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Bill Gross Grosses $1.7 Billion Profit In One Day, Now That’s A Trade

September 11, 2008 at 12:49 pm
by Timothy Sykes

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Why not more people are talking about THIS FT article I have no idea. Probly cuz everyone’s losing their ass and somebody who just won big isn’t gonna be the most popular guy right now.

From the article:

While shareholders in Fannie and Freddie suffered deep losses, the world’s biggest bond fund saw its highest ever one-day rise against its benchmark index on Monday, benefiting from the bet made by Mr Gross on mortgage bonds issued by the agencies.

Mr Gross had made a big shift out of US Treasuries and corporate bonds over the past year and into agency bonds, betting that the government would support Fannie and Freddie Mac. By May this year, more than 60 per cent of his $132bn fund was in mortgage debt.

On Monday, the fund rose by 1.3 per cent, or $1.7bn, its biggest one-day rise ever against the Lehman Aggregate Bond index.

Yah pretty amazing stuff. That’s why he manages $100 billion+ and you don’t.

Hat tip to PK’s blog

Posted in Breakouts, Good Trades, Real Wall Streeters

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  1. Bill Gross Grosses $1.7 Billion Profit In One Day, Now That's A Trade
  • Gonads Areus

    you must be kidding.

    he made 1%.

    who give s a shit what the figure was

    and its not even his money

    another blowhard money manager imo

  • Gonads Areus

    you must be kidding.

    he made 1%.

    who give s a shit what the figure was

    and its not even his money

    another blowhard money manager imo

  • Gonads Areus

    reminds me of the talk at the racetrack about the ‘big’ winner.

    sure, if you bet 10k a race, you can win AND lose big.

    one day Gross may be carried out on a slab

  • Gonads Areus

    reminds me of the talk at the racetrack about the ‘big’ winner.

    sure, if you bet 10k a race, you can win AND lose big.

    one day Gross may be carried out on a slab

  • timothysykes

    LOL, i’ll take that kind of 1% any day

  • timothysykes

    LOL, i’ll take that kind of 1% any day

  • Gonads Areus

    my friend, if you had the 100 billon, you’d be gone, just like me. ;-)

    who needs this aggrivation

  • Gonads Areus

    my friend, if you had the 100 billon, you’d be gone, just like me. ;-)

    who needs this aggrivation

  • Bob (VC)

    So Tim, what’s the latest on the DVDs? When will they be out, and will any of them replace the original, or are the all meant to supplement it?

  • Bob (VC)

    So Tim, what’s the latest on the DVDs? When will they be out, and will any of them replace the original, or are the all meant to supplement it?

  • no one

    Regarding the 1% comment, consider that it’s not his money and he’s getting a percent of that 1% of money that is mostly not his. I would prefer to make a fraction of a % on 1.7 billion dollars than 100% on what I have lol

  • no one

    Regarding the 1% comment, consider that it’s not his money and he’s getting a percent of that 1% of money that is mostly not his. I would prefer to make a fraction of a % on 1.7 billion dollars than 100% on what I have lol

  • http://www.bloomberg.com matt

    that Bill Gross is a smart cookie. He pumped $65 billion (yes, that’s with a ‘B’) into agency bonds over a year period…all geared to capitalize on a gov’t takeover & thus, almost guaranteed returns much higher than TBills with similar guarantees (not to mention underlying asset appreciation!!).

    B-A-L-L-S-Y!

    For all those who question his MO, keep in mind that the current leverage-induced risk-mispricing crisis is NOT due to guys like him. He’s just a boring bond manager buried in a heap of macro data…what I wouldn’t give to be one!

  • http://www.bloomberg.com matt

    that Bill Gross is a smart cookie. He pumped $65 billion (yes, that’s with a ‘B’) into agency bonds over a year period…all geared to capitalize on a gov’t takeover & thus, almost guaranteed returns much higher than TBills with similar guarantees (not to mention underlying asset appreciation!!).

    B-A-L-L-S-Y!

    For all those who question his MO, keep in mind that the current leverage-induced risk-mispricing crisis is NOT due to guys like him. He’s just a boring bond manager buried in a heap of macro data…what I wouldn’t give to be one!

  • Gonads Areus

    No balls are needed. The weasel even lost his mustache.

    its not his money.

    no one ever got fired for buying govt debt,so balls are the least of whats needed.

  • Gonads Areus

    No balls are needed. The weasel even lost his mustache.

    its not his money.

    no one ever got fired for buying govt debt,so balls are the least of whats needed.

  • http://www.test.timothysykes.com TIM Sykes
  • http://www.test.timothysykes.com TIM Sykes
  • Gonads Areus

    his fund

    5-Year Average Return: 5.54%

    lol, I did better with CD’s

    so much for the genius

  • Gonads Areus

    his fund

    5-Year Average Return: 5.54%

    lol, I did better with CD’s

    so much for the genius

  • timothysykes

    u misunderstand me, i dont respect his fund/think its good for investors, i respect anybody who accurately judges the risk/reward of a trade and takes home a giant pay day

  • timothysykes

    u misunderstand me, i dont respect his fund/think its good for investors, i respect anybody who accurately judges the risk/reward of a trade and takes home a giant pay day

  • YoungGunz

    I give him credit for knowing how to capitalize on the government stepping in. I don’t however give him credit for making a great prediction. That was almost a given. I will admit I would give him credit if he was making his move ahead of the mortgage bubble bursting.

  • YoungGunz

    I give him credit for knowing how to capitalize on the government stepping in. I don’t however give him credit for making a great prediction. That was almost a given. I will admit I would give him credit if he was making his move ahead of the mortgage bubble bursting.

  • timothysykes

    profting big from an almost given situation should be respected more than profiting from a longshot…thats good trading

  • timothysykes

    profting big from an almost given situation should be respected more than profiting from a longshot…thats good trading

  • Teddy

    PIMCO has around $830 Billion AUM (http://www.pimco.com/LeftNav/AboutPIMCO/Milestones.htm)

    I don’t think you shorting pennystocks would work with that kinda capital.

  • Teddy

    PIMCO has around $830 Billion AUM (http://www.pimco.com/LeftNav/AboutPIMCO/Milestones.htm)

    I don’t think you shorting pennystocks would work with that kinda capital.

  • Teddy

    AllianceBernstein LP (another money manager with around $800 billion AUM) ramped up their position in Frannie and Freddie common stock last quarter to 12.5% and 6.5% of the companies respectively:

    http://moneycentral.msn.com/ownership?Symbol=FNM
    http://moneycentral.msn.com/ownership?Symbol=FRE

    They probably had a pretty bad day!!!

    Just goes to show that you can still be right in theory (FNM and FRE are too big to fail), but still lose your shirt.

  • Teddy

    AllianceBernstein LP (another money manager with around $800 billion AUM) ramped up their position in Frannie and Freddie common stock last quarter to 12.5% and 6.5% of the companies respectively:

    http://moneycentral.msn.com/ownership?Symbol=FNM
    http://moneycentral.msn.com/ownership?Symbol=FRE

    They probably had a pretty bad day!!!

    Just goes to show that you can still be right in theory (FNM and FRE are too big to fail), but still lose your shirt.

  • http://www.learnthemarket.com ivegotstylekid

    nows thats a paycheck! this guys pretty damn smart, anyone think his head is absolutely huge? see him on cnbc all the time

  • http://www.learnthemarket.com ivegotstylekid

    nows thats a paycheck! this guys pretty damn smart, anyone think his head is absolutely huge? see him on cnbc all the time

  • http://www.stockrake.com StockRake

    “Diversification is for amateurs…”
    The best traders lay it out there when their signals tell them so. Bill’s signals told him to be in that position (whatever you want to declare a signal).

  • http://www.stockrake.com StockRake

    “Diversification is for amateurs…”
    The best traders lay it out there when their signals tell them so. Bill’s signals told him to be in that position (whatever you want to declare a signal).

  • http://lloydsinvestment.blogspot.com Lloyd

    What goes up $1.7b one day on a Fannie/Freddie bet . . . also comes down $1.8b another day on an AIG gamble. Such is volatility in these emotion-filled times of ours. Here’s the Bloomberg article:

    Gross’s Total Return Falls the Most in Three Years (Update1)

    By Matthew Keenan

    Sept. 17 (Bloomberg) — Bill Gross’s Pimco Total Return Fund, the world’s largest bond fund, fell 1.4 percent yesterday, the biggest one-day decline in more than three years, according to data compiled by Bloomberg.

    The loss, which compared with the 0.38 percent drop by the benchmark Lehman Brothers Aggregate Bond Index, came as the U.S. government moved to seize American International Group Inc., the largest U.S. insurer. The fund guaranteed $760 million of AIG debt as of June 30, part of a larger bet by Gross that some beaten-down corporate bonds will recover because they are too important for the government to let fail.

    “It’s not surprising to see some gyrations in a fund like Pimco Total Return,” said Lawrence Jones, a senior mutual-fund analyst with Chicago-based Morningstar Inc. “We’re clearly not under normal market conditions now.”

    Yesterday’s decline was the most since Pimco Total Return’s net asset value dropped by 3 percent on Dec. 13, 2004, when investors received short- and long-term capital gains dividends of about 33 cents a share.

    Mark Porterfield, a Pimco spokesman, wasn’t immediately available for comment.

    Pimco Total Return gained 1.3 percent on Sept. 8 after the U.S. took control of mortgage-finance companies Fannie Mae and Freddie Mac. The increase exceeded the advance of the Lehman Brothers index by about 0.5 percentage point, its best performance against the benchmark.

    The fund, run by Pacific Investment Management Co. of Newport Beach, California, had $132.3 billion in assets as of Aug. 29.

    Beats Rival Funds

    Gross’s fund has fallen 2.3 percent since Sept. 8, reducing the gain this year to 2.8 percent. It ranks ahead of 92 percent of similarly managed funds, Bloomberg data show.

    Gross, 64, Pimco’s co-chief investment officer, has made successful bets on mortgage-backed securities, Morningstar’s Jones said. About 65 percent of the fund’s holdings were mortgage-backed securities on June 30.

    Gross also favored bonds of corporations that were “under the Fed umbrella,” meaning they were so big or important to the U.S. or global financial markets that the government couldn’t allow them to fail, Jones said.

    The fund has “held up well under some extraordinary conditions,” Jones said.

    To contact the reporter on this story: Matthe
    w Keenan in Boston at mkeenan6@bloomberg.net.
    Last Updated: September 17, 2008 17:04 EDT

  • http://lloydsinvestment.blogspot.com Lloyd

    What goes up $1.7b one day on a Fannie/Freddie bet . . . also comes down $1.8b another day on an AIG gamble. Such is volatility in these emotion-filled times of ours. Here’s the Bloomberg article:

    Gross’s Total Return Falls the Most in Three Years (Update1)

    By Matthew Keenan

    Sept. 17 (Bloomberg) — Bill Gross’s Pimco Total Return Fund, the world’s largest bond fund, fell 1.4 percent yesterday, the biggest one-day decline in more than three years, according to data compiled by Bloomberg.

    The loss, which compared with the 0.38 percent drop by the benchmark Lehman Brothers Aggregate Bond Index, came as the U.S. government moved to seize American International Group Inc., the largest U.S. insurer. The fund guaranteed $760 million of AIG debt as of June 30, part of a larger bet by Gross that some beaten-down corporate bonds will recover because they are too important for the government to let fail.

    “It’s not surprising to see some gyrations in a fund like Pimco Total Return,” said Lawrence Jones, a senior mutual-fund analyst with Chicago-based Morningstar Inc. “We’re clearly not under normal market conditions now.”

    Yesterday’s decline was the most since Pimco Total Return’s net asset value dropped by 3 percent on Dec. 13, 2004, when investors received short- and long-term capital gains dividends of about 33 cents a share.

    Mark Porterfield, a Pimco spokesman, wasn’t immediately available for comment.

    Pimco Total Return gained 1.3 percent on Sept. 8 after the U.S. took control of mortgage-finance companies Fannie Mae and Freddie Mac. The increase exceeded the advance of the Lehman Brothers index by about 0.5 percentage point, its best performance against the benchmark.

    The fund, run by Pacific Investment Management Co. of Newport Beach, California, had $132.3 billion in assets as of Aug. 29.

    Beats Rival Funds

    Gross’s fund has fallen 2.3 percent since Sept. 8, reducing the gain this year to 2.8 percent. It ranks ahead of 92 percent of similarly managed funds, Bloomberg data show.

    Gross, 64, Pimco’s co-chief investment officer, has made successful bets on mortgage-backed securities, Morningstar’s Jones said. About 65 percent of the fund’s holdings were mortgage-backed securities on June 30.

    Gross also favored bonds of corporations that were “under the Fed umbrella,” meaning they were so big or important to the U.S. or global financial markets that the government couldn’t allow them to fail, Jones said.

    The fund has “held up well under some extraordinary conditions,” Jones said.

    To contact the reporter on this story: Matthe
    w Keenan in Boston at mkeenan6@bloomberg.net.
    Last Updated: September 17, 2008 17:04 EDT