[Drew]

Bill Gross exit could cost Pimco $400 billion - Sep. 29, 2014

One article taken at random, but there's a bunch of other good ones out there.

Tough to put this into context for someone outside of the bond industry... Bill Gross announcing on a Friday, out of the blue, that he was quitting PIMCO would be like, oh, Jeter announcing after Sunday's game that he was only retiring from the Yankees to sign a contract with the Red Sox.

PIMCO is the biggest bond manager in the world, and Bill Gross's Total Return Fund is (I don't have a handy source for this, but I'd be shocked if it isn't true) the single biggest bond fund in the world. On Friday, PIMCO lost $10 billion in assets from fund outflows on news Bill Gross had quit, which is out of the $2 trillion the firm manages, barely enough to move the needle. Janus's stock, meanwhile, rose 40% on the news.

Liquidity in the fixed income markets is quite a bit tighter in the wake of Dodd-Frank - market makers are keeping far fewer bonds in inventory so as to not risk being accused of proprietary trading - so this is going to be a bit of a market test, to see if the bond markets can withstand a shake-up of this magnitude.

 

[Joey]

Heard this on NPR Friday. What's really interesting is the he-said she-said of it. The board is saying his behavior (which was already tough to work with) had become very erratic lately, and that they were voting him out, while Gross is saying he wanted to quit anyways.

 

[105]

You can't fire me, I quit!!

 

[ShawnF]

Crazy how somebody quitting their job can shake up the market like that.

 

[Drew]

Heard this on NPR Friday. What's really interesting is the he-said she-said of it. The board is saying his behavior (which was already tough to work with) had become very erratic lately, and that they were voting him out, while Gross is saying he wanted to quit anyways.

Oh, he was getting incredibly erratic. :lol:

Bill Gross's stage antics leave Morningstar conference-goers gobsmacked | RIABiz

The departure of his co-CIO El Eran was also a bit of a shock, and there were clear tensions within PIMCO. This is getting less attention, but there was also reports on Thursday that the SEC is investigating Gross' flagship fund, the PIMCO Total Return Fund, over improprieties in asset pricing that may have been accomplished to artificially boost performance. So, it's likely going yo be an awkward month or two at PIMCO anyway. His quitting won't mean he's not liable under an investigation, but it means he doesn't have to be in the middle of the actual process.

Still though, to quit the company he started and built from the ground up to join a mutual fund manager mostly known for their equity offerings is certainly weird. I'd have expected him to just retire or split and start another company, not join an existing one.

Crazy how somebody quitting their job can shake up the market like that.

It's less that he quit his job, per se, it's just out of the blue the Total Return fund had $10 billion dollars in redemptions on the news. That's a lot of supply for an illiquid market to absorb.