Bill Gross announced early Friday that he is leaving PIMCO, the firm he co-founded in 1971, and will join Janus Capital Group on Sept. 29, where he will manage the Janus Global Unconstrained Bond Fund (JUCTX), which launched in May 2014, and “related strategies,” according to Janus.
PIMCO said late Friday that Daniel Ivascyn, 44, is the firm’s new group chief investment officer. Ivascyn has served as deputy CIO since January and has managed the $38 billion PIMCO Income Fund (PONDX); he joined PIMCO in 1998. The firm also appointed Scott Mather, Mark Kiesel and Mihir Worah as portfolio managers for the PIMCO Total Return Fund (PTTRX) and ETF (BOND).
Gross, 70, will operate from a new Janus office that will be built in Newport Beach, California (where PIMCO is based) and will be responsible for “building out the firm’s efforts in global macro fixed income strategies,” according to his new employer. Those efforts, Janus said, will be “separate and complementary” to its existing credit-based fixed income platform built under the company’s fixed income chief investment officer, Gibson Smith.
In a statement released by Janus, Gross cited his “longstanding relationship with and respect for CEO Dick Weil” as one of the reasons for joining Janus.
“I look forward to a mutually supportive partnership with Fixed Income CIO Gibson Smith and his team,” Gross said. “They have delivered excellent results across their strategies, which deserve more attention.”
Weil spent 15 years at PIMCO, including 10 years as the firm’s COO, before joining Janus in February 2010.
Gross further said that he looks forward to “returning my full focus to the fixed income markets and investing, giving up many of the complexities that go with managing a large, complicated organization.” Janus CEO Weil said that “With Bill leading our global macro efforts and Gibson our credit-based fixed income team, I am confident Janus will be able to meet the needs of virtually any client.”
In the blunt statement about Gross’ resignation, PIMCO CEO Hodge said “While we are grateful for everything Bill contributed to building our firm and delivering value to PIMCO’s clients, over the course of this year it became increasingly clear that the firm’s leadership and Bill have fundamental differences about how to take PIMCO forward.”
PIMCO had been struggling with underperformance of its flagship PIMCO Total Return mutual fund (PTTRX) and large outflows from the fund (see PIMCO Outflows Hit $26.5 Billion for 2014 as Vanguard Shines and PIMCO Outflows Slow, Firm Hires ‘Distressed Credit’ Manager). More recently, reports arose that the SEC was looking into Total Return’s ETF counterpart, BOND, though no wrongdoing was implied in the investigation (see SEC Probes PIMCO Total Return ETF; Firm Says It’s Cooperating).
In trading in Europe Friday, PIMCO parent Allianz (ALV) saw its stock price fall 8.48 points, or 6.18%. The stock price of Janus (JNS) was up 33% on the day to 14.81 as of 1 p.m. Eastern time; 84 million shares have been traded Friday so far of JNS, which prior to the Gross announcement had a one-year low of $8.41 and a high of $13.10.
According to TickerReport.com, of the seven analysts who follow Janus Capital, five have rated the stock as sell and two as a hold; with a consensus price target of $11.96. However, on Friday Citigroup upgraded JNS from a sell recommendation to neutral.
In its second-quarter earnings released July 23, Janus reported net income of $36.3 million, or $0.19/share, on revenue of $231.2 million, compared with 2013 second-quarter net income of $66.9 million, or $0.16/share, on revenues of $230.2 million.
As of June 30, 2014, Denver-based Janus Capital managed $177.7 billion in assets; only $31.4 million of those assets were in fixed income.
In July, Janus hired as chief investment strategist Myron Scholes, formerly of Stamos Partners, Long-Term Capital Management, Salomon Brothers and the University of Chicago.
In a presentation at last week’s Morningstar ETF conference, PIMCO Managing Director Jerome Schneider said that “being in the trenches is one of PIMCO’s secrets.” Trading takes up 40% to 50% of his day, Schneider reported, saying “even Bill Gross trades to this day.”
In a keynote presentation at the Morningstar Investment conference in June, Gross famously wore aviator sunglasses, proclaiming that “When you’re 70 years old, you need props.” During that speech he criticized his press coverage before he closed by thanking the audience for listening to his “late-in-life saga.” He then proclaimed that “PIMCO is thriving in 2014. You’d be lucky to buy it; I have.”
Related on ThinkAdvisor:
- What Bill Gross’ Resignation Means for PIMCO, Janus & Markets
- The Long and Sometimes Wacky Reign of the Bond King
- SEC Probes PIMCO Total Return ETF; Firm Says It’s Cooperating
- PIMCO’s ‘Secret’: Its Managers, Including Bill Gross, Still Trade Daily
- PIMCO’s Gross Used $45 Billion in Derivatives to Lift Fund Gain
- PIMCO’s Gross Prefers Bonds to the Mattress, St. Louis Fed Not So Sure
- What’s Up With Bill Gross? Morningstar Crowd Baffled