Editor's Note, March 29: This article has been corrected by the author as the original version incorrectly listed the PCK trades as buys instead of sells.
According to SEC filings from 2014, Bill Gross has invested nearly $4 million of his personal money in the Pimco Dynamic Income Fund (NYSE:PDI), a multi-sector taxable fund run by Dan Ivascyn. This is a "go anywhere" tactical fund, but its main focus has been on mortgage securities
Bill Gross also lightened up his holdings of Pimco California Muni Income Fund II (NYSE:PCK), a California municipal bond fund run by Joe Deane but still has retained about 148,000 shares. Mr. Gross lives in Newport Beach, California and is in the top income tax brackets given his reported $200 million annual compensation. See my previous article on California bond funds for more information- "A Good Investment Opportunity for Phil Mickelson".
There is generally a one day delay in SEC filings, and it is quite possible that Mr. Gross is planning additional purchases of PDI, since his previous PDI purchases have been 100,000 shares each, and his last purchase of 31,134 suggests he may have received only a partial fill.
Bill Gross- Closed-end Fund Trades for 2014
|Shares||TKR||Trade Date||Price||Proceeds||Price- March 28, 2014|
Note that the most recent purchase of PDI is profitable, but the PDI purchase back in February is still underwater (Note: dividends are not being considered).
Mr. Gross often steps in buy Pimco CEFs when he sees value. Sometimes he buys funds that he manages himself, but in this case, both funds are run by other Pimco managers.
Pimco closed-end funds often sell at a premium to net asset value, or at a lower discount than other similar funds. I believe regular fund purchases of Pimco funds by Mr. Gross may be one reason for this.
PCK actually sells at a 20% premium over NAV, partially because it pays incredibly low borrowing costs for its leverage- 0.08% interest on $163 million of auction rate preferreds.
Here is a brief description of each fund Bill Gross has bought or sold in 2014:
1. Pimco California Municipal Income II
- Total Assets= 423 MM Total Common Assets=260 MM
- Annual Distribution (Market) Rate= 7.65%
- Latest Monthly Distribution= 0.0625 (annual= $0.75)
- Average Monthly Earnings per Share= $0.0521 (as of 11/30/2013)
- Fund Expense ratio= 1.23%
- Premium/Discount= +19.75%
- Average Six Month Premium= +20.05%
- Effective Leverage: 45%
- Average Daily Volume: 76,000 Average $ Volume: $750,000
- Manager: Joe Deane
2. Pimco Dynamic Income Fund
- Total Assets= 2,568 MM Total Common Assets= 1,443 MM
- Annual Distribution (Market) Rate= 7.62%
- Latest monthly distribution= 0.191 (annual= $2.292)
- Average Monthly Earnings per Share= $0.275 (as of 12/31/2013)
- Fund Expense ratio= 2.01%
- Discount= -5.70%%
- Average Six Month Discount= -4.53%
- Effective Leverage: 44.8%
- Average Daily Volume: 249,000 Average $ Volume: 7.5MM
- Managers: Dan Ivascyn, Alfred Murata, Joshua Anderson
Disclosure: I am long PDI. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.