PIMCO
“It doesn’t take very long. I take my cup of coffee, one or two cups, and get my brain working and then something comes to mind that listeners might take advantage of or be respectful of. Do I tweet what is exactly on my mind? In some cases because of the 140 letter limit, it’s hard to get across the message. But yes, I enjoy tweeting.” [Bloomberg TV]
Mazel tov to Bill Gross on his patent for using arithmetic in certain ways! Here it is in patentese; here it is in English:
Bill Gross, who runs the world’s largest mutual fund at Pacific Investment Management Co., received a U.S. patent for the methodology behind a global bond index that weighs countries by the size of their economy rather than their indebtedness. … By focusing on gross domestic product, the index avoids concentrating on countries saddled with debt and offers a greater weighting for developing markets.
So hey that’s just super. I’m actually envious; I used to work in a field that back in the day would occasionally patent derivative trades for their tax/etc. advantages, but then the IRS/etc. realized that they could just look at the patents to see who was cheating – sorry, being aggressive – on their taxes. That’s kind of a hard sell to clients – “every purchase comes with a painful audit at no extra charge!” – and the days of patenting derivatives are kind of over.1
But patented indices lacks that you’ll-be-horribly-audited factor, and indices are a hotly competitive business for some reason. I’ve never entirely understood the business of licensing indices – it’s, like, licensing averages! I can average prices! I’ll sell you a spreadsheet for ten bucks! – but some of the appeal is obvious.2 Or at least more obvious post-Liborgate. An index maintained by a third party and licensed for profit is less likely to be manipulated, since the third party’s incentives are (1) to make the index reliable so they can profit from selling it to everyone and (2) specifically not to make it unreliable so they can profit from manipulating it, since they’re in the index business rather than the trading-the-thing-referencing-it business.3
That’s not Bill Gross’s business, though: Read more »
Mohamed El-Erian Didn’t Have To Tell Bill Gross To Stop Hitting Golf Balls At 3:30 Every Day. His Raised Eyebrows And Knowing Glances Said It All.
By Bess Levin
On most mornings, Bill Gross wakes early at his beachfront home in Laguna Beach, south of here, and is on Pimco’s trading desk by 6 a.m. He says he is working harder than ever and has no plans to retire anytime soon. Mr. El-Erian, he says, has energized Pimco — and him. Mr. Gross once used to work in a little golf in the afternoons and then return to his office. Not anymore. “You can’t help but be affected by someone who comes in at 4:30 a.m. when you are coming in at 5:30 or 6 and not know that there is an example that is being set,” Mr. Gross says of Mr. El-Erian as the two sit at a round table in Pimco’s offices. “To some extent, I wish that I could go over and hit golf balls like I used to at 3:30, but I have not hit balls in three and a half years,” Mr. Gross says. “Mohamed did not tell me not to hit balls, but his behavior basically said that this is a different company moving at a faster pace.” [NYT]
“It’s sort of like a half-nelson or even a full-nelson in wrestling terms being applied to bondholders under Greek law. They’re all being forced to go along.” [Bloomberg]
Has there ever been a person in your life who in hindsight you never adequately cherished ’til he/she was gone? Who you would have treated better if you’d known that that final day together would be your last? Who you would have begged to stay? Who you assumed would return to you eventually but as the weeks, months, and years crept on you were faced with the hard realization that the next and only time you’d see them would be in your dreams, because they were never coming back? Whose permanent absence, once finally accepted, hit you like a piano pushed from the window of the top floor of a hedge fund manager’s house by a surly pet pig? Then you know how people involved with Bill Gross’s Mustache feel today. Once a daily presence on the PIMCO manager’s face, the BGM went away for a while but it was assumed not for good because how could that be? Why would that be? It didn’t seem possible. And then this happened:
Bloomberg’s Tom Keene: When does the mustache come back?
Gross: Never. My wife has finally adjusted, so it’s not coming back.
If you never got to say a proper good-bye, if you would have done things differently, if you feel like the wind’s been knocked out of you, if you can’t bear the thought of being alone tonight, join us as we light a candle in memoriam. Read more »
Business Achievements Of “Indian Chief” Community Have Not Gone Unnoticed By Bill Gross
By Bess Levin
My point about pigskin offense and defense is the perfect metaphor for the world of investing as well. Offensively minded risk takers in the markets have historically been the ones who have dominated the headlines and won the hearts of that beautiful gal (or handsome guy). Aside from the rare examples of Steve Jobs and Bill Gates, however, the secret to getting rich since the early 1980s has been to borrow someone else’s money, throw some Hail Mary passes and spike the ball in the end zone as if you had some particular genius that deserved monetary rewards 210 times more than a Doctor, Lawyer or an Indian Chief. Nah, I take that back about the Indian Chief. The Chiefs, at least, have done pretty well with casinos these past few decades. [PIMCO Investment Outlook]
As many of you know, PIMCO chief Bill Gross is fond of weaving life stories throughout his monthly investor letters. One of his favorites, and a “Gross family legend,” was featured in a March 2011 correspondence entitled “Two Bits Four Bits Six Bits A Dollar.” It is the tale of the time he gave a waitress “negative tip,” noting on a napkin: “Thanks for the shitty service…you owe me 25 cents.” So, clearly, acting like a cheap prick to waitresses is kind Gross’s thing, as indicated by the fact that he proudly wrote about it in a note disseminated to thousands. Which is why it distresses us to report that someone has not only been flagrantly stealing BG’s move but doing so in on his own turf. Examine the evidence with us. Read more »
And To The Employee He Saw Wearing A Name Tag, Exchanging Business Cards, And Sipping The Free Bottled Water Like Some Kind Of Common Noob: Your Days Are Numbered
By Bess Levin
PIMCO still radiates Gross’s workaholic culture. On a recent visit to PIMCO’s headquarters, the trading floor was graveyard quiet. People who have worked for PIMCO say Gross prefers traders to swap electronic messages rather than speak – believing too much talk is a distraction. It’s not uncommon for PIMCO traders and portfolio managers, who start work at 4 a.m. Pacific time, to find a sheet of paper with their bond holdings circled by Gross himself, asking them to justify their trades. Gross’s temper has been known to flare at work, where he has slammed desk drawers in anger. He discourages employees from socializing and speaking with competitors, and once fumed at an employee for attending an industry conference: “I don’t want you to attend the conference, I want you to be a speaker at the conference.” [Reuters]
PIMCO Pantry’s Supply Of Gourmet Popcorn In The Garbage Can-Sized Tins Will Live To See Another Day
By Bess Levin
Bill Gross’s Pimco Total Return Fund, the world’s biggest mutual fund, attracted $231 million in investor deposits in January as performance rebounded. The new money ended three straight months of redemptions from Pimco Total Return, according to data compiled by Chicago- based Morningstar Inc. Investors pulled about $3 billion from the fund in the three months ended Dec. 31, bringing withdrawals last year to $5 billion, the research firm said. The $250.5 billion Pimco Total Return has advanced 2.4 percent this year, beating 99 percent of similarly managed funds, according to data compiled by Bloomberg. [Bloomberg, related]
As astute followers of PIMCO chief Bill Gross know, the bond manager often uses metaphors to explain various market behavior in his monthly Investment Outlook letter. In the past, he’s told us about why US policy makers are basically praying mantises in that they’ll bite your head off after sex, why this country is a patient waiting for a heart transplant, and why Congress reminds him a lot of Pepé Le Pew. Gross has also taken the opportunity to sprinkle in little personal details, including his pajama preference, his hatred for automatic flushers, a story about the time he acted like a cheap prick to a waitress (“A Gross family legend!”), and, of course, his inability to love the body god gave him. Most recently, Bill used the space to warn people that 2012 will be the year the markets will make you feel like lost your fucking mind. Read more »
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