Janus Henderson’s Ali Dibadj: ‘You just have to roll with the punches’

In 1979, the fall of the Shah of Iran left Ali Dibadj, then four years old, and his immediate family stranded in Canada. His father, who had worked there, lost his job and they had to leave their home and apply for an emergency visa to stay in the country. Dibadj’s mother went to work at a clothing boutique where she had once shopped and supported her husband and two children in a one-bedroom apartment.

It was a formative experience for Dibadj, now 49 and CEO of asset manager Janus Henderson, to see his parents pick up and start again without asking for special treatment. Their determination and emphasis on doing things the right way continues to shape his management approach as he attempts 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 to solve the problems,” Dibadj said. “I always think about integrity and that it will pay off in the end.”

Dibadj faced many problems when he took over from Janus Henderson two years ago this month. The group, which has about $350 billion in assets under management, was formed from the 2017 merger of Denver-based Janus with London-based Henderson. Most of the workforce remains distributed across time zones.

Often described as a case study in how not to merge, the deal aimed to cut costs and help two active managers fight off competition from low-cost index funds. But the co-CEO arrangement flopped, leaving the combined company beset by internal strife. By the time Dibadj arrived in June 2022, Janus Henderson had endured 18 consecutive quarters of net outflows, assets fell to a record low of $275 billion and the company was under pressure from activist investor Nelson Peltz.

“The core problem was a lack of accountability and buy-in, and not much collaboration. In fact, there was a lot of finger pointing,” Dibadj said. The staff of the Janus and Henderson companies “did not work together, and many of them did not know each other. It was very isolated.”

In an effort to unite his new company behind a shared purpose, Dibadj assembled 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 leadership team” met every other week for five months and in smaller groups to determine what customers wanted and where Janus Henderson could legitimately compete.

“This wasn’t ‘bring McKinsey in from the top’; this was not the board saying ‘this is the strategy’; it was ‘we’re all going to develop a strategy together,’” he explained. At first no one spoke, expecting him to take the lead. By the end, “we’d get into real debates and arguments. . . it was blood, sweat and tears.”

From 196 ideas, they came up with fewer than ten concrete objectives, which the board approved in November 2022. These include driving growth areas in the sector, such as active exchange-traded funds and alternative assets, while also revamping the way the company develops and sells products to businesses. Ensure that efforts are focused on the areas where they are most likely to pay off.

The company reaffirmed its commitment to active stock and bond selection, despite the industry trend towards passive, low-cost funds. It is believed that higher interest rates, and therefore costs of capital, will demonstrate the value of making informed choices. “We will return to a normal environment where a good or a bad company will perform differently,” he said.

So far, Janus Henderson as a whole is still experiencing outflows of $3 billion in the first quarter, with more expected. But sales were stronger in areas where reforms were implemented first. Flows from U.S. intermediaries such as asset managers and financial advisors have been positive for three quarters in a row, and the pioneering collateralized loan obligation ETF just surpassed $10 billion in assets.

Janus Henderson’s share price is up 10 percent in the past year and total shareholder returns from Dibadj’s launch date to May 31 are 60 percent, compared to 26 percent for a weighted average of its peers.

“He is the catalyst we needed to really drive this organization forward,” said Roger Thompson, who has been Chief Financial Officer since 2013. “It’s about making people at all levels feel personally responsible.”

Strategy development and team building came naturally to Dibadj, who started 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 business integration by working on the acquisition of Gillette by Procter & Gamble and the merger of supermarket chains Ahold and Delhaize. Success, he learned, came from putting the customer first.

“You always think about that end user, as long as you can make that end user happy,” he said. “It’s partly because my mother sold clothes on the shop floor. If you do the right thing for your client, for the person, it’s the morally right thing to do, and it’s the right business thing to do.”

In 2006, he moved to AllianceBernstein, where he established himself as a leading consumer sector analyst. He led the institutional investor rankings for 11 years in a row, but was also criticized for giving popular companies “sell” ratings. One client was so angry that he demanded Dibadj be fired, a message passed on by his boss while assuring him of his support.

“We just stuck to our guns and stuck to our integrity. There was one customer who was angry. . . but we did a lot of other customers a favor by alerting them that there was a problem,” Dibadj said. He later led a small-cap fund as a portfolio manager and then led strategy and finance.

As a consultant and analyst, Dibadj made a habit of questioning industry assumptions. At beverage companies, he focused on the volume metrics used to measure performance. “You can’t bring the volume to the bank. Basically you have to bring the revenue to the bank, which is volume times price,” he said. “Selling a two-liter, eight-ounce bottle of soda at a grocery store for 99 cents is very different from selling a $1.25, eight-ounce bottle at a corner store.”

That experience translated directly into his plans to right the ship at Janus Henderson. Dibadj advises analysts and the company to focus less on total assets under management and more on assets with higher returns and fees. “Not all assets under management are created equally,” he said during Janus’ first-quarter earnings call. “We are very conscious of delivering value to our customers and delivering value to our shareholders, and not looking for so-called low-calorie assets under management.”

Encouraged by Dibadj’s focus on the end user, Janus Henderson employees have come to talk about themselves as responsible for 60 million investors, some directly and others through financial advisors or pension plans. That resonates with recent newcomers like Michael Schweitzer, who recruited Dibadj from Capital Group. “He sets a good example. . . The customer focus is beyond anything I’ve ever seen,” said Schweitzer, head of the North American customer group. “No one is better than Ali.”

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

Both are areas the new strategy will prioritize, Dibadj explained, using a quote from hockey player Wayne Gretzy that betrays his Canadian upbringing: “We want to skate to where the puck is going, not where it has been.”