By Rob Copeland
Bill Gross's decadeslong run as one of the world's top fund
managers started by accident--and with one.
Bedridden at Duke University Hospital in 1966 after a car crash,
Mr. Gross studied a book about counting cards. He healed and headed
to Las Vegas, turning a $200 investment at the blackjack tables
into $10,000.
"I wanted to prove you could beat the system," he later told The
Wall Street Journal. "I thought about what I could do that takes
the same skills. I realized it was investing."
Nearly half a century after founding Pacific Investment
Management Co. and building it into the world's largest bond-fund
manager, Mr. Gross is out to prove himself again.
Mr. Gross, 70 years old, stunned Wall Street on Friday by
resigning from his Newport Beach, Calif., firm after months of
tension with his colleagues and amid concerns among investors that
led to massive outflows from his flagship Pimco Total Return
Fund.
He will join the far-smaller rival Janus Capital Group Inc. on
Monday. Mr. Gross, and Janus, are betting that his star power and
his skills as an investor will help lure money to Janus from Pimco
and others.
Mr. Gross earned a name as the "Bond King" with his knack for
predicting well ahead of the pack where interest rates were
headed.
And long before it was fashionable on Wall Street to eschew a
button-down approach, Mr. Gross built a brand steeped in his loose,
Californian style.
As money flowed into Pimco from corporate pensions,
sovereign-wealth funds and individual investors of all stripes, Mr.
Gross stuck to his image as an open-collared, yoga-loving, stamp
collector.
He won big in 1995 with a wager that long-term interest rates
would fall, and roiled the bond market in 2000 by dumping mortgage
securities and buying up long-term Treasury bonds.
His moves spurred copycats on Wall Street trading desks.
"Once it was confirmed that Bill Gross was doing this, everyone
seemed to turn back to their portfolios, scratch their head and
take another look at their own allocations," one money manager told
The Wall Street Journal in 1996 after Mr. Gross put $2 billion into
Treasurys.
When he was wrong, he admitted it. He was early to predict lower
Federal Reserve interest rates in response to a slowdown in U.S.
housing, a call that cost him in 2006 as rates stayed high. Mr.
Gross conceded it was a "big mistake."
While other asset managers spent lavishly on advertising to get
their mutual funds in front of investors, Mr. Gross became a
fixture on business television for more than two decades, helping
to spread the Pimco name.
Along the way, Mr. Gross became a favorite of investors and
journalists for his colorful takes on the once-sleepy fixed-income
market.
"We've shot the rapids, gone over the waterfall," he told
clients after a boom in risky bonds in 1993. He compared
credit-ratings firms' generous bond ratings in 2007 to "six-inch
hooker heels, and a tramp stamp."
But those idiosyncrasies came with an edge. A former naval
officer in the Vietnam War, Mr. Gross showed flashes of temper.
He scolded employees and quarreled with his heir apparent,
Mohamed El-Erian, who resigned in January, as well as with a host
of new deputies.
Mr. Gross, who was due to be fired from Pimco before he tendered
his resignation, said in a statement Friday he was happy to be
"giving up many of the complexities that go with managing a large,
complicated organization."
Sydney Finkelstein, a management professor at Dartmouth
College's Tuck School of Business, said: "It's not clear that his
skill set is as a leader or a manager. It's as a genius
investor."
Melissa Korn contributed to this article.
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