Odd Lots How Bill Gross Built a Bond Empire And Then Lost It All
Apr 4, 2022
Matt Levine, a Bloomberg Opinion columnist, and Mary Childs, author of "The Bond King" and NPR's Planet Money co-host, delve into the fascinating rise and fall of Bill Gross. They explore how Gross transformed bond investing from a dull practice into a lucrative trading empire through unconventional strategies. The discussion highlights his pivotal trades, internal PIMCO dynamics, and his complex legacy. Childs reflects on how personal rivalries shaped investment cultures, while both guests emphasize the pressing need for diversity in finance.
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Ginnie Mae Trade
- In the mid-80s, Bill Gross exploited a flaw in Ginnie Mae futures contracts.
- By demanding physical delivery, Pimco forced counterparties to deliver more valuable securities than anticipated.
Pimco's Size Advantage
- Pimco's success wasn't solely due to Bill Gross's investing acumen.
- Their massive size gave them an advantage, particularly in new bond issues.
Pimco's Strategy
- Pimco's investment strategy involved leveraging long duration, focusing on the curve's 4-5 year part.
- It also incorporated being long on credit and shorting volatility.
