NEW YORK, Reuters – Shock and disbelief lingered at Pimco’s sleek Newport Beach, California, headquarters on Monday, 72 hours after the investment firm was rocked by the sudden defection of co-founder Bill Gross to far-smaller rival Janus Capital Group.
As executives worked at damage control and to promote the new faces behind investment decision-making at the $US2 trillion asset manager, some employees were struggling to cope with the tsunami that swamped their world on Friday.
“I couldn’t believe it on Friday, and I still can’t believe it now,” one employee who was not authorised to speak publicly told Reuters. “We lost Mohamed El-Erian in January and now Bill Gross. It’s been confusing, frantic and sad.”
The stunning turn of events kept Pimco executives working over the weekend and throughout Monday to soothe clients and staff rattled by the episode, which triggered flashbacks of the departure of El-Erian, once seen as Gross’s heir-apparent.
Pimco Chief Executive Officer Doug Hodge and Group Chief Investment Officer Dan Ivascyn convened a series of conference calls with clients and the media to field questions about the firm’s future and respond to concerns about how they and corporate parent, German insurer Allianz SE ALVG.DE, had handled the affair.
After U.S. markets closed Monday, Hodge and Ivascyn were joined by President Jay Jacobs and global credit chief Mark Kiesel for a global staff meeting and video conference with all employees to boost morale, according to a source close to the situation.
A Pimco spokesperson confirmed that Hodge, Ivascyn, Jacobs and Kiesel spoke to all employees and added “that the mood in the firm is energized and focused.”
Among the efforts at containing the fallout was a 90-minute conversation with a Morningstar analyst Eric Jacobson, who has been a supporter of Gross and the firm’s flagship Total Return Fund PTTRX.O, the world’s largest bond fund that Gross steered personally for more than a quarter century.
Jacobson would not disclose the substance of the conversation. On Friday he had placed his ratings under review for the flagship fund and all others he had rated.
Since the start of the year, investors have pulled $US25 billion from the Pimco Total Return Fund and more than $US65 billion over the past 16 months.
Hodge told Reuters on Sunday that Pimco was bracing for more investors to pull money: “The outflows that have happened – and that may happen – we stand by our clients. We are managing assets and are confident that the vast majority of clients will stand with us.”
Meanwhile, the firm worked to scrub out Gross’ cyber footprints, as well. Pimco’s Twitter feed deleted all tweets from Gross, who had once been a prolific tweeter.
His widely followed monthly Investment Outlook pieces, considered a must-read by investment professionals worldwide, were tucked out of sight as well, now residing in an archive section of the Pimco website.
Still, some signs of his long association with Pimco remain. Each of Pimco’s highly prized Morningstar awards – including those honouring Gross – are mounted in the same place at the entrance to the firm’s trading floor.
(Reporting By Jennifer Ablan; Editing by Dan Burns and John Pickering)
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