Just a few weeks ago on May 17, Bill Gross sold 79,000 shares of the Pimco Corporate and Income Opportunity Fund (NYSE:PTY) in his children's trust accounts. He had great timing, since PTY has dropped well over 10% since then.
But after the recent "closed-end fund swoon", Mr. Gross has decided to re-enter the market. According to recent SEC filings, Bill Gross just invested over $13 million of his personal funds in two Pimco closed-end corporate bond funds. There is often a small delay in SEC filings, and it is possible that Mr. Gross bought more Pimco funds on Friday, or will buy other Pimco funds next week. Instead of reporting each individual trade, Mr. Gross reported a weighted average price for each day and a high-low trading range.
While a $2 million purchase is not a large amount for Mr. Gross, it does seem to indicate that he sees value in PCN here. It is quite possible that the purchases are not over, and we may see additional buys in other Pimco funds later this week.
Bill Gross often supports Pimco's funds with his personal money. In some ways, this is similar to "the Greenspan or Bernanke put". In this case, a "Bill Gross put" is applied to some Pimco closed-end funds.
Here are two Pimco closed-end funds that look attractive now and are available at nice discounts:
1) Pimco Income Strategy Fund II (NYSE:PFN)
· Total Assets= 784 MM Total Common Assets= 622 MM
· Annual Distribution (Market) Rate= 9.19%
· Latest Monthly Distribution= 0.08 (annual= $0.96)
· Average Monthly Earnings per Share= $0.0795 (as of 01/31/2013)
· Fund Expense ratio= 1.37%
· Discount to NAV= -3.41%
· Average Six Month Premium= +5.55%
· Effective Leverage: 20.63%
· Average Daily Volume: 262,000 Average $ Volume: 2.7MM
· Manager: Bill Gross
2) Pimco Dynamic Income Fund (NYSE:PDI)
· Total Assets= 2686 MM Total Common Assets= 1433 MM
· Annual Distribution (Market) Rate= 7.47%
· Latest monthly distribution= 0.177 (annual= $2.124)
· 2012 Year-end Distribution= $0.86
· Fund Expense ratio= 1.78%
· Discount to NAV= -11.42%
· Average Six Month Premium= -0.60%
· Effective Leverage: 47.39%
· Average Daily Volume: 313,000 Average $ Volume: 8.7MM
· Manager: Dan Ivascyn