What Bill Gross did on Friday was almost unimaginable. He quit a firm that he founded 40 years ago and has been the face of ever since to run a bond fund that may end up being smaller than his personal net worth.
And he apparently did it without even giving notice. Executives at Pimco and its parent company didn’t hear the news until his new employer, Janus Capital Group, issued a press release announcing the hire. At that point, Gross was already on a plane to Denver, home of his new boss at Janus, a former Pimco employee.
Gross’s decision has already sent shockwaves across the industry. Many large institutional clients will likely follow Gross or head elsewhere. The choice will no doubt create opportunities for new hires, people moves and money-making opportunities for those already employed at bond funds. Here are a few firms to keep your eye on.
As Pimco’s primary competitor in the US, DoubleLine is well positioned to take advantage of the mess caused by Gross’s departure. In fact, the first person Gross called when he saw the writing was on the wall was DoubleLine founder Jeffrey Gundlach. They discussed the possibility of uniting but talks fell flat when potential roles were discussed.
"I am CEO of the firm. We talked about working together, but I was never going to be the 'co-guy.' I am CEO. That was never going to happen,” Gundlach told CNBC.
Even without Gross, DoubleLine has already been winning. The firm saw between $400 million and $500 million of net inflows on Friday alone, according to Gundlach. In terms of client deposits, that’s the second best day in the history of the Los Angeles firm. And you can expect that trend to continue. Pimco has seen $10 billion in redemptions since Gross announced his exit.
Earlier this year, DoubleLine hired Ignacio Sosa as director of its product solutions group – a new role aimed at growing the business overseas. And then in May, DoubleLine made three more hires – two institutional sales representatives and an open-end mutual funds operations specialist from, you guessed it, Pimco. DoubleLine currently has three open positions on its website: two analysts and a trading coordinator, all out of Los Angeles.
An obvious name, Janus will no doubt need to add staff around Gross as he looks to build up the Janus Unconstrained Bond fund, which was launched earlier this year and reportedly controls only $15 million in assets. That number is going to go way, way up.
We reported last week on the people Janus likes to hire. Hint: they tend to be men and they tend to be from Pimco. But it’s worth asking the question whether Pimco staffers will follow Gross? From the sounds of it, he burned plenty of bridges there over the last year.
Janus has 29 openings on its website, most in Denver and most in technology and engineering. Gross will open his own office in Newport Beach, California.
From a global perspective, BlackRock is the largest of all money managers. The firm has been one of the biggest beneficiaries of Pimco’s outflows over the last 18 months, with its active bond strategies attracting $10.4 billion in 2013 as Pimco lost tens of billions.
Just this April, BlackRock hired Barry Knapp from Barclays to grow its newly launched strategies team within its bond unit. BlackRock has been growing more in Europe and in emerging markets than it has the US, though it has over 300 positions available in the Americas, according to its site.
The original home of Jeffrey Gundlach before their messy divorce, TWC has also seen its net inflows increase since Gross began his path of destruction in January. In March, TWC became the subadvisor of a $1.3 billion bond fund once controlled by Pimco.
And, for the fixed income market, TWC has been rather hot, with its two main funds outperforming 95% and 95% of its peers.
While it may not feel like adding headcount as it sees tens of billions in redemptions, Pimco has signaled that it is moving in a new direction with Gross gone. That could certainly lead to some fresh faces around its offices.
CEO Doug Hodge told Reuters that Pimco is moving away from Gross’s model, and that his flagship fund “is not [their] only strategy." Pimco is building up its equities division, with plans to hire dozens of people across geographies, but could also choose to mix up its bond teams. Typically speaking, turnover always occurs following a change in leadership.
None of the firms immediately responded to requests for comment on their hiring plans.