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

"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).

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

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.

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

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

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

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.

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

his fund

5-Year Average Return: 5.54%

lol, I did better with CD's

so much for the genius

new post:

http://www.timothysykes.com/admin/2008/09/11/an...

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.

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!

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

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?

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

who needs this aggrivation

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

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

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