In the stock market, investors didn’t wait around to assess the implications of Bill Gross’s departure from Pacific Investment Management Co. -- they sold.
Pimco’s Global StocksPlus & Income Fund slipped 7.4 percent to $22.25 at 12:05 p.m. in New York, while the firm’s High Income Fund decreased 7.4 percent to $11.53, the biggest drop in almost two years. The Pimco Corporate & Income Opportunity Fund slid 5.2 percent to $17.44, and the Pimco Total Return ETF declined 0.2 percent to $108.66.
The retreat whipsawed investors who were used to hearing Gross praise the same securities as a good way to navigate his “new neutral” era of slowing growth and falling interest rates. He owned shares in 14 Pimco closed-end funds as of the start of July after adding almost $60 million of his own money in May and June, data compiled by Bloomberg showed.
We might never know but the departure of Mohamed El Erian earlier in the year and now Bill Gross suggests some deep dissatisfaction with the structure of the company when its two leading lights decide to leave rather than stay and work to make it better. This is a blow for Allianz which will now be scrambling to ensure assets do not migrate with Bill Gross.
Its German listed shares pulled back to post a failed upside break today and it will need to continue to hold in the region of the MA, currently near €125, if potential for continued higher to lateral ranging is to be given the benefit of the doubt.
A number of the closed-end funds Bill Gross has been engaged in were trading at premiums to their NAV. An extreme example is the Pimco High Income Fund. Its ability to employ leverage might be used to justify the premium but at 38.38%, the valuation looks rich. It pulled back sharply today but closed off its low as investors focus on the sustainability of its 12% yield.