George Soros’ $500 Million Loss of Confidence in Bill Gross

Million-Loss-of-ConfidenceBillionaire Investor Pulls Out of Janus Capital Group Investment

George Soros has retracted a $500 million investment that he made in Janus Capital Group, Inc. (NYSE:JNS) last year, essentially removing his endorsement of Bill Gross after the latter was kicked out of Pimco.

What prompted this pullout by Soros was that Bill Gross had begun to record serious losses at the financial management firm, which left the renowned bond expert in a tight spot. (Source: “Bill Gross loses $500m George Soros endorsement,” Financial Times, November 2, 2015.) Gross is currently knee-deep in a legal battle with Pimco, his former employer, and controls a far smaller financial domain than he once did.

With this overt and very public retraction of confidence by George Soros, Bill Gross’ case that Pimco had made a serious error in squeezing him out is looking increasingly weaker by the day.

Indeed, Gross’ Janus Global Unconstrained Bond model, initially meant to woo some of his former clients from Pimco to Janus, has declined by nearly two percent in the last 12 months and utterly failed to retain the managed assets which shareholders had been hoping for. (Source: “George Soros just yanked $500 million from his bet on Bill Gross,” Business Insider, November 2, 2015.)

This latest move by George Soros puts Bill Gross’ ongoing legal dispute with Pimco on shaky ground. Gross has charged his former employer with wrongful dismissal, citing internal greed by a few key players as having been the prime motivator to push him out. (Source: “Bill Gross Just Got a Big Setback from Billionaire Investor George Soros,” Fortune, November 2, 2015.) Gross further maintains that he was a solid manager with a strong reputation, with a successful track record in both bear and bull market periods.

Soros’ reputation and robust record of hedge fund management was strong support for Gross, and for Janus by extension. But that endorsement did not result in a meaningful conversion in terms of additional clientele. While an initial $1.4 billion worth of capital was raised by Janus, enthusiasm quickly deflated once it became known that approximately half of this sum came out of Bill Gross’ own wallet. (Source: “George Soros’s Firm Pulls $500 Million Investment With Bill Gross,” Wall Street Journal, November 2, 2015.)

With Janus underperforming and failing to live up to earlier investor expectations, the capital fund has experienced monetary outflows in the last several months and shows no sign of uplift on the horizon.

While it’s not exactly clear how and when George Soros had thrown in the towel on Janus capital, and by extension Bill Gross, records indicate that about $490 million was removed from the account at the end of the September at the latest. (Source: “Soros Is Said to Pull $490 Million From Bill Gross Strategy,” Bloomberg, November 2, 2015.)

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