Investors pulled another $3.1 billion from Pimco’s flagship fund in March, the 11th straight month of outflows from the world’s largest bond fund, and its performance on the month lagged 95 percent of its peers due to a spate of wrong calls by long-time manager Bill Gross…Pimco spokesman Mark Porterfield said: “It’s important to compare a fund’s performance with its benchmark and not just with other mutual funds, which could hold riskier and higher-yielding assets. Total Return has outperformed its index for the past six months, two, five and 10 years.” [Reuters]
To settle a barrage of government legal actions over the last year, JPMorgan Chase has agreed to penalties that now total $20 billion, a sum that could cover the annual education budget of New York City or finance the Yankees’ payroll for 100 years. It is also a figure that most of the nation’s banks could not withstand if they had to pay it. But since the financial crisis, JPMorgan has become so large and profitable that it has been able to weather the government’s legal blitz, which has touched many parts of the bank’s sprawling operations. The latest hit to JPMorgan came on Tuesday, when federal prosecutors imposed a $1.7 billion penalty on the bank for failing to report Bernard L. Madoff’s suspicious activities to the authorities. Yet JPMorgan’s shares are up 28 percent over the last 12 months. Wall Street analysts estimate that it will earn as much as $23 billion in profit this year, more than any other lender. And JPMorgan’s investment bankers, who on average earned $217,000 in 2012, can look forward to another lush payday as bonus season approaches. “The fines have been manageable in the context of the bank’s earnings capacity,” Jason Goldberg, a bank analyst at Barclays, said. “It makes $25 billion in revenue per quarter and has record capital.” [Dealbook]
A Personal (Criminal) Matter
Common Sense Investment Management Not Sweating The Small Stuff (Its Founder Being Busted In A Prostitution Sting)By Bess Levin
Late last month, a guy named Jim Bisenius was surfing the web when he came across an advertisement for a prostitute. “I like prostitutes,” Jim probably thought to himself and proceeded to contact the woman at the number she had listed in the ad. Unfortunately for Jim, the ad turned out to be a decoy and the woman on the other end turned out to be a cop. Will this affect his criminal record? One would think so, yes. Will it affect his position at Common Sense Investment Capital, the firm he founded in 1991? According to CSIM, no.
For more than two decades, Common Sense Investment Management (CSIM) has brought superior risk adjusted returns to our investors and clients. CSIM’s success is about a team of committed and driven investment professionals; not one individual. Jim Bisenius’ recent personal transgression bears no reflection on this outstanding team of professionals or the quality of portfolio management at CSIM. Going forward, the firm’s partners have decided that Jim will remain in his role as Chief Executive Officer and Chief Investment Officer and he will deal with this recent event as the personal matter that it is. Our investment process and decision making will continue to be made by our investment committee, which is comprised of our President, four Portfolio Managers, Director of Operational Due Diligence, Director of Risk Management and myself. All management decisions continue to be made by the management team. We look forward to building on CSIM’s successful 22-year track record and creating value for our investors.
Relatedly, if you’re wondering if Jimbo is the type of guy who would define marriage as the union between one man and (at least) two women, the first being his wife, the second being the woman he thought was a hooker, the answer is come on, of course he is. Read more »
Down 65% this year after losing another 23% in June, JP&Co. can’t quite say that there’s no place to go but up. So they’ll say this: Read more »
Banks Not Exactly Living Up To Terms Of Mortgage Settlement No Reason To Think That Said Settlement Isn’t Working, Settlement Authors SayBy Jon Shazar
It seems that a few boutique mortgage lenders are playing a little fast and loose with the rules they agreed to follow when they agreed to pay $25 billion to get the government to leave them alone. Read more »
Billionaire John Paulson, the hedge- fund manager seeking to reverse two years of losses in some of his strategies, lost 27 percent in his Gold Fund last month after the precious metal and related securities plummeted, according to two people familiar with the matter. The loss brings the strategy’s decline to about 47 percent this year, said the people, who asked not to be identified because the information isn’t public. The fund is made up primarily of Paulson’s own money, one of the people said. The strategy has about $500 million, down from about $700 million at the end of March. [Bloomberg]
It looked like JP&Co. may have turned the corner in January. This proved illusory. Read more »