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Monday, March 03, 2014

What Will Be Gross' Next Act?

News summary by MFWire's editors

The ongoing drama at Pimco recently has landed Bill Gross in the heart of a media storm. It'll be a tough March for him deciding whether he needs to navigate it.

Recent media pieces have revealed the escalating tension between him and Mohamed El-Erian last summer which presumably led to the 55-year-old El-Erian's resignation and created turbulence for its employees. Meanwhile, the performance of the Pimco Total Return Fund, run by Gross, has trailed 64% of its peers-- which will undoubtedly impact investors' confidence. 

Now, Gross is on damage control. Recently the 69-year-old bond king, who professes that he doesn't like "sweet talking," defended himself to the WSJ declaring that "there's a time for soft love and time for hard love… I can't admit to both." He nonetheless has tried to portray a softer side to himself, for example boasting about how he once allowed a "conga line on the trading floor." He alas was publicly endorsed by the former head of Pimco's global equities Neel Kashkari.

Outsiders, of course, are still clueless as to what has been happening exactly within Pimco, which may be part of the problem. Will investors, especially institutions, continue to be comfortable with this notoriously "hard-charging" personality?

One bright spot in this typhoon, the WSJ reports that parent company Allianz seems "happy" with the Gross show. After all Pimco attributes about 80% of German issuer's asset management revenue.

Meanwhile, the firm may be testing out the equity alternatives water, according to recent comments by newly-hired deputy chief investment officerVirginie Maisonneuve.

Will this be enough? Does he need to do more? Or, does it even matter? Does Gross need to proclaim a certain kind of warmth-and-fuzziness or does he need to stand strong on the hard-charging? Will all of this be enough, or is this just Act One of a specialty debt circus?

We shall see.  

Edited by: Amy Xie


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