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Reuters blog archive
from Unstructured Finance:
The sultans of swing
Although most investors have been pleased with the steadily rising U.S stock market over the past six months, funds that profit when markets are convulsing are licking their wounds.
With market stress at multi-year lows, volatility hedge funds returned just 1.16 percent in the first quarter, compared with 3.7 percent for the broader hedge fund group.
Some of the volatility specialists are doing better than others by capitalizing on major market moves in Japan, for example. And some are doing better simply because they are ‘short’ volatility funds - they tend to perform better when markets are calmer. But those funds are now few and far between.
“If I were to turn the clock back there were a lot more short volatility funds than long in 2004,” said Joshua Thimons, a portfolio manager at PIMCO. “There are fewer now – 2008 wiped most of the face of the map.” Short volatility funds earn a risk premium by selling volatility in the markets, capitalizing on the fact “that some managers use it as tail hedging,” he explained. “These funds have done better this year, but there are fewer of them.”
from Unstructured Finance:
Obama hearts El-Erian
By Sam Forgione and Matthew Goldstein
OK, so it's not a big gig like being nominated to head the Treasury Dept. But President Obama's decision to tap PIMCO's Mohamed El-Erian to head the President's Global Development Council is no insignificant matter.
As the co-chief investment officer of the giant bond shop founded by Bill Gross, El-Erian is seen as the eventual heir apparent to run the Newport Beach, Calif firm. And El-Erian increasingly has become one of PIMCO's most visible faces---maybe even more than Gross himself these days--when it comes to talking about what ails the U.S. and global economies.
from Unstructured Finance:
Gundlach doesn’t whine over his stolen wine
By Jennifer Ablan and Matthew Goldstein
Who said bonds are boring? In recent days, Jeffrey Gundlach, the new king of the fixed-income world, has been dominating headlines with his lengthy CNBC interview on everything from counterparty risk to the market’s love affair with Apple stock to talk in the blogosphere about Gundlach’s pricey Santa Monica, Calif. residence being burglarized of more than $10 million in assets.
Against this backdrop, Gundlach’s firm, DoubleLine, hit a huge milestone this week as well, hitting $45 billion in assets under management.
from Unstructured Finance:
UF Weekend reads – The PIMCO edition
Jenn Ablan likes to tell me that people are always writing about PIMCO and Bill Gross, the long reigning "king of bonds." And when you think of it there's a lot of truth to that assertion.
Gross' mammoth $263 billion Total Return Fund gets endless coverage because--by its very size--it really is the bond market. It's one reason why so much ink is spilled whenever the Total Return Fund has a month where investors pull more money out of the fund than put in. And it's why there's so much analysis of what Gross & Co. are doing with Treasuries and mortgage-backed securities--and whether they are using lots of leverage and derivatives to boost exposures.
from Unstructured Finance:
UF Weekend Reads
The latest offerings by our Sam Forgione include a little Bridgewater, PIMCO and Jamie.
From National Journal:
Jim Tankersley airs Nick Hanauer's championing of the middle class after Hanauer's TED Talk was pulled.
from Unstructured Finance:
UF’s Weekend Reads
We're introducing a new feature on UF: a link to some weekend reads. Here is the first edition complied by Sam Forgione.
From The Guardian:
Andrew Balls, head of European investment for PIMCO from its London office, shares similar views on Europe and regulation with his brother, Ed Balls, of the British Labour Party. Brotherly love even extended to one of PIMCO’s major investment decisions: when Bill Gross decided to sell UK government debt in 2010, and Andrew Balls allegedly disagreed with the move, apparently backing his brother’s political status.
from Unstructured Finance:
PIMCO and BlackRock go strolling down K Street
By Jennifer Ablan and Matthew Goldstein
Wall Street may hate financial regulatory reform, but lobbyists certainly love it—especially ones working on behalf of giant asset managers PIMCO and BlackRock, which control a total of nearly $5 trillion in assets.
Last year, PIMCO and BlackRock both upped their lobbying expenditures in a big way.
from Alison Frankel:
PIMCO can’t move annual meeting to block Brigade board nominee
Remember a couple years back when Air Products, in its takeover assault on Airgas, attempted to force Airgas to move up its annual shareholder meeting? Air Products wanted to rush a vote on a slate of board nominees it supported en route to gaining control of Airgas's staggered board. The hurried-up meeting seemed at first like a clever maneuver by the company and its lawyers at Cravath, Swaine & Moore: After some tediously hair-splitting testimony about whether "annual" means once in a calendar year or once every 12 months, then-Chancellor William Chandler of Delaware Chancery Court blessed the moved-up shareholder meeting date. But Chandler was subsequently overturned by the Delaware Supreme Court, which said the Airgas board members whose seats were at stake were entitled to serve out their full three-year terms.
The shareholder meeting shuffle was nonetheless apparently not forgotten as a defensive device. Last September, the hedge fund Brigade Capital informed PIMCO that it intended to nominate a Brigade partner to serve on the board of trustees of two PIMCO funds, Income Strategy and Income Strategy II. In previous years the PIMCO funds held annual shareholder meetings in December, and a November 2010 proxy statement said the 2011 meetings were likely to take place in December as well. But in October 2011, PIMCO abruptly announced that Income Strategy and Income Strategy II would hold their next shareholder meetings not in December 2011 but in July 2012.
from Unstructured Finance:
Paul after PIMCO
By Jennifer Ablan and Matthew Goldstein
Paul McCulley says working at bond giant PIMCO was like being in Camelot. But in some ways, Bill Gross’s former top Federal Reserve watcher seems a lot happier and more at peace with himself since leaving the Newport Beach, Calif.-based firm at the end of 2010.
These days McCulley, who is credited with coining the phrase “shadow banking” to describe the role Wall Street banks and hedge funds play in pumping liquidity into the financial system, looks more like a professor at some liberal arts college than a once mighty money manager of some $50 billion.
from Unstructured Finance:
Gross miscalculation?
By Jennifer Ablan and Matthew Goldstein
It appears that Bill Gross's PIMCO Total Return Fund is losing ground with investors -- just not as fast as we originally thought.
Morningstar, the mutual-fund tracker, initially told us that PIMCO's flagship fund had suffered $17 billion in net outflows over the last 12 months. It turns out Morningstar discovered this morning that it miscalculated and the figure actually is $10.3 billion.
