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Bill Gross Quits P I M C O

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Too big to manage? Perfect timing?

http://www.reuters.com/article/2014/09/26/us-janus-billgross-exit-insight-idUSKCN0HL2AW20140926

(Reuters) - Bill Gross' abrupt departure from Pimco, the giant bond firm that he co-founded more than four decades ago, was preceded by months of clashes between the star investor and the firm's executive committee that got progressively worse, according to sources familiar with the situation.

Tensions had been building within Pimco, the Newport Beach, California-based asset manager with about $2 trillion under management. Co-Chief Investment Officer Mohamed El-Erian, Gross's long-time heir-apparent, made an acrimonious exit in January. The flagship Total Return Fund, the world's largest bond fund, suffered 16 straight months of outflows. The wrangling and the underperformance grated on the executive committee, chaired by Chief Executive Douglas Hodge.

"While we are grateful for everything Bill contributed to building our firm and delivering value to Pimco's clients, over the course of this year it became increasingly clear that the firm's leadership and Bill have fundamental differences about how to take Pimco forward," Hodge said in a statement on Friday.

As Gross, known as the "Bond King" within the industry, butted heads with colleagues, the clashes got worse. In recent days, about five senior portfolio managers told the executive committee that they would quit if Gross stayed, the sources said.

Gross himself threatened repeatedly to quit, letting management know that he had been looking around for a role elsewhere. Jeffrey Gundlach of DoubleLine Capital, Gross' arch-rival and the closest contender for the Bond King crown, said in an interview on Friday that Gross approached him early last week about a possible role.

They met last week at Gundlach's house in Los Angeles. The two discussed the possibility of Gross joining DoubleLine, but Gundlach said he wasn't willing to share direction of the firm with Gross.

"He didn't seem that rattled. But he didn’t seem happy. He seemed a bit angry about what was going on," Gundlach said.

In recent days, when Gross again threatened to quit, the executive committee decided it was time he actually left the firm, one of the sources said.

The firm had already put a succession plan in place, choosing Deputy Chief Investment Officer Dan Ivascyn as the successor. Allianz SE (ALVG.DE), the firm's German parent, had given its blessing. An announcement of Gross' ouster had been prepared, and was set to be announced as soon as Saturday, the source said.

Then, Gross sprung a surprise.

On Friday morning, Gross quit Pimco to join asset manager Janus Capital Group (JNS.N), run by his former Pimco colleague Richard Weil. Gross will manage the Janus Global Unconstrained Bond Fund (JUCTX.O). The fund, started in May, has just $13 million in assets. Pimco Total Return Fund has about $222 billion.

"It is the right thing," Gundlach said of Gross's move to Janus. "Now he can perform better because he isn't managing a lot of money."

U.S. Treasuries prices fell on Friday, Allianz slipped more than 6 percent in German trading and Janus soared 43 percent.

"I think people are concerned that Pimco is going to have to liquidate, so there is some pre-selling going on ahead of the fact that they may have to do some selling," said Tom di Galoma, head of rates and credit trading at ED&F Man Capital Markets.

It couldn't be learned whether Gross owns a stake in Pimco. Forbes estimates his net worth at $2.3 billion.

So you're 70, you live in Newport Beach California, you're worth a couple of billion dollars, and you go off to manage a £13million fund. Uh huh.

Edited by R K

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Too big to manage? Perfect timing?

http://www.reuters.com/article/2014/09/26/us-janus-billgross-exit-insight-idUSKCN0HL2AW20140926

I don`t get the big deal about "hunting around for a new role" before he left, he could just say "Bye" and go and sit on the beach for the next twenty years?

So you're 70, you live in Newport Beach California, you're worth a couple of billion dollars, and you go off to manage a £13million fund. Uh huh.

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its not like real work for him

bond trading is his life

take that away from him and you may as well just put a bullet in his head

and it will rock Pimco - plenty of investors will follow him, that $13m will be added to by new capital quite quickly I would think

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Pimco were very astute in 2009 and 2010 when they realised that interest rates were going to stay low, at a time when the markets generally were expecting rates to rise. They made big contrarian bets which paid off.

But since then their record has been poor, in particular when Bill Gross became convinced that interest rates would increase dramatically when QE began to taper.

The overwhelming likelihood is that interest rates are now set to remain extremely low for a long, long time. The paradox is that even though they're low by historic standards, they're still not low enough for the prevailing economic conditions. Interest rates are "zero bound", they can't go below zero yet the world's economy actually needs interest rates to be less than 0% to reach escape velocity, consequently we'll be stuck in this state of secular stagnation for years to come.

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^Yes. I guess it's like putting a retired Nigel Mansell in a Nissan Micra World Championship (If there was one).

They have high hopes.

----

There is one slight problem in just being a specialist in one asset class, they do go through bad periods, and that can last 10 years or more and then you're pretty much stuck.

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I have always thought that the relationship between people like Bill Gross and networks like CNBC is essentially a form of front running / market manipulation which ought to result in jail terms.

And this from an ex banking / finance guy .....

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Myron Scholes (yes really, that Scholes) joined Janus back in July.

The burier of bodies and the composer of hymns sharing one office?

This ought to be entertaining.

Time to stock up on popcorn.

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Myron Scholes (yes really, that Scholes) joined Janus back in July.

The burier of bodies and the composer of hymns sharing one office?

This ought to be entertaining.

Time to stock up on popcorn.

Agreed, the bond business could use a good show.

Pimco were very astute in 2009 and 2010 when they realised that interest rates were going to stay low, at a time when the markets generally were expecting rates to rise. They made big contrarian bets which paid off.

But since then their record has been poor, in particular when Bill Gross became convinced that interest rates would increase dramatically when QE began to taper.

The overwhelming likelihood is that interest rates are now set to remain extremely low for a long, long time. The paradox is that even though they're low by historic standards, they're still not low enough for the prevailing economic conditions. Interest rates are "zero bound", they can't go below zero yet the world's economy actually needs interest rates to be less than 0% to reach escape velocity, consequently we'll be stuck in this state of secular stagnation for years to come.

Not really, what the world needs is some healthy debt destruction via default. This is the cowards option and raising rates will drain the lake very quickly,

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Pimco were very astute in 2009 and 2010 when they realised that interest rates were going to stay low, at a time when the markets generally were expecting rates to rise. They made big contrarian bets which paid off.

But since then their record has been poor, in particular when Bill Gross became convinced that interest rates would increase dramatically when QE began to taper.

The overwhelming likelihood is that interest rates are now set to remain extremely low for a long, long time. The paradox is that even though they're low by historic standards, they're still not low enough for the prevailing economic conditions. Interest rates are "zero bound", they can't go below zero yet the world's economy actually needs interest rates to be less than 0% to reach escape velocity, consequently we'll be stuck in this state of secular stagnation for years to come.

Not sure about astute. More likely an inside line to the WH.

Same goes for Buffett.

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hes bagged the big elephant.

  1. Gross: (2/2) I & my team will manage your new unconstrained strategic acct. 24h/day. An honor to be chosen & an honor to be earned as well.

  2. Gross: (1/2) We are honored to be managing a new unconstrained strategic account for Soros Fund Management LLC. http://www.janus.com

Its just like Wall St (first one)

Quantum Partners LP, a private investment vehicle managed
by Soros Fund Management LLC, has invested in a separate account managed by Bill Gross
pursuant to a strategy similar to that of the

and reduced fees ofc.

Edited by R K

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