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Janus Blasts Into Orbit on Bill Gross Hire, PIMCO Funds Get the Ugly Stick


The legendary Bill Gross is leaving PIMCO to join Janus Capital

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Janus Capital (JNS), made famous in the late 1990's for its big time tech mutual funds, is getting big time in bonds with the hire of Bill Gross from PIMCO.

Janus is up 38% this morning.

That could be a justified move.

As of 6/30, Janus had $177 billion in assets under managment, with just $31.4 billion in fixed income.

The Total Return Fund (PTTRX) Bill Gross ran has $222 billion in assets. PIMCO itself, which Bill Gross built, has about $2 trillion in assets.

I'd say Gross is going to grow that $31.4 billion number in short order.

Gross has taken some flack for the Total Return Fund underperforming peers, but remember, one reason that fund has struggled is size.

A lot of people made great money with the Total Return Fund over the past few decades, and many will be happy to place assets with Gross at his new home.

Obviously, he's made some mistakes in terms of strategy, but that happens to even the most successful investors. Look back beyond the 24-hour news cycle and you'll see massive outperformance.

Plus, the smaller PIMCO Total Return ETF (BOND) has done much better than the fund. (see chart -- BOND is bar charts, Total Return Fund is purple line)

There is a pickle there in that the SEC is looking at PIMCO's pricing practices for the fund, but until there's an official verdict, BOND's performance supports the argument that Gross can do better on a smaller asset base.

Say Hello to the Bad Guy?

Gross has taken heat for what we'll call an 'abrasive' personality. And CNBC's David Faber reported this morning that he was set to be fired for "increasing erratic behavior".

But I wonder if he's being thrown under the bus here.

Superstar billionaire investors come with big egos and big attitudes. If Bill Gross was as nice as Mr. Rogers, he wouldn't be Bill Gross.

On a related note, PIMCO closed-end funds managed by Bill Gross are taking big hits. This may look like a buying opportunity but keep in mind that in some cases, these funds were trading at huge premiums to NAV that are now being squeezed out.

Pimco High Income Fund (PHK) is down 8% to $11.48, but it has a NAV of  8.52. That's still a massive premium.

Pimco Corporate & Income Opportunity (PTY) is down 6.5% to 17.19, but it has a NAV of 15.70

PIMCO Corporate & Income Strategy Fund (PCN) is down 3.2% at $15.91. NAV is 15.68

PIMCO Income Strategy Fund (PFL) is down 4.5% to $11.77, so that one is actually trading at a discount now -- NAV is 12.29.

PIMCO Income Strategy Fund II (PFN) is down 3.3% to $10.31, while NAV is 10.92.

Twitter: @MichaelComeau

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No positions in stocks mentioned.
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