentiated products or services, above-market growth or game-changing potential.

It’s Good to Talk

The respective management teams spend a great deal of time researching investment prospects. This includes traveling the world to meet with company management, attending specialist conferences, speaking to experts and gaining an extensive knowledge of the investment areas. As lead manager of the Janus Global Life Sciences strategy, Andy Acker, sees it: “Our analysts should know their companies as well or even better than anyone. This demands going beyond conversing with management. We spend a lot of time talking to physicians – whose decisions affect 80% of healthcare spending – attending medical conferences and interviewing thought leaders in virtually every therapeutic area.”

Healthy Innovation

“Healthcare is experiencing an acceleration in innovation,” explains Acker, “We aim to invest in companies which address unmet medical needs or make the healthcare system more efficient.” The managers are also very focused on doing the deep fundamental research which will identify companies trading below their intrinsic value. Acker explains: “We are still in the early stages of the confluence of demographics and innovation that will drive demand for the sector. Therefore, we think the market’s distraction on regulatory risk provides an attractive and inexpensive opportunity to participate in the sector.”

One recent success story concerned a biomedical company innovating treatment for Hepatitis C. The team surveyed doctors and researchers, studied the research and began to understand the potential of clinical stage therapies. The decision was then taken to buy a biopharmaceutical company that was subsequently acquired by an industry leader at a significant profit to the portfolio. The team went on to increase its stake in the market leader, and when the Hepatitis C treatment was launched, it was one of the most successful products in biotech.

Having the Correct Tools

Research tools include an internally developed Information Management System database that combines volume data with weekly pricing on over 10,000 products to project sales trends. Also, clinical trials can be analyzed using bio-statistical models developed in-house.

Acker describes their method as: “A bottom-up approach to research that seeks to understand companies and the ecosystem within which they operate. Rigorous modeling and competitive analysis, plus Environmental, Social and Governance (ESG) is a significant part of our research process.”

A Pragmatic Approach

Naturally, in such an innovative field, there is risk. The success of a new business or a new treatment is highly uncertain. Acker says that risk is carefully calculated and assessed: “Our risk management approach reflects a certain caution about the downside in a stock. We take into account business and regulatory uncertainty and the difficulty of estimating future cash flows,” adding, “for those companies facing binary outcomes that significantly impact their future, such as a company with no products on the market and important clinical trials, we use a ‘Value at Risk’ framework. This establishes the size of any one position so that in a worst-case scenario the estimated adverse impact from a particular event should not exceed 1% of the portfolio’s performance.”

Spreading Risk

For Jonathan Coleman, lead manager of the Janus Small Cap Growth strategy, diversification of this portfolio is the key to managing healthy, sustainable growth. “Stable growth names populate the portfolio,” he explains, “companies with a low risk of surprises and a proven track record. These don’t have the fastest growth, but they are the most consistent.”

As an example, the team invests in a service company focused on the non-profit industry with solid organic revenue growth and the potential for margin expansion. Other favorite holdings include cyclical share gainers which operate in cyclical end markets but outcompete their competition in difficult times and emerge stronger when the tide turns in their favor.

Coleman admits that: “Game-changing growth names are the ones everyone likes to talks about – the firms that are doing something so dramatically different that growth rates can be very fast. With these firms, we watch position size closely and keep our holdings small but meaningful enough to matter.”

Keeping an Eye on Events

The team’s in-depth research leads to regular updates and improvements to the portfolio, which are sometimes guided by external events. Coleman explains: “We have made recent changes across a few sectors including industrials, financials and consumer, where we think the new US administration’s policy could shift the landscape subtly to create new opportunities.”

Always, investment is guided by a research-driven process which focuses on quality small-cap companies with differentiated business models and sustainable competitive advantages, with the aim of driving outperformance against the benchmark and peers, over time. “We take a moderate approach,” says Coleman, “seeking to identify companies with large addressable markets that are poised for growth over a multi-year period.”

The Office of Responsible Investment

The two managers see themselves and their teams as long-term fundamental investors. The importance of strong ESG criteria in every company they invest in is emphasized by the appointment of a Responsible Investment Officer. This officer oversees the dissemination of ESG issues and coordinates ongoing ESG education and ESG-related proxy voting.

However, the managers expect everyone to take responsibility for monitoring the sound governance of a company. As Acker concludes: “The primary responsibility for fundamental research lies with the analysts. However, the Responsible Investment Officer helps to focus the conversation and keep relevant material and issues to the fore.”

Both managers are confident that their thorough and innovative, deeply considered approach to investing will maintain the portfolios at the forefront of their areas of expertise for many years to come. BM


責任為本 投資有道

Carmen Reid 撰文




每隊管理團隊均花費大量時間研究所屬投資市場的前景。為此,他們遠赴各國與公司管理層會面、參加專業人士之論壇並與專家交流,以廣泛汲取各投資領域的知識。駿利健康護理策略的投資經理Andy Acker指出:「我們的分析員需對目標公司作出全面了解,其程度甚至應超越任何人。為此,我們需與各管理層深入交流,包括投放長時間與醫生交談、參加醫療論壇以及訪問幾乎來自所有治療領域的思想領袖。要知道,醫生的決定會影響著八成的醫療保健支出。」










對於駿利小型股票增長策略的投資經理Jonathan Coleman來說,投資組合多樣化是達致健康及可持續增長的關鍵。Coleman解釋:「穩定增長代表多元化的組合性投資。一些公司具有較低出現意外的風險,而且保持良好的往績。雖然它們沒有高速增長,卻表現最為穩定。」








儘管如此,兩位投資經理仍希望所有隊員一同負責監察公司的管治狀況。Acker總結道:「分析員須對基礎研究負上最大責任。 然而,責任投資主任可助他們確立研究焦點,並帶出相關資料和問題的重要性。」

兩位投資經理也相信,經過他們全面、創新及深思熟慮的投資策略,其投資組合將會在未來多年中繼續於各自領域中鶴立雞群,歷久彌堅。 BM