Speculation on what Mohamed El-Erian’s abrupt departure from Pimco really means became the world’s largest parlor game last week, ranging from Munich to Wall Street to coastal OC, where mobile phones buzzed with best guesses … This one from a veteran Pimco watcher: “Two things seem certain: Despite the company’s efforts to diversify into equities and to recruit the talent to make that happen, Pimco remains a bond fund, and it remains Bill Gross’ bond fund” …
Bolstering that view: Bonds still account for 99% of Pimco’s nearly $2 trillion in assets under management … Another perspective had El-Erian worn out by the uniquely demanding management style of Gross, a Vietnam-era Navy vet who’s known for running the tightest of ships as he charts a course for hundreds of billions of dollars in other people’s money …
Others had El-Erian bailing out on Gross. “El-Erian is jumping ship,” said one well-heeled player. “Capital is fleeing the bond market—the outlook is dismal for bond managers, looking years ahead” …
Then there’s this from an All-Star of the investment world who sees El-Erian as a big-picture guy and “rainmaker” of sorts, thanks to high-level contacts around the globe, including governmental links; he’d done his stints at the IMF and the Harvard Endowment and had even been talked about as a possible Prime Minister of Egypt. But he wasn’t “well-cast” to take advantage of Pimco’s powerful brand by building the sort of equity funds and other products that could retain client money as it fled bonds, our All-Star says. El-Erian simply didn’t have much experience in creating and growing equity funds. The chance to extend Pimco’s brand from bonds to stocks has so far been missed, according to this view, and the responsibility tracks to El-Erian …
Back to our first speculator, who also contends that Pimco parent, Munich-based Allianz, had good reason to retain El-Erian as a consultant. He’s intimately familiar with Pimco’s culture, something management in Germany could use in dealing with its results-oriented and relatively freewheeling operation in Newport Center. But he was expendable at Pimco—something that can’t be said about Gross …
Speculation is bound to continue, and the Insider will get the next phase started here: Pimco’s promotion of Douglas Hodge to CEO and its other inside moves last week will be followed by some high-level new hires …
Program note: Rancho Mission Viejo boss Tony Moiso will give a talk to the 6th annual Business Leaders for Philanthropy Night to benefit the J.F. Shea Therapeutic Riding Center. The event is sponsored by OC alumni associations of the Harvard, Stanford, UC Berkeley, UC Irvine, USC and UCLA business schools. It’s set for the evening of April 10 and open to the public. Info on tickets and sponsorships is at www.sheacenter.org. Tours of the Shea Center are available—and recommended by the Insider…
Also recommended: The Swedish potato sausage at the Globe Deli in Costa Mesa; (seasonal; limited supply) …
Kudos: to Jaqueline Hahn on her recent lecture that accompanied the exhibit on 19th century Romanticism at Bowers Museumin Santa Ana …
RIP: Fifi Chao passes along word of the passing of Link Mathewson, a fellow OC food writer who “epitomized the word grace.”
