Challenge awaits bond star Gross at team-spirited Janus

Fri Oct 3, 2014 4:49pm EDT
 
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By Ross Kerber, Richard Leong and Jennifer Ablan

BOSTON/NEW YORK (Reuters) - Investors hope the Bond King can remake himself as a team player.

Bill Gross last week abruptly left Newport Beach, California-based Pimco, the firm he built into a bond giant, to join Janus Capital Group JNS.N, a small Denver firm that touts on its website how its friendly, team-oriented culture creates "strong collaborators."

While investors are certainly excited about the move - Janus shares are up 30 percent since the announcement - some wonder just how much easily the outspoken, 70-year-old Gross will fit in at the firm led by Pimco veteran Richard Weil. Weil hired Gross at the urging of former Pimco chief executive officer Bill Thompson, according to two people familiar with the matter.

But Janus already has a bond leader in Gibson Smith, who has less star power than Gross but has quietly delivered better performance in recent years. He is said to work well with Janus CEO Weil, and has emphasized a team approach, which could be a contrast with the autocratic style that Gross showed at Pimco.

Kevin Mahn, who helps manage $2 billion as chief investment officer at Hennion & Walsh, a Parsippany, New Jersey-based wealth management firm, questions if Gross can co-exist with Smith and how much oversight Gross may face.

"It's setting the stage for a culture clash," Mahn said. "Here's a guy who was at rock-star status, and Pimco was synonymous with his name. Now he's moving to a different firm and he's not necessarily going to be the same person as he was," Mahn said.

Michael Cuggino, president of the $7.5 billion Permanent Portfolio Family of Funds in San Francisco, which owns Janus shares, said Weil and the rest of Janus' management will be judged in part on how smoothly Gross transitions to their firm. Key will be for Gross to show he can work well with others and for Janus to avoid the bad publicity that marred Gross's last months at Pimco, including his falling-out with his one-time successor Mohamed El-Erian, who left earlier this year.

"If they bring in Gross and it's a disaster and all over the front pages because they didn't get along, like with El-Erian, that's not good," Cuggino said.   Continued...

 
Bill Gross speaks at the Morningstar Investment Conference in Chicago, Illinois, June 19, 2014.    REUTERS/Jim Young