A Gross Recipe gets Salty


Bill Gross is not the always affable, mild-mannered, yoga practitioner we have been led to believe he is.  He is demanding of his staff, prone to hyper-criticism and a bit of a tyrant. Who would have expected that the King of Bonds was driven by a big ego and a tinge of nastiness?*

An article, published in the Wall Street Journal last week, reveals a different view of Mr. Gross than what many readers of his monthly Investment Outlook have come to expect of him. Some of his colleagues and industry commentators are shedding light on a range of behavior that is inconsistent with the persona that Bill Gross himself has so masterfully developed over the last four decades. For those who had come to ‘know’ him through the stories he tells, the recent contradicting reports come as a surprise.

Is this is the new normal Bill Gross?

The catalyst for the WSJ article was the sudden departure of Mohamed El-Erian, the highly-respected former heir-apparent to Mr. Gross. Mr. El-Erian fled PIMCO’s offices in Newport Beach and left a reported $100 million annual salary behind. As power struggles go, this one was ferocious.

For a man overseeing $2 trillion dollars in assets and who is, according to one commentator, the Steve Jobs of bond management, few should be really surprised at what was hiding beneath the mild-mannered style Mr. Gross exudes in public. Indeed, a management consultant who had worked with PIMCO for three years likened the shop’s environment to a ‘pressure cooker’ with Mr. Gross as its Chef. Things have boiled over.

PIMCO is like no other firm in the history of asset management. One might argue that it is all but impossible to reach a level of royalty in this industry and create an enterprise of such scale without dishing out some ‘tough love’ every once in a while. Mr. Gross contends that he can indeed be demanding of others but no more so than he is of himself.  Ultimately, its about results:  AuM and performance numbers will be the ongoing measure of success.

Beyond the melodrama, these newly surfaced elements of Mr. Gross’s personality are important developments for investors to understand and monitor. Asset management is a people business. Success is dependent on attracting and retaining talented individuals who are able to execute as a team. Managing inter/intra-personal complexities, particularly within large firms, is integral to cohesion and growth. These are elements that investors must both be aware of and focus on. Their realities are often hidden from view.

In The Gross Recipe, an essay on Mr. Gross and the persona he has created through his monthly Investment Outlook, I wrote:

“[W]hat works so well for Mr. Gross is that investor-readers do not know everything about him. There is always something unknown remaining for the reader’s imagination to create for him/her self. Perhaps it is this ‘just enough’ status that, like properly managed Fed monetary policy, is the recipe for success.”

Perhaps now investors know too much.


afterword:  It is interesting to compare the public persona of Bill Gross to that of the other claimant of the title “King of Bonds:” Jeffrey Gundlach of Doubleline.  Mr. Gundlach’s strongly expressed confidence and ego are similar is some ways with what is now very publicly being discussed about Bill Gross.  Alas, it has not hurt Doubleline from being one of the fastest growing asset management companies in recent history.

* If you find this topic interesting and have not done so already, please read the essay, “The Gross Recipe.” It discusses the persona Bill Gross has created through his colorful storytelling in the monthly “Investment Outlook” essays he writes.  The current essay is a direct follow up from that articles. See: http://propinquityadvisors.com/distribution/the-gross-recipe

[Thanks to Baldwin Berges for his pictorial contribution of Mr. Gross.  See: www.baldwinberges.com & www.bd-insider.com.]