The ‘Bond King’ departs; no player is bigger than the Club?

In football you’ll often hear managers throw out the cliché ‘no player is bigger than the club’. In truth they will bend this rule for players blessed with exceptional talent; Eric Cantona and Luis Suarez would have been turfed out of Manchester United and Liverpool respectively had it not been for their genius. But when a player’s powers begin to wane managers are much less forgiving. Alex Ferguson comes to mind and his acrimonious split with the legendary Roy Keane. Keano had acquired cult status at Old Trafford, and rightly so, epitomising the winning mentality at United. But in 2005 he ‘overstepped the mark’, according to Fergie, lambasting his teammates in the infamous ‘MUTV rant’. However, I have no doubt if it had been five years earlier, Fergie would have covered up the interview instead of using it to part company with a club icon while keeping the United faithful onside.

This brings me to the departure of the legendary Bill Gross from PIMCO last week, a company he co-founded and where he enjoyed an illustrious career of outperformance, earning the title ‘Bond King’ as he rode the wave of a 30 year bond bull market. Like Keano at United, Gross had become synonymous with PIMCO but in recent years there were signs he was losing his magic. Some big calls he made publicly turned out to be horribly wrong as the major central banks began to call the shots in bond markets, defying the old money supply rules. For once Gross began to underperform his peers which manifested in consistent outflows from PIMCO as investors lost faith in his skills. Suddenly the firm’s leadership began to see Gross’s personality as less ‘quirky’ and more ‘jerky’.

It is clear Bill Gross jumped before he was pushed, with management claiming that “over the course of this year it became increasingly clear that the firm’s leadership and Bill have fundamental differences about how to take Pimco forward”. Janus, another firm familiar with outflows, signed the ageing superstar with their shares jumping over 33% on the prospect of Gross attracting fund flows. However, like Keano, whose best days were behind him after United, Janus may be just signing a big name struggling to adapt to a world dominated by central bank monetary stimulus. For PIMCO, their job will be to convince investors that no player is bigger than the club!