SA News • Mon, Jun. 16
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- Bill Gross has moved on from PIMCO.
- Five Gross-managed closed-end funds suffered large losses in the wake of his departure.
- Other PIMCO funds also took losses which are less likely to be sustained as Gross had no real role in the day-to-day management of these funds.
Bill Gross PIMCO Exit Creates Unprecedented Value In CEFs
- Bill Gross has departed PIMCO today, following the dramatic exit of Mohamed El-Erian earlier this year.
- This and other recent negative press has caused capital flight, which has pared PIMCO assets under management this year.
- PIMCO is a global asset management firm with ~$2 trillion under management and currently employs the top fixed-income managers in the country.
- Unprecedented value has been created in closed-end funds (CEFs), which marks a buying opportunity in several funds that investors should note.
- Market pundits view this news as a move that will harm PIMCO, however this bashing only serves short-term interest.
Bill Gross Invests His Personal Money In Mortgages
- Bill Gross has been buying PDI in 2014.
- Bill Gross has sold off some of his California muni bond fund.
- Bill Gross has been buying Pimco funds managed by others.
Why I'm Not Adding To The PIMCO Dynamic Income Fund
There are no Transcripts on PDI.
Thu, Dec. 18, 12:11 PM
- Oil price drops similar or greater in magnitude than what's recently been seen have occurred a number of times over the past 30 years, say new Pimco CIO Daniel Ivascyn along with Saumil Parikh. Some have coincided with major recessions and others with faster global growth. So what gives for 2015?
- The short answer: This drop in oil is supply-, not demand-driven, they conclude, and thus should foster faster economic growth than otherwise next year.
- As for inflation, expect negative headline prints in developed economies next year, but these should bounce back later in 2015 and into the following year.
- Investment themes: 1) The outlook for easier monetary policy (in all but the U.S.) has been priced in, making for limited upside for high-quality duration 2) TIPS are attractive as their prices have more than discounted the coming negative inflation prints 3) Globally, eurozone peripheral bonds are the pick 4) In the U.S. non-agency mortgages (see Ivascyn's PDI) are poised for outperformance, but agency paper is overvalued, particularly as the Fed's purchases have ended.
- Ivascyn also manages the Pimco Income Fund (MUTF:PONAX) and (formerly managed by Bill Gross) the Pimco Unconstrained Bond Fund (MUTF:PUBAX).
- ETFs: AGG, BND, BOND, SCHZ, LAG, SAGG, DI, GBF, FBND, LDUR, FWDB, IUSB, VBND, TIP, VTIP, SCHP, IPE, LTPZ, STPZ, TIPZ, STIP, TPS, TDTT, TIPX, TDTF, SIPE
Thu, Nov. 20, 3:09 PM
- There was a sizable knee-jerk selloff in Pimco closed-end funds, particularly those managed by Bill Gross, when he announced his sudden departure from Pimco in late September, but the lofty premiums for some have returned, writes Morningstar's Cara Esser.
- The Pimco High Income Fund (NYSE:PHK) to take one example, by October 20th traded for a slightly higher premium than it did the day before Gross' exit, and today sells for a 49% premium to NAV.
- Other CEFs formerly run by Gross: PTY sells for a 17.6% premium, PCN a 3.7% discount, PFL a 1% premium, and PFN a 3.2% discount.
- Others of note: PDI a 3.8% discount, PGP a 54% premium, RCS a 12.8% premium.
Thu, Oct. 9, 9:23 AM
- “We’re nowhere close to reaching the limit in terms of ability to generate alpha,” says Scott Mather, one of the three managers taking the reins of Pimco's Total Return Fund (MUTF:PTTRX), (NYSEARCA:BOND) in wake of Bill Gross' departure. Whether it's possible to keep generating benchmark-beating returns with a $200B portfolio (it was once nearly $300B) is the debate of the day on Wall Street.
- Mather brushes off the idea of too big too succeed as does S&P Capital IQ's Todd Rosenbluth, who notes Total Return had a huge year in 2012 (beating the benchmark AGG by 600 basis points) when AUM was larger than it is today.
- Square 1 Financial's David Schawel disagrees, noting the fund's size excludes it from too many attractive segments of fixed income. Total Return's performance, he says, basically comes down to duration calls, and no one gets those right more than 50% of the time.
- He takes note of Dan Ivascyn's Pimco Income Fund (MUTF:PIMIX), (NYSE:PDI) - up an average of 12.8% over the last five years vs. the peer average of 7.2%. AUM were $300M in 2008 and $38.6B today. Ivascyn and his co-manager, says Schawel, play in lucrative areas of the bond market which Total Return isn't even allowed to participate in, and even if it could, the size wouldn't be enough to move its needle.
Fri, Sep. 26, 11:49 AM
- Pimco's closed-end funds and ETFs are plunging in the wake of Bill Gross' exit to Janus: PHK -8.7%, PGP -8.5%, PTY -6.2%, PCN -4.2%, RCS -4.3%, PFL -3.6%, PFN -2.7%, PKO -2.5%, PDI -2.2%, PCI -1.4%, BOND -0.2%.
- "A lot of people bought into Pimco because of Bill Gross, who was the face of the organization, and so they’re shooting first and asking questions later,” says Motley Fool Asset Management CIO Bill Mann. "Investing is a personal business, and the market is saying it trusted Bill Gross.”
- Meanwhile, headlines indicate Dan Ivascyn, Pimco's (OTCQX:AZSEY, OTCPK:ALIZF) deputy chief investment officer, will succeed Gross and take over portfolio management; WSJ had written earlier this week that Ivasycn already was growing in popularity among Pimco investors, who had been putting more money into his fund even as they were pulling it from Gross’ fund.
Mon, Jun. 16, 3:36 PM
- The Bond King may be battered and bruised a little bit, but his words still cary some weight, with two of his three Barron's Mid-Year Roundtable picks from this weekend posting big gains on heavier-than-usual volume. The thesis: Own some mildly levered closed-end bond funds which can borrow at 10 or 20 basis points, re-lend the money at 400 to 500 basis points, and produce a yield of 7-8%.
- One Bill Gross is buying for his own portfolio is the BlackRock Build America Bond Trust (BBN +2.5%). The feds subsidize 35% of the interest paid, the fund usually owns A- and AA-rated long-term bonds, and currently yields 7.5%.
- He's also a buyer of the Pimco Dynamic Income Fund (PDI +1.1%), an owner of non-agency mortgages expected to yield between 8-10%. On sale for some time, the fund now trades at about net asset value.
- Gross' third pick is an ETF, the iShares U.S. Preferred Stock Fund (PFF +0.1%). Liquid with an expense ratio below 50 bps, the fund primarily holds bank preferreds. It's a short-term play, says Gross, as many of the preferreds in its portfolio will be refunded within a year or to and the dividend will fall. In the meantime, one can collect a 5.5% yield.
Fri, May. 23, 4:14 PM
- Several weeks after Bill Gross purchased more of the Pimco Dynamic Income Fund (PDI) for his own account, its roughly 5% discount to NAV has disappeared.
- The same, however, isn't true for Pimco Dynamic Credit Income (PCI), though it's also managed by well-regarded Dan Ivascyn. One reason for caution might be the relative newness of the fund, writes Brendan Conway.
- In the meantime, two Pimco CEFs which are known for sporting towering premiums to NAV continue to do so, the Pimco Global StockPLUS & Income Fund (PGP) and the Pimco High Income Fund (PHK). Two other Pimco CEFs at discounts: Pimco Income Strategy Fund (PFL) and Pimco Income Strategy Fund II (PFN).
Fri, Mar. 21, 11:30 AM
- "When times get tough, on Wall Street or in Newport Beach, Calif., the tough turn on each other," writes David Weidner, not seeing anything too unusual in the Pimco saga. These sorts of ugly partings happen all the time amid the massive egos on Wall Street. Consider Citigroup with Sandy Weil and Jamie Dimon, Morgan Stanley with Phil Purcell and John Mack, and Bear Stearns with Jimmy Cayne and Warren Spector.
- "In every case, the splits occurred under tremendous pressure. Much like a marriage headed for divorce, long simmering incompatibilities, jealousies and flaws rose to the surface ... When push comes to shove, it is always better to be king. No. 2’s instinctively need to watch their backs. You want normal? That is normal."
- Allianz (AZSEY)
- Pimco CEFs: PTY, PDI, PMF, PGP, PKO, PFL, PFN, PCN, PCM, PHK, RCS, PMF, PML
- Previous: Gross becoming "increasingly illogical and irrational."
Thu, Mar. 20, 4:42 PM
- It turns out it was three, not two lined up to be deputy CIOs to Bill Gross amid the departure of Mohamed El-Erian. One - Marc Seidner - resigned in January just hours before he was to be publicly announced in his new position. Seidner - who followed El-Erian to Pimco in 2009 - reportedly had found working there increasingly difficult over the last 18 months, with Gross becoming "increasingly illogical and irrational."
- In other news Pimco has lost a $1.3B bond fund mandate to TCW.
- Pimco's parent: Allianz (AZSEY)
- Among Pimco's closed-end offerings are: PTY, PDI, PMF, PGP, PKO, PFL, PFN, PCN, PCM, PHK, RCS, PMF, PML. There's also the ETF version of Bill Gross' Total Return Fund: BOND.
Wed, Mar. 19, 12:22 PM
- “There is a heightened level of uncertainty in the post El-Erian era surrounding the questions of whether Pimco’s latest senior staffing transitions will prove beneficial to investors [and] whether recent and future senior-level departures indicate a persistent side effect of the firm’s pressure-cooker culture," says analyst Eric Jacobsen cutting Pimco's "stewardship" rating to C from B and the "parent pillar score" - which examines manager turnover, investment culture, and fee levels - to Neutral from Positive.
- It's not automatic, but look for the big-picture rating changes to quickly filter through to the ratings of individual Pimco funds, says Morningstar.
- Among Pimco's closed-end offerings are PTY, PDI, PMF, PGP, PKO, PFL, PFN, PCN, PCM, PHK, RCS, PMF, PML. There's also the ETF version of Bill Gross' Total Return Fund: BOND.
- Pimco parent Allianz SE (AZSEY -2%)
Mon, Jan. 27, 9:55 AM
- A trio of closed-end funds selling at discounts to NAV get early boosts after Bill Gross recommends them at the Barron's Roundtable over the weekend.
- The Pimco Dynamic Income Fund (PDI +2.1%) launched in May 2012 near the low in interest rates, but is still 20% higher today, in addition to making hefty payouts. One of the managers is Daniel Ivascyn who was just elevated to Pimco's deputy CIO after the resignation of Mohamed El-Erian. Magazine cover indicator types will want to know Ivascyn was just named to Morningstar's Fixed Income Managers of the Year.
- PDI yields 7.85%, but a special dividend boosted 2013's return to 12%. It is slightly levered and invests in nonagency MBS. "The fund could have a lot of firepower if the housing market holds up."
- For those with interest in tax-free income, Gross suggests the Pimco Municipal Income Fund II (PML +1.5%), trading at a slight discount to NAV and holding no debt of Puerto Rico or Detroit.
- Selling at an 8% discount to NAV at last check is the Reaves Utility Income Fund (UTG +1.2%).
- For high yield debt, Gross suggests an ETF, the Pimco 0-5 Year High-Yield Corporate Bond Index (HYS +0.1%) - the shorter duration should limit risk if spreads widen.
Dec. 23, 2013, 10:01 AM
- The Pimco Corporate & Income Strategy Fund (PCN +2.3%), $0.95 per share from net long-term capital gain.
- The Pimco Corporate and Income Opportunity Fund (PTY +3.6%), $1.84 per share from net long-term capital gain.
- The Pimco Income Opportunity Fund (PKO +1.1%), $0.60 per share from net income.
- The PCM Fund (PCM +0.3%), $0.135 per share from net income.
- The Pimco Dynamic Income Fund (PDI +1.4%), $1.31 per share - $1.21 from net income, $0.05 from net short-term capital gain, and $0.05 from net long-term capital gain.
- The Pimco Dynamic Credit Income Fund (PCI +0.5%), $0.36 per share - $0.12 from net income and $0.24 from net short-term capital gain.
- The distributions will be payable on January 17 to holders of record on December 30. The ex-dividend date is December 26.
- Press release
Dec. 9, 2013, 11:07 AM
- Net speculative longs in gold (GLD +0.6%) last week fell 16% to 26,774 contracts, according to the CFTC, the lowest amount since June 2007. Shorts rose 6.2% to 79,631, about matching a high set in July. The exit continues in gold ETPs, with assets now off 31% YTD to the lowest level since February 2010.
- "There's probably another wave of panic selling ahead," says Sage Capital's Bob Smith, one of those who's exited gold, putting the money in stocks instead. "In the absence of calamity, there's not much to go on."
- The last 12 years (prior to 2013) were an aberration, says Morningstar's Samuel Lee. True believers should instead look to deep-value assets linked to gold, namely the miners (GDX +1.3%) - they over-expanded and failed to hedge against falling prices, but a play now is a bet executives have learned their lessons.
- An even better idea, says Lee? Admit the worst-case scenarios about global crises and currency debasement never panned out and move onto another asset - nonagency MBS. The cheap, illiquid sector creates opportunities for a good fund manager, he says. Lee's pick is the Pimco Dynamic Income Fund (PDI +0.7%) - an "implicit bet on housing prices."
- Gold ETFs: GLD, IAU, PHYS, SGOL, UGL, DGP, GLL, DZZ, UGLD, DGL, DGZ, AGOL, GLDI, DGLD, TBAR, UBG
- Gold miner ETFs: GDX, GDXJ, NUGT, DUST, GLDX, GGGG, RING, PSAU, JNUG, JDST
Oct. 17, 2013, 12:17 PM
- I see no reason for long-term rates to head higher, says Jeff Gundlach, appearing on CNBC. He doesn't see the taper coming soon - incomes are falling, the labor force participation rate is stuck, and inflation is non-existent. Further, why would Janet Yellen take the Fed helm and immediately begin to reverse a policy she's so supportive of?
- Without the taper, he notes, QE is actually expanding on a relative basis thanks to a smaller budget deficit and less Treasury issuance needing to be mopped up by the central bank.
- The best opportunity in fixed income continues to be closed-end funds trading at discounts to net asset value (his DBL being one of them). You can put together a basket of these, he says, yielding 8-9% and with a discount to NAV of 10%. Others possibilities (though we haven't checked their prices vs. NAV): PDI, PTY, PCI, PHK, PKO, PCN, PCI, PFN, PFL.
- Treasurys continue their big rally, the yield on the 10-year now all the way down to 2.60%. TLT +0.8%, TBT -1.6%.
- Turning to stocks: I don't like $300B market cap companies trading at 20x forward earnings, he says, suggesting GOOG be "harvested" for gains.
- On TSLA: There's something wrong with this picture, he says, noting the company's $23B valuation while GM and Ford are hitting new highs. These massive Tesla sales being priced into the stock have to come from somewhere.
Oct. 2, 2013, 2:59 PM
- Pimco Dynamic Income Fund (PDI +0.7%) gains after perhaps unexpectedly bumping its monthly payout 7.9% to $0.191 per share. The current price of $29.04 is a 5.2% discount to yesterday's closing NAV.
- Worth keeping in an eye on is the saga of Elke Batista's OGX Petroleo, and whether it will default. According to David Schawel, PDI fund manager Daniel Ivascyn owns a decent slug of the failing company's paper.
Oct. 1, 2013, 5:15 PM| Comment!
Sep. 13, 2013, 3:45 AM
- Pimco and BlackRock (BLK) reportedly scooped up over 25% of Verizon's (VZ) mammoth $49B bond sale on Wednesday, helping the telecom carrier to raise all the money it wanted to at once rather than in chunks, as it had originally intended.
- Bill Gross' firm bought $8B in bonds and BlackRock $5B, with the two companies also influential in persuading Verizon to price the debt at an above-market rate.
- Pimco funds: PCI, PTY, PDI, PHK, BOND, PKO, PCN, PCI, PFN
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