‘You just gotta roll with the punches’

In 1979, the fall of the Shah of Iran imprisoned the then four-year-old Ali Dibadje and his immediate family in Canada. His father, who worked there, lost his job and they had to move out of home and seek emergency visas to stay in the country. Dibadjo’s mother went to work at the clothing boutique where she once shopped and supported her husband and two children in a one-bedroom apartment.

Watching his parents pick themselves up and start over without asking for special treatment was a formative experience for Dibadje, now 49 and CEO of asset manager Janus Henderson. Their commitment and emphasis on doing things the right way continues to shape his management approach as he tries to rebuild a legendary brand that has fallen on hard times.

“It taught me that you just have to roll with the punches and work hard and solve problems,” Dibadj said. “I always think about integrity and that it pays off in the end.”

Dibadj faced plenty of challenges when he took over from Janus Henderson two years ago this month. The group, which has around $350 billion in assets under management, was created in 2017 by the merger of Denver-based Janus with London-based Henderson. Most of its workforce remains split between time zones.

The deal, often described as a case study in how not to merge, was intended to cut costs and help the two active managers battle competition from low-cost index-tracking funds. But her co-CEO arrangement failed, leaving the merged company plagued by internal dissent. By the time Dibadj arrived in June 2022, Janus Henderson had endured 18 straight quarters of net outflows, with assets falling to a low of $275 billion and the firm under pressure from activist investor Nelson Peltz.

“The main problem was a lack of accountability and buy-in, and little cooperation. In fact, there was a lot of finger-pointing,” Dibadj said. Employees from the Janus and Henderson businesses “did not cooperate and many of them did not know each other. It was very busy.”

In an effort to unify his new company around a common sense of purpose, Dibadj brought together a geographically diverse team of 40 people, half investors and half from distribution and corporate departments, to come up with a new strategy. The “senior management team” met together and in smaller groups every other week for five months to figure out what customers wanted and where Janus Henderson could legitimately compete.

“This was not ‘bringing in McKinsey from on high’; this was not the board saying “this is the strategy”; it was ‘let’s all develop a strategy together’,” he explained. At first, no one spoke, expecting him to take the lead. Eventually, “we would get into real debates and arguments. . . it was blood, sweat and tears.”

From 196 ideas, they settled on fewer than 10 specific goals, which the board approved in November 2022. These include championing growth areas of the industry, such as active exchange-traded funds and alternative assets, while overhauling the way the firm develops and sells products make sure efforts are directed where they are most likely to bear fruit.

The company reaffirmed its commitment to active stock and bond selection, despite industry trends toward low-fee passive funds. The bet is that higher interest rates, and thus the cost of capital, will prove the value of informed decisions. “We will return to a normal environment where good or bad society will operate differently,” he said.

Janus Henderson as a whole is still suffering outflows so far, $3 billion in the first quarter, with more expected. However, sales were stronger in areas where the reforms were introduced first. Flows from U.S. intermediaries such as wealth managers and financial advisers have been positive for three straight quarters, and its pioneering ETF of collateralized credit obligations just surpassed $10 billion in assets.

Janus Henderson’s share price is up 10 percent year-to-date, and Dibadj’s total return to shareholders from its inception date to May 31 is 60 percent, compared to 26 percent for its peers’ weighted average.

“He’s the catalyst we needed to really get this organization going,” said Roger Thompson, who has been CFO since 2013. “It’s about making people at all levels feel personally accountable.”

Strategy development and team building came naturally to Dibadje as he began his career at McKinsey after earning engineering and law degrees from Harvard. As a consultant, he focused on the consumer sector and gained experience in corporate integration by working on the acquisition of Gillette by Procter & Gamble and the merger of the Ahold and Delhaize supermarket chains. He learned that success comes from putting the customer first.

“You’re always thinking about the end user if you can please them,” he said. “It kind of comes from my mom selling clothes in the store. If you do the right thing by your client, by the person, it’s the morally right thing to do and the business thing to do.”

In 2006, he moved to AllianceBernstein, where he established himself as a leading consumer sector analyst. It has led institutional investors’ rankings for 11 years, but has also faced criticism for assigning “sell” ratings to popular companies. One client was so angry that he demanded that Dibadj be fired, which his boss gave him while assuring him of his support.

“We just stuck to our guns, we stuck to our integrity. There was one client who was upset. . . but we were doing a lot of other clients a favor by warning them that there was a problem,” Dibadj said. He later led a small-cap fund as a portfolio manager and then headed strategy and finance.

As a consultant and analyst, Dibadj had a habit of questioning industry assumptions. With beverage companies, he focused on volume metrics that were used to measure performance. “You can’t take volume to the bank. You actually have to transfer the yield to the bank, which is the volume times the price,” he said. “Selling a two-liter bottle of soda for 99 cents at the supermarket is completely different from selling a $1.25, eight-ounce bottle at the corner store.”

This experience directly translated into his plans to right the ship at Janus Henderson. Dibadj advises analysts and companies to focus less on total assets under management and more on those with higher returns and higher fees. “Not all AUM is created equal,” he said on Janus’ first-quarter earnings call. “We are very careful about providing value to our clients and bringing value to our shareholders, and we are not looking for so-called low-calorie AUM.”

Buoyed by Dibadj’s focus on the end user, Janus Henderson employees began referring to themselves as responsible for 60 million investors, some directly and others through financial advisors or pension plans. This resonates with recent arrivals such as Michael Schweitzer, whom Dibadj recruited from Capital Group. “He is an example. . . The client focus is beyond anything I’ve ever seen,” said Schweitzer, who leads the North American client group. “Nobody beats Ali.

Janus Henderson is actively looking for acquisitions, but Dibadj is worried about overpaying. So far this year, the asset manager has announced two deals: the National Bank of Kuwait’s private equity deals in emerging markets and Tabula Investment Management, a European ETF provider.

Both are areas the new strategy prioritizes, Dibadj explained, using a quote from ice hockey great Wayne Gretzy that reveals his Canadian upbringing: “We want to skate where the puck is going, not where it’s been.”