Secretariat Bolts the Barn

DENVER–(BUSINESS WIRE)— Janus Capital Group Inc. (NYSE: JNS) today announced that William H. Gross, world-renowned fixed income investor, will be joining Janus Capital Group. He will manage a recently launched Janus Global Unconstrained Bond Fund and related strategies, and will join Myron Scholes, Ph.D., and other members of the Janus team focused on global asset allocation. Mr. Gross’ employment will be effective September 29, 2014 and he will begin managing the Janus Global Unconstrained Bond Fund and related strategies effective October 6, 2014.

This morning, Bill Gross announced his departure from the firm he started, PIMCO. He’s joining Janus Funds and setting up a fixed income / global macro shop for them right across the street in Newport Beach. This is major news and will have a ripple effect through the investment management business for a long time to come. Virtually every major pool of capital around the world is allocated to PIMCO in some way, shape or form. This, the second high-level departure (some would say the ultimate high-level departure), could end up as the nail in the coffin for the world’s second largest bond fund, Pimco Total Return – which manages some $248 billion of the firm’s total $1.9 trillion in assets.

Some quick thoughts for now:

1. If you’re a wealth manager allocated to PIMCO, have you not seen enough now? Total Return has been bleeding assets for two years now, but this will almost certainly accelerate things. PIMCO liquidating sales could even hit the bond market.

2. Janus shares are up some 40% as of this writing on the news today. The company has added over $800 million to its market cap (which is now $2 billion, about equal with Mr. Gross’s net worth!). Do investors really think Gross has the AUM-drawing power he used to? His stewardship of Total Return has been pretty poor in recent years and many have blamed his stubbornness or inability to work with / listen to colleagues. Not sure why a new office would change that. I’d be fading the Janus pop.

3. Gross is 70 years old. Why he still feels the need to do this is beyond my comprehension. Guy should be trading his own money from between the thighs of a different Playboy Bunny five days a week.

4. What’s Mohamed thinking today? Will he come back? Never!

5. What’s McCulley thinking today? Gross f***ing lured him back! Is he loading a shotghun with shells whilst grumbling under his breath? Probably not. This might even turn out great for him – he’s all they have left to stabilize the ship!

6. Allianz (aka the Germans who own PIMCO) sold off so hard overseas on the news that the DAX actually turned lower! It’s the seventh largest weighting in the German index.

7. What’s Jeff Gundlach thinking today? The Iron Throne is now indisputably his. I’m not going to email him, will let him enjoy.

8. Glad I have no PIMCO wholesaler appointments on my calendar this coming month. On second thought, maybe now is a great time to ask for NBA tickets…

More later once I’ve digested…