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PIMCO After Gross: Money Flying Out the Door


Sunday nights aren’t usually associated with major financial news, which makes it all the more curious why Pacific Investment Management Company (PIMCO) released a major update a few hours before midnight on September 28.

But then again, PIMCO didn’t exactly have a typical week, either.

Last Friday, founder Bill Gross announced he was leaving the firm for Janus Capital Group Inc (NYSE: JNS). 

Shares of Janus rose 43 percent.

PIMCO as a whole isn’t publicly traded, but investors sold many of its funds en masse.

PIMCO Corporate and Income Opp Fund (NYSE: PTY), PIMCO Global Stockplus and Income Fund (NYSE: PGP) and Pimco HIgh Income Fund (NYSE: PHK) each shed over 5 percent in value during Friday’s trading.

The Wall Street Journal reports PIMCO could have lost at least $10 billion from withdrawals over the weekend and that withdrawals may reach $100 billion in the near future.

So, how did the firm respond? With a Q&A from Chief Investment Officers Scott Mather, Mark Kiesel and Mihir Worah, who now manage Gross’s $200 billion-plus baby, the PIMCO Total Return Fund.

Highlights from the Q&A session:

  • “I am proud to say that we all have strong long-term records of generating performance for clients.” -Scott Mather
  • “As with every other generalist portfolio manager at PIMCO, Bill Gross relied on us – along with the firm’s 240 other portfolio managers – for help in generating the trade ideas that have driven the strategy’s strong historical performance.” -Mark Kiesel
  • “[W]e believe that a more explicit team approach actually brings a lot of benefits to the strategy.” -Mihir Worah
  • “[T]here may be times when we simply can’t come to an agreement. Should that happen, I will make the call.” -Scott Mather
  • “Our belief in the New Neutral continues to anchor our views. We believe the Fed has been looking, and will continue to look, to reflate the U.S. economy.” -Scott Mather

Naturally, Twitter also reacted:

The gist of it is that there are now three PMs managing Total Return, but in the event of a major disagreement, Scott Mather makes the call.

— Downtown Josh Brown (@ReformedBroker) September 29, 2014

“It was a seamless transition.” Um, really?

— Dani Hughes (@divinedani) September 29, 2014

They’re trying to stop all the liquidations on Monday, ain’t gonna help “@PIMCO: new article, PIMCO TR Update…

— Nicholas Olesen CFP© (@NicholasOlesen) September 29, 2014

Disclosure: At the time of this writing, the author had no position in the equities mentioned in this report.

© 2014 Benzinga does not provide investment advice. All rights reserved.

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