Bill Gross' Last Months At PIMCO Were Spent On A Witch Hunt

Bill GrossPIMCO / YouTubeBill Gross

Bloomberg News’ Mary Childs has a must-read inside account of how bond king Bill Gross fell from power at PIMCO.

On Sept. 26, Gross, the 70 year-old self proclaimed “Justin Bieber of bonds”, announced that he was leaving the firm he cofounded to join Janus Capital. He was reportedly going to be fired by PIMCO for “increasingly erratic behaviour.”

In February, Gross was the subject of an incredibly unflattering Wall Street Journal article that detailed how Gross had a nasty clash with Mohamed El-Erian in front of the other employees. El-Erian, PIMCO’s CEO/co-CIO, suddenly resigned from PIMCO in January.

According to the Journal, Gross referred to himself as “Secretariat,” the legendary racehorse. The article also said that Gross didn’t like it when his traders made eye contact with or spoke to him.

According to Mary Childs’ inside account, Gross tried to hunt down the employees he believed were leaking these sort of conversations to the press.

From Bloomberg:

In the weeks that followed, Gross tried to close ranks. He spent more than 20 minutes before a firm-wide meeting to discuss the media scrutiny that had beset the company, a speech in which he disparaged El-Erian, according to two people. When he ended to a standing ovation from the audience, including Hodge and Ivascyn, at least one executive declined to rise. Thimons, a managing director outspoken in his objections to Gross’s leadership, disagreed with his comments and refused to stand, according to a person who was present.

According to Bloomberg, Gross said he was looking for “Mr. X” — the person he believed to be the mole. Gross thought portfolio managers Andrew Balls and Joshua Thimons were the ones speaking to the media. He unsuccessfully tried to have both of them fired.

From Bloomberg:

To stop the reports, Gross set up interrogations of members of the investment committee, managing directors, and lower-ranking money managers. He carried around a three-ring binder of printed-out emails and hand-written notes to find out who was talking to the press.

Among his suspects were Balls, a former journalist, and Thimons, the executive who had remained seated during the standing ovation and who had organised a going-away party for El-Erian. Gross sought to fire Balls, a move opposed by Pimco’s new executives. Gross gave in and agreed not to pursue the matter at that time.

Until the end Gross pushed Balls to leave PIMCO “for the good of the firm.” He continued his hunt, staged public displays of anger to intimidate others, and singled people out by seating them off to the side at meetings.

Ultimately, though, it was Gross who was going to be fired, not his mysterious “Mr. X”. Gross jumped ship before that happened.

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