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(Bloomberg) – It wasn’t just retail traders who cashed in big during GameStop Corp’s stock market mania. A legendary billionaire investor has committed minor murder by bypassing stocks.
Bill Gross, former king of bonds and co-founder of Pacific Investment Management Co., said in an interview with Bloomberg Television on Tuesday that he had bet around $ 10 million against the video game retailer’s shares.
But the trade did not go without a hitch.
“I got there too early,” Gross said. “I was in the hole of about $ 10 million.” But he stuck to it to sell at a profit.
GameStop stock, for months among the top-selling on the New York Stock Exchange, jumped more than 1,700% from Jan.1 to Jan.27 as a legion of Reddit users piled up, forcing traders down to rush for stocks and brokers to take the very unusual step of curbing trading.
In the midst of this mania, Gross attempted to bet against stocks: “I walked in with options like a good Robinhood trader, I guess.”
He hasn’t finished yet.
“I’m still selling the $ 250 and $ 300 call options,” Gross said. “I think this is the perfect opportunity for options sellers, not buyers, to take advantage of it.”
Gross was widely known for his bond betting after four decades at Pimco, which he integrated into one of the world’s largest asset managers. For years, he generated blue chip returns as manager of the Pimco Total Return Fund, and in 2013 the company’s assets approached $ 2 trillion. He was ousted a year later after a feud with his partners at Pimco over strategy, succession and management control.
Gross then joined Janus Henderson Group Plc as a fund manager, moving from a search for relative performance against a benchmark to a no-constraint strategy. The aim was to achieve positive results regardless of the market conditions, but it did not work. The returns were disappointing and Gross retired in March 2019.
Gross continues to comment on central bank policy and deficits and speculates in the bond markets with his personal fortune.
Read more: Bill Gross Says He’s Running Out of T-Bills
He said he was short of selling Treasury bills in recent weeks which took the 10-year yield to a one-year high above 1.6%. He also continues to bet against 10-year futures and long bonds. The investor predicts a surge in inflation to come that will give Federal Reserve Chairman Jerome Powell a “pause” on the central bank’s current policy of decline for longer.
“Inflation, you know, currently below 2% is not going to be below 2% in the next few months,” Gross said. “I see a figure of 3% to 4% in front of us.”
(Updates with the raw views on inflation in the last paragraph.)
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