OPINION: Bill Gross Act Two: Peyton Manning…Or Joe Montana?

Terry Flanagan

Last week, high yield bond guru and prolific financial writer Martin Fridson penned an excellent column about Bill Gross and his recent move to Janus after a long tenure as a bond manager at Pimco.

Fridson suggested that Bill Gross may be poised to “pull a Peyton Manning” — that is, follow up on a sustained period of greatness with more greatness, only in a twilight act in different surroundings.

Manning was named Sports Illustrated’s Player of the Decade in the 2000s for his accomplishments as quarterback of the Indianapolis Colts, which included a Super Bowl MVP award in 2007. But he was cast off by Indy after missing the entire 2011 season with a neck injury. The Denver Broncos took a chance and handed the keys to their offense over to Manning, who validated their faith by winning Comeback Player of the Year in 2012, setting a league record for passing yardage in 2013, and transforming the team from middling to elite.

Just yesterday, the 38-year-old Manning threw his 500th career touchdown in a win over the previously unbeaten Arizona Cardinals.

Can the 70-year-old Gross — whose ‘Manningesque’ accomplishments over four decades at Pimco include top-quintile performance for the Total Return Fund as well as multiple bond-manager-of-the-year accolades — achieve similar greatness at Janus?

The best guess from this corner is no, and the ceiling on Gross’ second act is very good, rather than great. Rather than Peyton Manning, the more apt comparison is to another legendary NFL quarterback who switched uniforms late in the game: Joe Montana.

Nicknamed The Comeback Kid, the charismatic Montana won multiple Super Bowls for the San Francisco 49ers in the 1980s. Traded to Kansas City in 1993 at age 36, Montana led the Chiefs to the AFC Championship game and was selected to the Pro Bowl in his first season wearing red, and he returned the Chiefs to the playoffs in 1994 before retiring. Montana hardly embarrassed himself in KC, but he wasn’t quite able to find Dwight Clark in the back of the end zone at Arrowhead Stadium like he did at Candlestick Park. (I realize I am dating myself with references to these non-commercially named sports venues.)

Why is Gross more likely to follow the path of Montana rather than Manning? It’s no knock on Gross or a call that he’s washed up — rather, the cold hard fact is that greatness is profoundly difficult to achieve. Perhaps the ways in which Gross discovered an investment edge no longer work — and if they don’t, will he be able to find new advantages? He was a great bond manager for a long time, but it’s reasonable to surmise — especially after some mixed results in his last few years at Pimco — that the competition has narrowed the gap on him.

In addition, Gross is a regular guest on CNBC and he is about as public in his bond-market prognostications as Warren Buffett is on the equity side, so many of his old playbooks are out in the public domain.

Add it all up, and you can look for the Janus Bonds to be a playoff-caliber team, but not a Super Bowl contender.   

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