Bill Gross aka ‘Bond King’ (name given by financial press) stunned the investment world on Friday when he left the firm he co-founded (was taken over by Allianz) and joined rival Janus on Friday. At PIMCO, Gross managed $ 2 trillion + fund and he is set to join a rival to manage a fund with ‘mere’ millions in corpus. Reuters columnist gives a great analogy here Its like resigning from the US Presidency to become a city manager of a small town.
The question remains Why would a 70+ year old multi – billionaire (drew a salary of $ 200 million pa.) bail out of the company he found to join a rival ? El Erian the chief econ at PIMCO had quit some time back and there were murmurs back then that he had a fall out with Gross. There were talks of Grosss’ short temper and his shouting at his subordinates. There were also talks of how it was ‘my way or the highway’ kind of approach that Gross was known for. There is this anecdote that i read somewhere whereby one of Grosss’ traders saying that one of their investment holding being expensive and Gross asking him to buy more of it for him. More about his behaviour (in lighter vein) by Deal Breaker here
There was the SEC investigation going on, news of which broke only recently. The investigation related to whether PIMCO returns were inflated in any way.
More importantly his funds had displayed poor performance and had witnessed outflows to the tune of $ 70 billion since May 2013 (16 straight months of outflows).
The ‘Bond King’ sure was fighting a tough battle for the past many months. Regarding the possibility of being fired? Grosss’ rival Jeffery Gundlach however says he couldnt have been fired by Allianz and the move was just that Gross wanted to move on on his own terms.