Ow, But Not Too Ow?
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Friday, October 23, 2015

Ow, But Not Too Ow?

Q3 was a painful one for the markets, and thus for mutual fund shops and other asset managers. Big publicly traded shops have accordingly seen their shares suffer this year. And yet, as earnings results that reflect the Q3 pain are rolling in, some of those same publicly traded assets are being smiled on a bit by Mister Market. When things are really dark, even a tiny match is a kind of light at the end of the tunnel.

Gregory E. Johnnson
Franklin Resources, Inc.
Chairman, Chief Executive Officer
Bloomberg reports that Franklin Resources' shares rose 4.9 percent yesterday, their biggest gain in more than three and a half -- and this is after the parent of Franklin Templeton [profile] suffered its worst quarterly outflow ever. Reuters and the Wall Street Journal noted similar share price jumps yesterday at Janus [profile] (6.5 percent), T. Rowe Price [profile] (6.6 percent), and AllianceBernstein [profile] (AB) (3.5 percent).

The secret to the big bumps after a bad quarter is that, save AB (which is up 4.7 percent year-to-date), the aforementioned shops' shares have already suffered. So far in 2015, Franklin is down 28 percent, T. Rowe 13, and Janus 5.4. Mister Market already priced the Q3 market pain into the asset managers.

And then, when they released their earnings, the bad news suddenly didn't sound so bad. The asset managers kept up their share buyback programs, touted improved performance in their mutual funds, and showed off cost control tactics.

"Investors may have looked at these things and judged the worst is over," Morningstar analyst Greggory Warren told Reuters.

The worm turns.

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