Legendary bond investor Bill Gross is leaving Pacific Investment Management Co., the Newport Beach firm he co-founded, to join Janus Capital Group Inc. and manage a recently launched global bond fund, the company said Friday.
In a terse statement, Pimco Chief Executive Douglas Hodge said Gross had resigned over "fundamental differences" about the direction of the company and would leave immediately. According to the Wall Street Journal, which cited unnamed sources, Pimco was preparing to fire Gross before his resignation.
"While we are grateful for everything Bill contributed to building our firm and delivering value to Pimco's clients, over the course of this year it became increasingly clear that the firm's leadership and Bill have fundamental differences about how to take Pimco forward," Hodge said.
Gross, 70, will be based out of a new Janus office in Newport Beach starting Monday and will focus on helping the firm allocate its assets globally, Janus said. Starting Oct. 6, Gross will manage the Janus Global Unconstrained Bond Fund.
"Bill Gross has an exemplary track record with decades of success and he will offer an exceptional approach to navigating today's increasingly risky markets with a focus on macro, unconstrained strategies," said Janus CEO Richard M. Weil.
Pimco said late Thursday that it had named Daniel Ivascyn to succeed Gross as chief investment office for all Pimco funds. Ivascyn's $38-billion Pimco Income Fund has beaten 99% of its rivals over the last five years.
Ivascyn, 44, an expert trader of mortgage bonds, had been among six Pimco deputy investment chiefs; the other five were named chief investment officers in their areas of expertise.
Three of the deputies, Mihir Worah, Mark Kiesel and Scott Mather, will fill Gross' key position managing the world's largest bond fund, the Pimco Total Return Fund, the company said in a news release.
Stock for Allianz, the German financial giant that owns Pimco, was down about 6% Friday. Janus shares were up 30% on the news Gross was joining the company.
Gross' sudden departure is the latest upheaval at Pimco, the $2-trillion bond fund he helped launch in 1971.
This week, Pimco said it was cooperating in a Securities and Exchange Commission investigation into whether it improperly inflated the price of bond holdings in an exchange traded fund that Gross personally managed.
News of the probe followed the sudden departure in January of Pimco Chief Executive Mohamed El-Erian, who had been widely seen as Gross' heir apparent as chief investment officer.
A few months later, Pimco trustee William J. Popejoy questioned the $200-million salary, and what he called the "bullying" behavior and "mediocre" recent performance of Gross.
Gross, a billionaire who has been dubbed the 'bond king,' said Friday that he was eager to return to a full-time focus on investing.
He said he joined Janus because of his "long-standing relationship with and respect for" Weill, who spent 14 years at Pimco before joining Janus in 2010.
"I look forward to returning my full focus to the fixed income markets and investing, giving up many of the complexities that go with managing a large, complicated organization," Gross said.
Gross charted an unlikely path to the elite ranks of finance -- from a childhood in Ohio, to the Vietnam War, to card-counting in Las Vegas to celebrity bond trader.
Gross earned a psychology degree from Duke University. After college, he honed his knack for numbers at the blackjack tables, where he spent 16 hours a day counting cards, turning $200 into $10,000 -- and getting kicked out of several casinos.
After a stint in the Navy, he returned from Vietnam and enrolled at UCLA's business school for its affordable in-state tuition. To help pay for it, he took a job helping out at corporate picnics, running balloon tosses and three-legged races.
After working as an accountant, he landed at Pacific Mutual Life Insurance Co. when his mother showed him a job ad in the Los Angeles Times.
"Well, hell, it's better than being an accountant," Gross once said of the decision to join the company that first turned him into a bond investor.
In 1971, under the insurer, he co-founded Pimco. He eventually built the company into such a powerhouse that critics worried it controlled too much of the bond market.
At a June investor conference, Gross cited the recent turmoil and joked he could have been introduced as Gen. George Patton or the "Wall Street version of Justin Bieber." He donned sunglasses and proclaimed himself a "pretty cool-looking dude."
He brought the same personality to his regular notes to investors. In August, he wrote about the Vietnam War. He told his readers that he recently met a Vietnamese cab driver who had fled during the war after his father and older brother were killed.
He wrote that he had wanted to apologize to the cabbie for ever going to the country. He said he didn't, but he talked of trying to put the war behind him.
"Goodnight Vietnam," he wrote, before quickly transitioning to another topic: "Don't say 'goodnight,' but say 'good evening' to the prospect of future capital gains in asset markets."