The reputation of legendary bond investor Bill Gross continues to take blows.
This is a story that’s been building for a while, but is crescendoing right now.
First it started with his underperformance as a fund manager, getting the last leg of the bond rally spectacularly wrong.
But getting a call wrong isn’t in itself that big of deal.
Things started taking a turn for the worse in January when news came out that PIMCO’s former co-CEO with Gross, Mohamed El-Erian, was leaving the firm. At first this was plausibly chalked up to normal differences or El-Erian wanting to do something else. Then it came out in the Wall Street Journal that there had been serious clashes between El-Erian and Gross, and that Gross had insulted El-Erian in front of colleagues, while referring to himself as “Secretariat.”
But again, even this story could be ascribed to the natural existence of big tensions and egos at a massive, important firm.
But the new shoe that just dropped makes Gross look even worse.
Jennifer Ablan at Reuters quotes Gross as saying things about the El-Erian feud that make him sound angry and paranoid.
According to Ablan, Gross said that Mohamed El-Erian is trying to “undermine” him and that El-Erian “wrote” the Wall Street Journal story. When Reuters pushed back on this assertion, Gross accused Reuters of being in the tank for El-Erian, too, and then suggested that he had been spying on El-Erian’s phone calls:
When asked if Reuters could see the evidence about El-Erian and the allegation he was involved in the article, Gross said: “You’re on his side. Great, he’s got you, too, wrapped around his charming right finger.”
He said he knew that El-Erian, who had been widely seen as the heir apparent to Gross but is now due to leave in mid-March, had been in contact with Reuters as well as the Wall Street Journal.
Gross indicated he had been monitoring El-Erian’s phone calls.
PIMCO later denied that Gross had made those statements to Reuters, but admitted that it keeps records of employee phone calls.
Bottom line: The biggest bond manager in the world has gone from having a tough run in performance to a terrible run in the press.