Are chinks in the armor of Bill Gross’ reputation beginning to appear?
“I don’t think anyone can argue Bill Gross isn't a fantastic investor,” Morningstar Analyst Robert Goldsborough told us in April. “He has made some contrarian bets against the bond market recently, and you don’t bet against someone like [Gross].”
But analysis by The Wall Street Journal of Lehman Brothers’ liquidation plans filed in federal bankruptcy court reveals losses on certain Lehman bonds traded by Gross' firm, Pacific Investment Management Co. (PIMCO), that exceed $3.4 billion.
As the paper notes, Gross (left) buoyed his reputation during the 2008 financial crisis through well-timed bets on Treasuries and mortgage debt.
PIMCO is among the nation's largest money managers for mainstream Americans, both through institutional clients, such as pension funds, and mutual funds held in 401(k) retirement accounts. That means the Lehman losses hit ordinary investors who had put their money into PIMCO funds during the market boom.