Comments on: Questioning El-Erian http://blogs.reuters.com/felix-salmon/2012/07/30/questioning-el-erian/ A slice of lime in the soda Sun, 26 Oct 2014 19:05:02 +0000 hourly 1 http://wordpress.org/?v=4.2.5 By: CAGR http://blogs.reuters.com/felix-salmon/2012/07/30/questioning-el-erian/comment-page-1/#comment-42178 Wed, 01 Aug 2012 02:51:29 +0000 http://blogs.reuters.com/felix-salmon/?p=16640#comment-42178 Interesting piece. For part of it I thought this might have been written by the PIMCO public relations team. The author’s take on how mangers are compensated on the buyside is idealistic and naive. Depending on how the sell agreement was negotiated with Allianz the compensation numbers may be correct as it’s not unusual for the selling firm to retain a % of the revenues and the autonomy to run the business as they see fit (i.e. they maintain control over the culture, comp, strategy, etc…) While Mr. Gross may have had a bad year I’m 2011 most investors recognize that he (and team) have consistently added alpha far above the benchmark on a relatively consistent basis (use rolling time periods to get a clear picture of the consistency). As a founder of on organization that might generate $7b in fees (assuming avg fee across structure of enterprise 50bps) and a 35% revenue sharing agreement (not that uncommon) is it that crazy to think 10% of the revenues may go his way? By and large this is a sticky business as long as you don’t consistently have major blow-ups. Indeed, the author tacitly acknowledges one of the strengths of their business model (and asset management in general) when he defends El Erian’s lackluster performance on relatively small funds for PIMCO ($10B -which is bigger than most asset mangement firms) by pointing out that they are still able to gather assets. That is the beauty of distribution and PIMCO has great distribution. The author points out that Mr. Gross is a multibillionaire, maybe a germane question would be how much of his net worth is in the fund, especially since he is not a big fan of equities.
I thought the author partially redeemed himself for the cheer leading exhibit in the first half of the article by asking some very great questions that weren’t addressed in the NYT article. Maybe one more to add to the list – how would a completely transparent, exchanged traded derivatives market affect PIMCO’s ability to mange the vast sums of fixed income assets they have?

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By: michaelmaiello http://blogs.reuters.com/felix-salmon/2012/07/30/questioning-el-erian/comment-page-1/#comment-42160 Tue, 31 Jul 2012 17:49:24 +0000 http://blogs.reuters.com/felix-salmon/?p=16640#comment-42160 Didn’t Blackrock catch up by buying iShares from Barclays?

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By: streeteye http://blogs.reuters.com/felix-salmon/2012/07/30/questioning-el-erian/comment-page-1/#comment-42127 Mon, 30 Jul 2012 12:34:52 +0000 http://blogs.reuters.com/felix-salmon/?p=16640#comment-42127 PIMCO has $1.4t under management. At .5% management fee that would be$7b in fees. If managers gave themselves a pay cut as penance, the would be handing the money to the parent company, which doesn’t seem obviously more deserving. At least Gross is responsible for having built the business, and keeping investors there after a tough year. If anything, investors deserve a fee holiday. That would be an even bigger shocker than managers taking a pay cut.

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By: dsquared http://blogs.reuters.com/felix-salmon/2012/07/30/questioning-el-erian/comment-page-1/#comment-42124 Mon, 30 Jul 2012 07:55:53 +0000 http://blogs.reuters.com/felix-salmon/?p=16640#comment-42124 [Finally, and most interestingly, how did Larry Fink manage to amass twice Pimco’s assets under management despite the fact that Bill Gross, the greatest bond investor of all time, had a more than 15-year headstart on him?]

… I think there might have been one or two acquisitions in there.

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By: GregHao http://blogs.reuters.com/felix-salmon/2012/07/30/questioning-el-erian/comment-page-1/#comment-42120 Mon, 30 Jul 2012 05:57:00 +0000 http://blogs.reuters.com/felix-salmon/?p=16640#comment-42120 With their parent Allianz being a publicly traded company(?) in Germany, why isn’t top PIMCO pay information published?

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