Saturday, September 27, 2014

A Final Word on Bill Gross

Well, it is too bad, but as always happens in the world of Wall Street finance, it is all about personalities.  Wait, that describes politics too, but that's another discussion. Some final thoughts.
  • As a fixed income investor, a CFA charter holder, Bill Gross has proved his mettle more than any investor as his industry. His industry awards are testament to this, as any unbiased observer would have to admit.  
  • The statement in the press release outlining his departure from Pimco was petty and small minded.  Objectively, without the personal investment management and asset attracting talents of Mr. Gross, there would have been no blockbuster, mega-sale to Allianz, which made his allies and detractors very rich.  This should have been acknowledged, and this shows that the CEO doesn't have a generous spirit, no matter what the simple business decision taken. 
  • The culture at Pimco involved, according to the press, lots of shouting and berating of subordinates, colleagues and superiors.  Except for the superiors part, anyone who has worked on Wall Street knows that this is part and parcel of the everybody culture. Were Hunter S. Thompson still alive, he might have written "Fear and Loathing on Wall Street." 
  • For Bill's part, it's not a good idea to yell at your CEO or your board members: definitely a lack of EI, likely under duress. Inexcusable, unproductive, not worthy of him as a person or as an executive.  
  • It is hard to understand the outflows from Total Return given its long-term track record, and it should have been a matter of the institutional sales and marketing teams getting behind this to prevent it. Corporate buyers of investment management services are very sticky, even in the face of bad long term performance.  The pension consultants needed hand holding to head off the outflows.  The stories of yelling at these functions seems understandable.  Was there accountability here?
  • I didn't know that the equity funds launch was Mr. Gross' idea, according to the press. This is unsubstantiated and hard to believe, a side issue nevertheless, as he wasn't responsible for managing their ineptitude.  Again, the marketing of these funds was terrible.
  • It will be interesting to see what happens to the management of Harbor Bond Fund.
  • If all of this inner turmoil was going on for so long, then the board and CEO were not up to their tasks, which was to bring back unity and stability in the locker room.  They failed.
  • Working for Jeff Gundlach, who himself left his employer in a huff without anywhere near Bill Gross' track record, was a non-starter.
  • Janus may be a non-starter, unless Bill Gross does better with his yoga and re-centers himself. He and I had a short correspondence way back when about yoga and meditation.  I think he disconnected the asanas from the spiritual development piece.  They are inseparable. 
  • It's all unfortunate, but in the end, nobody is indispensable.
  • Pimco should lose assets, as whoever takes over Total Return or a clone, can't really claim the historical performance record of Bill Gross, according to how I read the II performance reporting standards.  Instead (s)he will have to articulate their own investment strategy and improve transparency, which was always frustrating when reading the Total Return fund's reporting.
Sayonara, Mr. Gross.  Less time in headstands and more perhaps in seiza. Investors start checking your quality bond fund alternatives.  The universe isn't as big as it should be.  

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