Waddell & Reed Financial tops the rankings

As Sporting KC goalie Jimmy Nielsen raised a “champions” scarf after winning the MLS Cup last December, two fans took particular joy in the moment.

They’re the executives at Waddell Reed Financial Inc. who adroitly had put the company’s Ivy Funds brand on the team’s jerseys at the start of the season.

“Every time they play, every time they’re in the media, you get to see the Ivy Funds,” said chief executive officer Hank Herrmann, who made the jersey-buy decision with Tom Butch, the company’s chief marketing officer.

Overland Park-based Waddell Reed notched its own victory by topping this year’s Star 40 rankings. It made its debut in the 2000 rankings at No. 2.

And the Ivy Funds, which Waddell manages alongside its Waddell Reed Funds, had a big hand in this year’s showing.

One difference between the company’s two fund groups is who can sell them. Only Waddell Reed’s 1,746 advisers can sell the Waddell-branded funds. They also can sell the firm’s Ivy Funds, as can any financial adviser.

And they sold them heavily last year. Both continue to attract investors’ dollars this year.

The Ivy Funds took in $7.4 billion from investors last year, even after accounting for withdrawals, or more than 10 times what the Waddell Reed Funds had attracted.

In the first three months of this year, the two groups drew in a record $4.7 billion, “easily the strongest results among our traditional asset manager coverage universe,” analyst Jason Weyeneth of Sterne Agee Leech Inc. told investors last week.

Fund performance has drawn the market’s attention.

Barron’s, the weekly financial publication, has noted the performance of both groups in recent years. In February, it gave the Ivy Funds the top rank for the last 10 years’ performance and ranked the Waddell Reed Funds No. 5 for their 2013 performance.

It means more and more financial planners that are independent of Waddell Reed are offering the Ivy Funds to their clients.

“If you have a good product you can go from a couple hundred people selling it to thousands of people selling it,” Herrmann said.

Along with those sales, the rising stock market put more dollars into the company’s equity mutual funds. The total assets Waddell Reed managed topped $131 billion at the end of March, up 26.6 percent from a year earlier.

The company earns management fees on those assets, which boosted its profits and helped increase the company’s own stock market value. Each of those gains helped propel the company in the Star 40 rankings.

Herrmann said the company’s success also stems from having a broad mix of mutual funds. When China’s growth was causing commodity prices to soar, advisers were able to offer the Ivy Global Natural Resource Fund.

The Ivy High Income bond fund found followers as extremely low interest rates made other bond funds less attractive. Ditto with the Ivy Science and Technology Fund, which has become a hotter ticket as technology stocks fared better.

Robert Lee, who follows Waddell Reed for Keefe, Bruyette Woods, backs up Herrmann on this. Waddell Reed has benefited from “demand for a wide variety of equity and balanced strategies,” Lee wrote in a note to clients.

Waddell Reed hasn’t ignored its namesake funds or the in-house sales force that offers them to investors. Herrmann said investments in adviser training, support and technology have boosted their productivity as a sales force.

Once sub-par, they’re now “maybe a scooch” better than the industry average, Herrmann said. Waddell Reed is the only fund company with its own sales force.

Despite the company’s growth, Herrmann remains optimistic about future gains. Small investors, he said, took a lot of money out of the stock market during the financial crisis.

And he sees their return so far as akin to sticking a toe in the water, which means more are waiting to follow.

Fact and figures on the top five companies


Henry J. Herrmann, chairman and CEO

•  Headquarters: 6300 Lamar Ave., Overland Park, KS 66202

•  On the Web:

•  Phone: 913-236-2000

•  Ticker Symbol: WDR on NYSE

•  Founded: 1937

2013 Revenues: $1.37 billion (16)

Revenues vs. 2012: 17% (6)

2013 Income: $253.0 million (8)

Income vs. 2012: 68% (8)

2013 Market Value: $5.55 billion (7)

Market Value vs. 2012: 86% (9)


Greg Henslee, president and CEO

•  Headquarters: 233 S. Patterson, Springfield, MO 65802

•  On the Web:

•  Phone: 417-862-6708

•  Ticker Symbol: ORLY on Nasdaq

•  Founded: 1957

2013 Revenues: $6.65 billion (3)

Revenues vs. 2012: 8% (16)

2013 Income: $670.3 million (1)

Income vs. 2012: 14% (17)

2013 Market Value: $13.64 billion (4)

Market Value vs. 2012: 35% (23)


Michael J. Brown, chairman and CEO

•  Headquarters: 3500 College Blvd., Leawood, KS 66211

•  On the Web:

•  Phone: 913-327-4200

•  Ticker Symbol: EEFT on Nasdaq

•  Founded: 1994

2013 Revenues $1.41billion (15)

Revenues vs. 2012: 11% (8)

2013 Income: $88.0 million (17)

Income vs. 2012: 328% (1)

2013 Market Value: $2.42 billion (19)

Market Value vs. 2012: 108% (6)


Neal L. Patterson, chairman and CEO

•  Headquarters: 2800 Rockcreek Parkway, North Kansas City, MO 64117

•  On the Web:

•  Phone: 816-221-1024

•  Ticker Symbol: CERN on Nasdaq

•  Founded: 1979

2013 Revenues: $2.91 billion (7)

Revenues vs. 2012: 9% (13)

2013 Income: $398.4 million (3)

Income vs. 2012: 0% (24)

2013 Market Value: $19.16 billion (2)

Market Value vs. 2012: 44% (19)


John F. Prim, chairman and CEO

•  Headquarters: 663 Highway 60, Monett, MO 65708

•  On the Web:

•  Phone: 417-235-6652

•  Ticker Symbol: JKHY on Nasdaq

•  Founded: 1976

2013 Revenues: $1.18 billion (17)

Revenues vs. 2012: 10% (12)

2013 Income: $197.4 million (12)

Income vs. 2012: 21% (16)

2013 Market Value: $5.07 billion (8)

Market Value vs. 2012: 50% (17)

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