“Bond King” Bill Gross faced a huge setback as Soros Fund Management LLC, led by the famous investor George Soros pulled almost its entire investment of $500 million from an account managed by Gross at Janus Capital Group, Inc. JNS. According to people familiar with the matter, Soros’ move was due to poor returns.
Gross, who joined Janus Capital in September 2014 after his sudden departure from the company he co-founded – Pacific Investment Management Company (PIMCO) – won the $500 million investment by Soros Fund last November. The investment was undoubtedly a major endorsement of Gross, who took his position as the chief portfolio manager of the Janus Global Unconstrained Bond strategy (JUCIX).
The Soros Fund investment, which was held in a separate account, was managed through a private investment vehicle known as Quantum Partners LP. The portfolio followed a similar strategy, which Gross employed in his Janus Fund.
While it is unclear when Soros Fund pulled its investment, according to industry data provider eVestment LLC, an amount of $490 million was not reported by Janus Capital in separate accounts in between the second and third quarter of 2015. The trade publication Pension & Investments earlier reported on the $490 million outflow. However, it did not mention the identity of the withdrawal party.
The withdrawal comes at a time when Gross is striving hard to lift the performance of the $1.4 billion Janus fund. While Gross himself has invested $700 million, the fund fails to exhibit a healthy position. According to Morningstar data, the Janus Global Unconstrained Bond fund has lost around 1.5% so far this year and is behind 74% of its peer funds. Also, it witnessed net outflows in five of the nine months this year.
With the redemption from the hedge-fund billionaire George Soros, investors’ confidence on Gross is likely to be dented.
Separately, Gross is engaged in a legal battle as last month he filed a lawsuit against PIMCO, alleging that several of his former colleagues conspired to oust him in order to boost their own careers and have a larger claim of his annual bonus. PIMCO’s parent, German insurer, Allianz SE’s AZSEY U.S. unit – Allianz Asset Management of America L.P. – also stands as a defendant in the lawsuit, which is seeking at least $200 million in damages.
Janus Capital currently carries Zacks Rank 4(Sell). A couple of better-ranked stocks in the investment management space include Monroe Capital Corp. MRCC and Medley Management Inc. MDLY. Monroe Capital sports a Zacks Rank #1 (Strong Buy) while Medley Management carries a Zacks Rank #2 (Buy).
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