PIMCO founder and co-CIO Bill Gross has indicated he will give portfolio managers more freedom to contradict his views, according to a report in Tuesday’s Financial Times.
This news was reported just after a Los Angeles Times story disclosed that a member of the PIMCO Total Return Fund’s board of trustees, William Popejoy, criticized Gross’ $200 million salary, along with the way he has handled management issues. “You just can’t treat people that way and expect things to be OK,” Popejoy said.
The treatment he was referring to was reported in a Feb. 24 Wall Street Journal article detailing, among other conduct by Gross, arguing with ex-CEO Mohamed El-Erian in front of staff; ordering an investment manager who questioned one of his fund choices to buy more of the fund at issue; and punishing employees for forgetting to number pages in presentations.
Meanwhile, Morningstar has aired concern over executive turmoil at PIMCO and whether or not the six new deputy chief investment officers will be an adequate counterweight to Gross.
“Mr. Gross seems very contemplative about mistakes he may have made in shaping that atmosphere in the past,” Morningstar analyst Eric Jacobson told the Financial Times after meetings at PIMCO. “He has speculated there may have been a lot more silence in the room when he and Mohamed were dominating the [investment] committee, because members of the group were anxious about taking positions that might upset one of them or the other.”
Late last week, news circulated that Gross had accused departing PIMCO CEO Mohamed El-Erian, who quit on Jan. 21, of trying to “undermine” him by talking to the press about issues between them.
“I’m so sick of Mohamed trying to undermine me,” said Gross, 69, according to Reuters, in a story posted late Thursday and updated Friday. The bond guru also indicated that he had been monitoring El-Erian’s phone calls.
When Reuters staff asked to see the evidence implicating El-Erian, Gross allegedly lashed out: “You’re on his side. Great, he’s got you, too, wrapped around his charming right finger,” the news agency reported.
A PIMCO spokesman said in a statement emailed to Reuters on Friday: “Mr. Gross did not make the statements Reuters attributes to him. He categorically denies saying this firm ever listened in on Mr. El-Erian’s phone calls or that Mr. El-Erian ‘wrote’ any previous media article.”
Reuters is standing by its story, and The Wall Street Journal maintains that it did the recent reporting and writing for its PIMCO coverage.
PIMCO’a assets under management fell by some $80 billion in 2013, according to Morningstar. The flagship PIMCO Total Return Fund, which Gross manages, had $1.6 billion of net outflows in February, its 10th consecutive month of outflows.